Explanatory note

This Order provides for the exemption of consumer credit agreements or consumer hire agreements from regulation under the Consumer Credit Act 1974 where the debtor or hirer has a high net worth. It also makes provision about declarations where agreements are entered into wholly or predominantly for the purposes of the debtor’s or hirer’s business.

Article 2 sets out the conditions for the exemption for a person of high net worth. These include the requirements that the debtor or hirer is a natural person and that the agreement must include a declaration by the debtor or hirer complying with article 3. The declaration must also have the form and content set out in Schedule 1.

Another condition for the exemption is that a statement of high net worth has been made in relation to the debtor or hirer. Articles 4 and 5 set out who is able to give the statement and Schedule 2 sets out the form and content the statement must have.

Section 16B of the Consumer Credit Act 1974 provides for the exemption from regulation under that Act of consumer credit agreements or consumer hire agreements, which are entered into wholly or predominantly for the purposes of the debtor’s or hirer’s business where the credit provided or hire payments made exceed £25,000. Section 16B(2) of the Act provides that there shall be a presumption that an agreement is entered into wholly or predominantly for the purposes of the debtor’s or hirer’s business if the agreement includes a declaration by the debtor or hirer to that effect. The Order provides that a declaration for the purposes of section 16B(2) must comply with the requirements in article 6 and have the form and content set out in Schedule 3.

A Regulatory Impact Assessment has been prepared in respect of this Order and may be viewed at http://www.dti.gov.uk/consumers/consumer-finance/credit-act-2006/documents. Impact was also considered as part of the Regulatory Impact Assessment, which accompanied the Consumer Credit Bill when it was introduced into the House of Commons in May 2005.