The new Consumer Credit Regulations

Date01 January 2011
Author
The New Consumer Credit Regulations
DR MAX BAR RETT *
Introduction
On 9 June 2010, the Minister for Finance made the European Communities
(Consumer Credit Agreements) Regulations 2010.1The Regulations
implement the Consumer Credit Dir ective into Irish law and represent the
last legislative step in a process that commenced in September 2002 with the
European Commission’s initial proposal for a new consumer credit
directive.2The new Consumer Credit Directive replaces the principal EU
measure concerned with consum er credit (Directive 87/102/EEC).3This
article considers certain aspects of the Regulations and various changes they
make to exist ing Irish cons umer credit la w, making reference to the
Directive, the Consumer Credit Act 19954and the Consumer Protection
Code where appropriate.
*Dr Max Barrett, Solici tor, is Group Company Secretary with Anglo Irish Bank. Any
opinions expressed in this article are entirely personal
1S.I. No. 281 of 2010, hereaft er referred to as the “Reg ulations”. The Regulations
came into operation on 11 June 2010. (Regulations, reg.2)
2References in this ar ticle to the “Consumer Credit Directive ” or the “Directive” are
to Directive 2008/48/EC of the European Parliament and of the Council of 2 3 April
2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC
(O.J. No. L133, 22.5.08, 66), hereafter refer red to as the “Directive”. Ar ticle 27 of
the Directive, as initially published, requires that it be implemented by 12 May 2010
but in a “Corrigendum” pub lished in the Official Journal this was corrected to read
11 June 2010. (See Corrigendum to Directive 2008/48/EC of the European Parliament
and of the Council of 23 April 2008 on credit agreements for consumers and repealing
Council Directive 87/102/EEC). For a useful summary of the near six-year genesis of
the Directive , see the “Procedure f ile” maintained by the European Parliament and
available, as of 26 July 2010, at www.europarl.europa.eu/ oeil/file.jsp?id=225692
3i.e. Council Directive 87/102/EEC of 22 December 1986 for the approximation of the
laws, regulations and administrative provisions of the Member States concerning
consumer credit (O.J. No. L42, 12.02.1987, 48) Article 29 of the Directive (as
corrected by the C orrigendum to the Directive, Ibid .) repeals Directiv e 87/102/EEC
with e ffect from 11 June 2010 , the date from which the new Directive was to be
transposed into national law (per Directive, art.27, as corrected) and from which the
Regulations took effect (per Regulations, reg.2)
4No. 24 of 1995
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Consumers
The Regulations apply only to certain credit agreements with “consumers”.5
The definition of the term “consumer” in the Regulations accords with that
in the Consumer Credit Act, being “a natural person who is acting, in the
course of a transaction to which these Regulations apply, for purposes
outside his or her trade, business or profession”. This definition is markedly
different fro m that which pertains under the Consumer Protection Code,6
the pre-eminent regulatory code applicable to enti ties regulated by the
Central Bank of Ireland. Under the Consumer Protection Code, the term
“consumer” refers to natural persons acting outside their business, trade or
profession, but also embraces
[i] a person or group of persons, but not an incorporated body with an
annual turnover in excess of 3 million … [ii] incorporated bodies
having an annual turnover of 3 million or less in the previous
financial year … or [iii] a member of a credit union; and includes,
where appropriate, a potential “consumer”.7
Because of this difference of definition betw een the Reg ulations and the
Consumer Credi t Act on the one hand and the Code on the other, persons
excluded from the protections of the Regulations and the Act as non-
consumers are afforded a separate suite of pr otections, including some
protections related only to loans, under the Consumer Protection Code.
Credit agreements
Not all credit agreements come within the scope of the Regulations. Among
the more significant forms of credit agreement outside the scope of the
Regulations are: a credit agreement secured on property8; a credit agreement
the purpose of which is to acquire or retain property rights in land or in an
5Regulations, regs 3(1) and 6(1). The term “credit agreement” is defined in the
Regulations as “an agreement under which a creditor gr ants or promises to grant to
a consumer cred it in the form of a deferred payment, loan or other simila r financial
accommodation, but does not in clude an agreement for- (a) the provision, on a
continuing bas is, of services, or (b) the supply of goods of the same kind, where the
consumer pays fo r the services o r goods by inst alments for the duration of their
provision”. (Regulat ions, reg.6(1)). Excepted categories of cr edit agreement that fall
outside the scope of the Regulations are considered later in the main text above
6i.e. Financial Regulator Consumer Protection Code (Dublin, 2006), as supplemented,
referred to throughout this article as the “Consumer Protection Code”
7Consumer Protection Code, 4
8i.e. “a credit agreement secured by—(i) a mortgage or another comparable security on
immovable property, or ( ii) a rig ht related to immovable property”. (Re gulations,
reg.3(6)(a))
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