10 really interesting things in credit law (seriously)

1. Until the Consumer Credit Act 1974 (CCA), no specific law covered credit.

2. The architect of the CCA – Lord Crowther – had all his recommendations approved except one – the appointment of a Credit Commissioner – which many believed he would eventually fill when his recommendations were put into place. The job of policing the CCA was given to the Office of Fair Trading instead.

3. Despite extremely extensive regulations on credit advertising, not a single case was prosecuted using these regulations for over 25 years. And then the law was relaxed as the regulations were considered unworkable.

4. Until 2005, gambling debts were unenforceable by law.

5. The case law that defines what is meant by ‘extortionate lending’ found rates of 13% as ‘harsh and unconscionable’. And that was for someone lending to a person with an impaired history. Most credit cards now charge more than that.

6. Debtor prisons were abolished in 1874, though non payment of rates and fines can still result in being banged up. Similarly, if someone obtains judgment against you and you fail to attend an ‘oral examination’, a warrant for your arrest, and imprisonment, can follow. Even today.

7. If a lender does not ask sufficient questions about the financial circumstances of a prospective borrower, or lends knowing of potential difficulty in being able to repay, the debt can be brought before the court and ‘set aside’ – because the decision to lend is considered ‘injudicious’.

8. Urgent legislation was enacted in 2004 to stem the tide of students declaring themselves bankrupt on graduation, and avoiding student loans. Over 1000 students used this loophole until the law changed such that student loans are no longer affected by bankruptcy.

9. If a guarantor pays off a loan, they are entitled to any security held by the original lender, and have a perfect right to pursue the debt, just as if they had lent the money in the first place, using ancient ‘rights of subrogation’.

10. The Child Support Agency has the ability to obtain a legal judgment against a person without going through any court process. Child Support Orders, as they are called, do not appear on credit files either.

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