Consumer Credit Act 1974

40 Enforcement of agreements made by unlicensed trader. U.K.

(1) A regulated agreement, other than a non-commercial agreement, if made when the creditor or owner was unlicensed, is enforceable against the debtor or hirer only where the [F1 OFT] has made an order under this section which applies to the agreement.

(2) Where during any period an unlicensed person (the “trader ”) was carrying on a consumer credit business or consumer hire business, he or his successor in title may apply to the [F1 OFT] for an order that regulated agreements made by the trader during that period are to be treated as if he had been licensed.

(3) Unless the [F1 OFT] determines to make an order under subsection (2) in accordance with the application, [F2 it] shall, before determining the application, by notice—

(a) inform the applicant, giving [F3 its] reasons, that, as the case may be, [F2 it] is minded to refuse the application, or to grant it in terms different from those applied for, describing them, and

(b) invite the applicant to submit to the [F1 OFT] representations in support of his application in accordance with section 34.

(4) In determining whether or not to make an order under subsection (2) in respect of any period the [F1 OFT] shall consider, in addition to any other relevant factors—

(a) how far, if at all, debtors or hirers under regulated agreements made by the trader during that period were prejudiced by the trader’s conduct,

(b) whether or not the [F1 OFT] would have been likely to grant a licence covering that period on an application by the trader, and

(c) the degree of culpability for the failure to obtain a licence.

(5) If the [F1 OFT] thinks fit, [F4 it] may in an order under subsection (2)—

(a) limit the order to specified agreements, or agreements of a specified description or made at a specified time;

(b) make the order conditional on the doing of specified acts by the applicant.

[F5 (6) This section does not apply to a regulated agreement, other than a non-commercial agreement, made by a consumer credit EEA firm unless at the time it was made that firm was precluded from entering into it as a result of—

(a) a consumer credit prohibition imposed under section 203 of the Financial Services and Markets Act 2000; or

(b) a restriction imposed on the firm under section 204 of that Act.]

Textual Amendments

F1 Words in s. 40 substituted (1.4.2003) by Enterprise Act 2002 (c. 40), ss. 278, 279, Sch. 25 para. 6(20)(a); S.I. 2003/766, art. 2, Sch. (with art. 3)

F2 Words in s. 40(3) substituted (1.4.2003) by Enterprise Act 2002 (c. 40), ss. 278, 279, Sch. 25 para. 6(20)(b)(i); S.I. 2003/766, art. 2, Sch. (with art. 3)

F3 Word in s. 40(3)(a) substituted (1.4.2003) by Enterprise Act 2002 (c. 40), ss. 278, 279, Sch. 25 para. 6(20)(b)(ii); S.I. 2003/766, art. 2, Sch. (with art. 3)

F4 Word in s. 40(5) substituted (1.4.2003) by Enterprise Act 2002 (c. 40), ss. 278, 279, Sch. 25 para. 6(20)(c); S.I. 2003/766, art. 2, Sch. (with art. 3)

F5 S. 40(6) inserted (1.12.2001) by S.I. 2001/3649, art. 170

Modifications etc. (not altering text)

C1 S. 40 restricted (1.1.1993) by S.I. 1992/3218, reg. 61(1)

S. 40 modified (1.1.1996) by S.I. 1995/3275, reg. 38(1)