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Guidance on unenforceable agreements

Start date: 27 January 2010
End date: 21 April 2010

The OFT is conducting a consultation on draft guidance on a creditor's duty to give information to debtors and the consequences of non-compliance on a creditor's ability to enforce.

This consultation is focused on sections 77/78/79 of the Consumer Credit Act 1974 which cover a creditor's duty to give information to debtors under fixed-term, running account, and hire agreements. It clarifies the latest OFT and court understanding of these sections following a recent High Court judgment on the matters, and sets out the OFT's views of relevant practices which would be considered to be unfair under section 25 of the Consumer Credit Act 1974 - the 'fitness test'.

The OFT's decision to issue guidance at this time has primarily resulted from our concerns that debtors are being misled as to the meaning and impact of sections 77 to 79 and that some creditors appear not to understand the nature and extent of their obligations under these sections.

This consultation is aimed at those with an interest in the relevant stages of the lending process as conducted by consumer credit businesses. This includes creditors and debt collection companies, as well as claims management companies and consumer advisors. It also includes large and small businesses, trade associations, professional bodies, regulators, enforcement agencies, consumer organisations and borrower groups.

Download OFT consultation on draft guidance on unenforceable agreements for consumers and industry (pdf 526kb).

See press release 05/10 (27 January 2010).

See press release 105/10 (16 October 2010)

Download OFT1272 - Guidance on section 77, 78 and 79 of the Consumer Credit Act 1974 -  the duty to give information to debtors and the consequences of non-compliance on the enforceability of the agreement (pdf 330kb).

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.

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