12â Other powers of the court

The CCA 1974 permits a court to grant a time order allowing the debtor more time to repay the debt under a regulated consumer credit or consumer hire agreement.286 Further, the terms of any agreement or security may be amended as the court considers just over a period of time, which could result, for example, in reducing the rate of interest or even extending the terms of the agreement.287

Q6 Compare and contrast the different regulatory approaches of the extortionate credit bargain provisions as originally enacted in the Consumer Credit Act 1974 and the unfairness test introduced by the Consumer Credit Act 2006.

13â Financial Ombudsman Service

One of the most innovative reforms introduced by the CCA 2006, through amendments to the FSMA 2000, was provision of an ‘alternative dispute resolution system … [which] … would benefit both firms and consumers’.288 The FOS is an independent dispute resolution service that was established under the FSMA 2000 to help settle individual disputes between consumers and those firms which are regulated by the FSA.289 Patient noted that ‘The [2006] Act contains an amendment to the FSMA [2000] which will extend the scope of the financial ombudsman scheme to all consumer credit businesses. Although many mainstream institutions will already fall within the scope of scheme, a significant number of areas will be added to the jurisdiction of the ombudsman, allowing consumers a quick, straightforward and readily accessible route to redress. Areas where this may be of particular impact will be the home shopping market and debt collecting.’290

284Patient, above n. 207, at 313.

285FSA, above n. 273, Annex A3 and A4. The interpretation of the term ‘fair’ is integral to the FSA’s ‘Towards fair outcomes for consumers’ policy. For a more detailed discussion see FSA, Treating Customers Fairly: Towards Fair Outcomes for Consumers (London, 2006).

286CCA 1974, s.129. The court will grant such an order where it is ‘just’ to do so. For a commentary on this section see Director General of Fair Trading v. First National Bank Plc [2001] UKHL 52.

287CCA 1974, s.136.â 288â DTI White Paper, above n. 13, at 61.

289 FSMA 2000, Part XVI.â 290â Patient, above n. 207, at 311.

Access to the FOS will make it considerably easier for consumers to question whether or not their credit agreement breached the unfairness test of the CCA 1974. It should also be more cost-effective for consumers to challenge credit agreements through the FOS than incurring expensive legal fees in the court system.291 The CCA 2006 amendments broaden the authority of the FOS to hear complaints concerning licensed creditors under the CCA 1974.292 FSMA 2000, section 226A now provides that a claimant may bring a complaint before the FOS which relates to an act or omission by the respondent provided that six conditions are met:

(a)the complainant is entitled and willing to have the complaint referred to the FOS;293

(b)the complaint falls within the description specified in consumer credit rules;294

(c)at the time of the complaint the respondent was in receipt of a standard licence or was authorised to undertake activity as specified by the CCA 1974;295

(d)the act or omission was of a type specified by the FSMA 2000;296

(e)at the time of the act or omission that type of business was specified in an order made by the Secretary of State; and297

(f)the complaint cannot be dealt with under the compulsory jurisdiction.298

The FOS will only consider a complaint if the subject matter of the complaint occurred on or after 6 April 2007 and if the creditor was licensed under the CCA 1974. Further, the FOS will not investigate a complaint unless the creditor was provided with an opportunity to handle the complaint and has issued a final response, and a period of more than eight weeks has passed since the complaint was received.299 The official complaints-handling rules for consumer credit businesses are contained in the FSA Handbook.300

The availability of this alternative dispute resolution scheme for consumer credit disputes has proved to be very popular, and has resulted in many creditrelated disputes being referred to the FOS.301 The most common types of such

291DTI White Paper, above n. 13, at 61.

292FSMA 2000, s.226A, as inserted by CCA 2006, s.59. The Financial Ombudsman Service jurisdiction ‘included all existing categories of consumer credit standard licence holders on 6 April 2007’. See FOS, Rules for the New Consumer Credit Jurisdiction (London, 2006) 4.

293 FSMA 2000, s.226A(2)(a).â 294â Ibid. s.226A(2)(b)â 295â Ibid. s.226A(2)(c).

296Ibid. s.226A(2)(d). The types of businesses covered by this provision are consumer credit business; consumer hire business; and a business so far as it comprises or relates to credit brokerage; debt-adjusting; debt-counselling; debt-collecting; debt administration; the provision of credit information services; or the operation of a credit reference agency.

297 FSMA 2000, s.226A(2)(e).â 298â FSMA 2000, s.226A(2)(f).

299OFT, ‘Alternative dispute resolution scheme’ (n/d), available at www.oft.gov.uk/about-the-oft/ legal-powers/legal/cca/CCA2006/alternative/.

300See FSA, FSA Handbook Dispute Resolution: Complaints (London, n/d).

301FOS, ‘Consumer credit complaints and the ombudsman service’ (2008) 68 Ombudsman News (March/April) 1, 12.

14â Enforcement

The OFT is an independent and non-ministerial government department, funded by HM Treasury, and it has the dual function as the United Kingdom’s competition and consumer authority. Its objective is to ensure that ‘markets work well for consumers’. It aims to achieve this objective through a number of measures including carrying out research, advising the government, promoting consumer and business education, promoting self-regulation, and by enforcement of competition and consumer law. It is to this last measure that this chapter now turns. The OFT has a wide range of enforcement duties and enforcement powers under the Estate Agents Act 1979,303 the Unfair Terms in Consumer Contracts Regulations 1999,304 the Consumer Protection (Distance Selling) Regulations 2000,305 the Consumer Protection from Unfair Trading Regulations 2008,306 the Business Protection from Misleading Marketing Regulations 2008,307 and the Enterprise Act 2002. The OFT also has enforcement duties under the Money Laundering Regulations 2007.308

Following the review of the operation of the CCA 1974, the OFT was granted an extensive array of enforcement powers under the provisions of the CCA 2006 and the Consumer Protection from Unfair Trading Regulations 2008.309 The OFT stated that these new instruments:

mark a fundamental move away from prescriptive regulation towards a princi- ple-based consumer protection regime which encourages targeted, risk-based enforcement geared to the efficient operation of the market. At the same time, they also increase the range of enforcement tools available to enforcers, strengthening investigative powers and enabling OFT to take criminal proceedings and to seek financial penalties, alongside existing civil enforcement and compliance tools.310

These new measures formed part of the Labour government’s ‘better regulation’ policy, which was based upon a series of reports published by the government, including the Hampton Review,311 the Arculus Review312 and the Macrory

302Ibid. 13.

303This has since been amended by the Consumers, Estate Agents and Redress Act 2007. For a more detailed discussion of this Act see F. Ratcliffe, ‘Redressing the lack of professional standards’ (2007) 151(34) Solicitors Journal 1150.

304SI 1999/ 2083. For a discussion of these Regulations see E. Macdonald, ‘Scope and fairness of the Unfair Terms in Consumer Contracts Regulations’ (2002) 65(5) Modern Law Review 763.

310OFT, ‘Consumer protection from Unfair Trading Regulations 2008’ (n/d), available at www.oft. gov.uk/business-advice/treating-customers-fairly/protection.

311DBIS, Reducing Administrative Burdens: Effective Inspection and Enforcement (London, 2005).

312DBIS, Regulation—Less is More: Reducing Burdens, Improving Outcome (London, 2005).