Instalment credit agreements: consumer credit firms

The Government has introduced legislation which extends the exemption for instalment credit.

A credit agreement will be exempt if it meets all of the following criteria:

  • it is repayable by no more than 12 instalments (eg monthly), within no more than 12 months
  • it is a borrower-lender-supplier agreement (ie it finances the acquisition of specific goods or services)
  • it is for a fixed amount
  • it involves no charges or interest (eg there can be no admin fee) or is secured on land. It is not:
    • an agreement financing the purchase of land
    • a conditional sale or HP agreement, or
    • a pawn agreement

Firms that only enter into, or that only broker agreements that meet the relevant criteria, do not need to be authorised for consumer credit unless they carry on any other kind of credit-related regulated activity.

It is the responsibility of firms to determine whether (and how) they are affected by this exemption, seeking independent legal advice as necessary.