Consumer Credit Licences- payments for goods and services by instalments

Under the Consumer Credit Act 1974, most businesses that provide goods and services on credit, lend money or provide debt services to consumers need to have a consumer credit licence (CCL).

Also, Businesses have been required to hold a consumer credit licence if they spread their charge over more than four instalments.

Some  IAB  Accredited Training Providers offer interest free instalment facilities over more than four instalments and as such are required to hold a CCL.

Previously, the only exemption stated that a credit agreement would be exempt if it met all the following criteria:

  • it is repayable by no more than four instalments (e.g. quarterly), within no more than 12 months
  • it is a borrower-lender-supplier agreement (i.e. it finances the acquisition of specific goods or services)
  • it is for a fixed amount
  • it involves no charges or interest (e.g. there can be no admin fee)

Important New legislation now extends the above exemption to include credit repayable by up to 12 instalments within a year (e.g. monthly), provided the credit agreement meets the other criteria listed above. This means that now, a Firm offering such agreements does not need to be authorised for consumer credit provided that it is not carrying out any other form of regulated credit activity.

The revised exemption comes into force on 18 March 2015.

Brian J Harford FCCA, FIAB

Principal, Woodgrove Tutorials

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