Part 7 Chapter 2

The Consumer Credit Act 1974

1â Introduction

This chapter begins by briefly highlighting and commenting on the importance of the recommendations of the Crowther Committee on Consumer Credit 1971 and how it influenced the enactment of the Consumer Credit Act (CCA) 1974. The second part of the chapter provides a general discussion of the aims and objectives of the CCA 1974 and comments on its scope and application. It then provides an overview of the interpretation of several important concepts and terms within the Act. The remainder of the chapter provides a detailed discussion of the Act’s main provisions and highlights the significant amendments introduced by the Consumer Credit Act (CCA) 2006. The latter part of

2â Crowther Committee on Consumer Credit

The introduction of the CCA 1974 is associated with the recommendations of the Crowther Committee, which in 1968 was given the broad remit to investigate and explore all forms of credit.2 The Committee identified several weaknesses within the then-existing consumer credit legislative framework,3 and it recommended the introduction of two statutes, a Lending and Security Act and a Consumer Sale and Loan Act.4 The proposed Lending and Security Act would ‘apply to all credit transactions … it would deal not just with the rights of the parties under the loan contract, but also with registration of the security interest and conflicts between the secured party and any third party’.5 Macleod commented that this recommendation ‘would fuse together all the various existing forms of legislation relating to consumer credit into one rationally coherent enactment’.6 However, the proposal to implement a Lending and Security Act was not acted on due to its complex nature and high cost implications,7 and the recommendation to introduce a Consumer Sale and Loan Act resulted in the implementation of the CCA 1974 as the ‘basis of regulation for consumer credit’.8 It is important to note that the principal objective of the recommendations was to provide consumers with a higher level of protection, as discussed in Part 7 Chapter 1.9 Indeed, the Crowther Committee stated that the main objective of its proposed reforms was ‘to provide for the small individual borrower the protection he unquestionably needs without setting up artificial barriers between one sort of credit and another’.10 This is a view supported by Scott and Black who argued that the ‘main thrust of the Committee’s exhaustive analysis was directed to improving consumers’ rights and to rationalising the law into a new coherent framework’.11

1Directive 2008/48/EC..

2Report of the Committee on Consumer Credit (Chairman: Lord Crowther) (Cmnd. 4596, 1971) (‘Crowther Committee Report’).

3See J. Macleod, Consumer Sales Law (Routledge, Oxford, 2007) 175; S. Brown, ‘The Consumer Credit Act 2006: real additional mortgagor protection?’ (2007) Conveyancer and Property Lawyer 316, 317–18. The existing framework included, e.g., the Pawnbrokers Act 1872, Bill of Sales Acts 1878 and 1882, Moneylenders Acts 1900–1927, Hire Purchase Act 1964 and Advertisements (Hire Purchase) Act 1967.

4Crowther Committee Report, above n. 2, at 183.

5 Macleod, above n. 3, at 175.â 6â Ibid.

7See C. Scott and J. Black, Cranston’s Consumers and the Law (Butterworths, London, 2000) 238.

8Brown, above n. 3, at 317.

9G. Borrie, ‘The credit society: its benefits and burdens’ (1986) Journal of Business Law (May) 181,Â184.

10Crowther Committee Report, above n. 2, at 6.6.3–6.4.

11Scott and Black, above n. 7, at 238.