What is credit?
Credit can be defined as the financial accommodation that is ‘the provision of a benefit (cash, land, goods, services or facilities) for which payment is to be made by the recipient in money at a later date’. The Consumer credit Act 1974 s.9(1) defines credit as including ‘a cash loan, and any other financial accommodation’.
Types of credit
Credit arrangements can be classified in two ways which are loan credit and sales credit.
Loan credit involves an advance of money; sales credit involves a deferent of a payment obligation under a supply contract.
A loan payment of money by a creditor to a debtor as a means of benefiting and enriching the debtor, upon a condition that the money paid, plus interest, shall be repaid by the debtor to the creditor at a specified rate over a specified period. A deferment of payment obligation occurs where the buyer of goods or services obtains the benefit of the goods or services without having to pay, immediately and in full heir price.
Consumer Credit Act 1974
The act regulates the credit industry involved in the supply of credit to individuals to protect consumers from devious money lenders. Under the CCA 1974, a licence is required to carry on consumer credit business, a consumer hire business or ancillary credit business and the industry operates under the supervision of the Director General of fair Trading. The Act also imposes controls on advertising and the means of obtaining business and contains provisions regulating individual agreements.
The CCA is self-consciously fundamental. Some idea of its scope may be gained from the list of performances wholly or partially repealed s192. The act is certain radical in the sense that it seeks to make a new start with newly-invented terminology. The purpose was to make it difficult for practitioners to ignore the new law by simply assuming that it only re-enacts previous law.
The CCA is also radical in that it extends its protection into...