01 Oct Consumer Credit (Exempt Agreements) Order 1989
The Consumer Credit (Exempt Agreements) Order 1989 is a UK legislation that outlines the terms and conditions for exempting certain credit agreements from being regulated by the Financial Conduct Authority (FCA). This order is relevant to both lenders and borrowers and could have a significant impact on their financial dealings.
Under the Consumer Credit Act 1974, all credit agreements are regulated by the FCA to ensure that borrowers are protected from lenders who might exploit them. However, there are certain types of credit agreements that are exempt from this regulation, as outlined in the 1989 order. These agreements include credit transactions entered into by a business, a high-value loan, and certain short-term loans.
For lenders, the order provides a clear and concise guide as to which credit agreements they can offer without being in breach of FCA regulations. For example, businesses can lend to other businesses without requiring authorization from the FCA. This exemption is particularly relevant to large corporations that frequently use credit transactions to finance their operations.
Furthermore, the order stipulates that loans of more than £60,260 are also exempt from FCA regulation. This provision is relevant to high-net-worth individuals who may require large loans to fund their investments or business ventures. This exemption ensures that they can obtain the necessary financing without going through the bureaucratic process required by the FCA.
Short-term loans, such as payday loans, are also exempt from FCA regulation, provided the loan duration is one year or less. This exemption is relevant to borrowers who require short-term financing but cannot meet the criteria set out by the FCA for regulated loans. However, lenders must still comply with other consumer protections, such as affordability checks and transparency requirements.
In conclusion, the Consumer Credit (Exempt Agreements) Order 1989 outlines the conditions for exempting certain credit agreements from FCA regulation. This legislation is relevant to both borrowers and lenders and could have a significant impact on their financial dealings. Lenders must ensure that they are offering exempt agreements in compliance with the order, while borrowers must be aware of the potential risks associated with such agreements.