‘Tough’ new credit rules come into force

The Consumer Credit Act 2006 has seen its biggest shakeup for more than 30 years, with the introduction of a series of new measures that give consumers greater protection against rogue lenders and debt collectors.

Under the new rules, which came into effect on 6 April, lenders will be subject to a more rigorous test by the Office of Fair Trading (OFT) in order to receive a Consumer Credit Licence.

The recent amendments also grant the OFT greater powers to impose more stringent penalties for licence holders who abuse their position, while the £25,000 threshold above which consumer lending is not regulated has been removed.

Secretary of State for Business and Enterprise, John Hutton, said the recent changes would ‘create a level playing field that will enable honest businesses to thrive.’

Meanwhile John Fingleton, Chief Executive of the OFT, claimed the new regulations would create a fairer environment for consumers without increasing the red tape burden for small firms.

‘The new provisions will allow us to adopt a more targeted approach to credit licensing based upon risk to consumers,’ he said.

‘This will mean we can deal more effectively with behaviour which harms consumers while imposing minimal burdens on businesses that treat consumers well.’