Consumer Credit Act 1974

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

[F1 (1) A regulated agreement is not enforceable against the debtor or hirer by a person acting in the course of a consumer credit business or a consumer hire business (as the case may be) if that person is not licensed to carry on a consumer credit business or a consumer hire business (as the case may be) of a description which covers the enforcement of the agreement.

(1A) Unless the OFT has made an order under subsection (2) which applies to the agreement, a regulated agreement is not enforceable against the debtor or hirer if—

(a) it was made by the creditor or owner in the course of a consumer credit business or a consumer hire business (as the case may be); and

(b) at the time the agreement was made he was not licensed to carry on a consumer credit business or a consumer hire business (as the case may be) of a description which covered the making of the agreement.

(2) Where—

(a) during any period a person (the ‘trader’ has made regulated agreements in the course of a consumer credit business or a consumer hire business (as the case may be), and

(b) during that period he was not licensed to carry on a consumer credit business or a consumer hire business (as the case may be) of a description which covered the making of those agreements,

he or his successor in title may apply to the OFT for an order that the agreements are to be treated for the purposes of subsection (1A) as if he had been licensed as required.]

(3) Unless the [F2 OFT] determines to make an order under subsection (2) in accordance with the application, [F3 it] shall, before determining the application, by notice—

(a) inform the applicant, giving [F4 its] reasons, that, as the case may be, [F3 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 [F2 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 [F2 OFT] shall consider, in addition to any other relevant factors—

(a) how far, if at all, debtors or hirers under [F5 the regulated agreements in question] were prejudiced by the trader’s conduct,

(b) whether or not the [F2 OFT] would have been likely to grant a licence covering [F6 the making of those agreements during] that period on an application by the trader, and

(c) the degree of culpability for the failure to [F7 be licensed as required] .

(5) If the [F2 OFT] thinks fit, [F8 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.

[F9 (6) This section [F10 (apart from subsection (1))] does not apply to a regulated agreement F11 . . . 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.]

[F12 (7) Subsection (1) does not apply to the enforcement of a regulated agreement by a consumer credit EEA firm unless that firm is precluded from enforcing it as a result of a prohibition or restriction mentioned in subsection (6)(a) or (b).

(8) This section (apart from subsection (1)) does not apply to a regulated agreement made by a person if by virtue of section 21(2) or (3) he was not required to be licensed to make the agreement.

(9) Subsection (1) does not apply to the enforcement of a regulated agreement by a person if by virtue of section 21(2) or (3) he is not required to be licensed to enforce the agreement.]

Textual Amendments

F1 S. 40(1)(1A)(2) substituted (6.4.2008) for s. 40(1)(2) by Consumer Credit Act 2006 (c. 14), ss. {26(1)}, 71(2); S.I. 2007/3300, art. 3(2), Sch. 2

F2 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)

F3 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)

F4 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)

F5 Words in s. 40(4)(a) substituted (6.4.2008) by Consumer Credit Act 2006 (c. 14), ss. {26(2)(a)}, 71(2); S.I. 2007/3300, art. 3(2), Sch. 2

F6 Words in s. 40(4)(b) inserted (6.4.2008) by Consumer Credit Act 2006 (c. 14), ss. {26(2)(b)}, 71(2); S.I. 2007/3300, art. 3(2), Sch. 2

F7 Words in s. 40(4)(c) substituted (6.4.2008) by Consumer Credit Act 2006 (c. 14), ss. {26(2)(c)}, 71(2); S.I. 2007/3300, art. 3(2), Sch. 2

F8 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)

F9 S. 40(6) inserted (1.12.2001) by S.I. 2001/3649, art. 170

F10 Words in s. 40(6) inserted (6.4.2008) by Consumer Credit Act 2006 (c. 14), ss. {26(3)}, 71(2); S.I. 2007/3300, art. 3(2), Sch. 2

F11 Words in s. 40(6) repealed (6.4.2008) by Consumer Credit Act 2006 (c. 14), ss. 70, 71(2), Sch. 4; S.I. 2007/3300, art. 3(2), Sch. 2

F12 S. 40(7)-(9) inserted (6.4.2008) by Consumer Credit Act 2006 (c. 14), ss. {26(4)}, 71(2); S.I. 2007/3300, art. 3(2), Sch. 2

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)