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Offering credit

If your business sells goods or services on credit, lends money or provides debt counselling or debt adjusting services to consumers, you almost certainly need to be licensed by the OFT.

Providing or arranging consumer credit without a licence is a criminal offence and can result in a fine and/or imprisonment. Businesses cannot legally enforce a credit agreement if they are not licensed.

Before deciding whether to grant you a consumer credit licence, the OFT assesses whether you are a ‘fit’ person. Once you have a licence, the OFT can revoke it, for example if you are convicted of an offence of violence or dishonesty, or fail to comply with the Consumer Credit Act or other consumer legislation.

Under consumer credit law, you must set out credit and hire agreements in a particular way and make sure they contain certain information. New legislation means that, from April 2007 onwards, unfair credit agreements can be challenged in the courts. There are also rules on how agreements are entered into, and the information that must be provided to consumers.

For information on consumer credit licenses, see Credit licensing.

Consumer Credit Directive

The Consumer Credit Act and regulations are changing as a result of implementation of the Consumer Credit Directive (CCD).  Regulations were laid on 30 March 2010 and are due to come into force on 1 February 2011. It will however be open to firms to comply before then if they choose. Details can be found on the Department for Business, Innovation and Skills (BIS) website.

Relevant OFT guidance will be updated in due course in the light of the CCD changes.

To find out more about your duties as a credit provider, including guidance on who needs a licence and how to apply for one, see the consumer credit licensing area of the site.

Money Laundering Regulations 2007

The OFT supervises those businesses with a Category A consumer credit licence, under the Money Laundering Regulations. We have published guidance to help you comply with your obligations under the regulations.




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