Citation, commencement, interpretation and revocation

1.-(1) This Order may be cited as the Consumer Credit (Exempt Agreements) Order 1989 and shall come into force on 19th June 1989.

(2) In this Order-

"the Act" means the Consumer Credit Act 1974;

"business premises" means premises for occupation for the purposes of a business (including any activity carried on by a body of persons, whether corporate or unincorporate) or for those and other purposes;

and references to the total charge for credit and the rate thereof are respectively references to the total charge for credit and the rate thereof calculated in accordance with the Consumer Credit (Total Charge for Credit) Regulations 1980(2).

(3) The Orders specified in Schedule 2 to this Order are hereby revoked.

Exemption of certain consumer credit agreements secured on land

2.-(1) The Act shall not regulate a consumer credit agreement which falls within section 16(2) of the Act, being an agreement to which this paragraph applies.

(2) Where the creditor is a body specified in Part I of Schedule 1 to this Order, or a building society authorised under the Building Societies Act 1986(3), or an authorised institution under the Banking Act 1987(4) or a wholly-owned subsidiary of such an institution, paragraph (1) above applies only to-

(a)a debtor-creditor-supplier agreement falling within section 16(2)(a) or (c) of the Act;

(b)a debtor-creditor agreement secured by any land mortgage to finance-

(i)the purchase of land; or

(ii)the provision of dwellings or business premises on any land; or

(iii)subject to paragraph (3) below, the alteration, enlarging, repair or improvement of a dwelling or business premises on any land;

(c)a debtor-creditor agreement secured by any land mortgage to refinance any existing indebtedness of the debtor, whether to the creditor or another person, under any agreement by which the debtor was provided with credit for any of the purposes specified in heads (i) to (iii) of sub-paragraph (b) above.

(3) Head (iii) of sub-paragraph (b) of paragraph (2) above applies only-

(i)where the creditor is the creditor under-

(a)an agreement (whenever made) by which the debtor is provided with credit for any of the purposes specified in head (i) and head (ii) of that sub-paragraph; or

(b)an agreement (whenever made) refinancing an agreement under which the debtor is provided with credit for any of the said purposes,

being, in either case, an agreement relating to the land referred to in the said head (iii) and secured by a land mortgage on that land; or

(ii)where a debtor-creditor agreement to finance the alteration, enlarging, repair or improvement of a dwelling, secured by a land mortgage on that dwelling, is made as a result of any such services as are described in section 4(3)(dd) of the Housing Associations Act 1985(5) which are certified as having been provided by-

(a)a local authority;

(b)a housing association within the meaning of section 1 of the Housing Associations Act 1985 or Article 114 of the Housing (Northern Ireland) Order 1981(6);

(c)a body established by such a housing association for the purpose of providing such services as are described in the said section 4(3)(dd);

(d)a charity;

(e)the National Home Improvement Council; or

(f)the Northern Ireland Housing Executive.

(4) Where the creditor is a body specified in Part II of Schedule 1 to this Order, paragraph (1) above applies only to an agreement of a description specified in that Part in relation to that body and made pursuant to an enactment or for a purpose so specified.

(5) Where the creditor is a body specified in Part III of Schedule 1 to this Order, paragraph (1) above applies only to an agreement of a description falling within Article 2(2)(a) to (c) above, being an agreement advancing money on the security of a dwelling-house.

Exemption of certain consumer credit agreements by reference to the number of payments to be made by the debtor

3.-(1) The Act shall not regulate a consumer credit agreement which is an agreement of one of the following descriptions, that is to say-

(a)a debtor-creditor-supplier agreement being either-

(i)an agreement for fixed-sum credit under which the total number of payments to be made by the debtor does not exceed four, and those payments are required to be made within a period not exceeding 12 months beginning with the date of the agreement; or

(ii)an agreement for running-account credit which provides for the making of payments by the debtor in relation to specified periods and requires that the number of payments to be made by the debtor in repayment of the whole amount of the credit provided in each such period shall not exceed one;

not being, in either case, an agreement of a description specified in paragraph (2) below; and in this sub-paragraph, "payment" means a payment comprising an amount in respect of credit with or without any other amount;

(b)a debtor-creditor-supplier agreement financing the purchase of land being an agreement under which the number of payments to be made by the debtor does not exceed four; and in this sub-paragraph, "payment" means a payment comprising or including an amount in respect of credit or the total charge for credit (if any);

(c)a debtor-creditor-supplier agreement for fixed-sum credit to finance a premium under a contract of insurance relating to any land or to anything thereon where-

(i)the creditor is the creditor under an agreement secured by a land mortgage on that land which either is an exempt agreement by virtue of section 16(1) of the Act or of article 2 above, or is a personal credit agreement which would be an exempt agreement by virtue of either of those provisions if the credit provided were not to exceed £15,000;

(ii)the amount of the credit is to be repaid within the period to which the premium relates, not being a period exceeding 12 months; and

(iii)there is no charge forming part of the total charge for credit under the agreement other than interest at a rate not exceeding the rate of interest from time to time payable under the agreement mentioned in head (i) above,

and the number of payments to be made by the debtor does not exceed twelve; and in this sub-paragraph "payment" has the same meaning as it has in paragraph (1)(b) above; and

(d)a debtor-creditor-supplier agreement for fixed-sum credit where-

(i)the creditor is the creditor under an agreement secured by a land mortgage on any land which either is an exempt agreement by virtue of section 16(1) of the Act or of article 2 above, or is a personal credit agreement which would be an exempt agreement by virtue of either of those provisions if the credit provided were not to exceed £15,000;

(ii)the agreement is to finance a premium under a contract of life insurance which provides, in the event of the death before the credit under the agreement referred to in head (i) above has been repaid of the person on whose life the contract is effected, for payment of a sum not exceeding the amount sufficient to defray the sums which, immediately after that credit has been advanced, would be payable to the creditor in respect of that credit and of the total charge for that credit; and

(iii)there is no charge forming part of the total charge for credit under the agreement other than interest at a rate not exceeding the rate of interest from time to time payable under the agreement referred to in head (i) above,

and the number of payments to be made by the debtor does not exceed twelve; and in this sub-paragraph, "payment" has the same meaning as it has in sub-paragraph (1)(b) above.

(2) The descriptions of agreement referred to in sub-paragraph (a) of paragraph (1) above and to which accordingly that sub-paragraph does not apply are-

(a)agreements financing the purchase of land;

(b)agreements which are conditional sale agreements or hire-purchase agreements; and

(c)agreements secured by a pledge (other than a pledge of documents of title or of bearer bonds).

Exemption of certain consumer credit agreements by reference to the rate of the total charge for credit

4.-(1) The Act shall not regulate a consumer credit agreement which is an agreement of one of the following descriptions, that is to say-

(a)subject to paragraphs (2), (3) and (4) below, any debtor-creditor agreement in respect of which the rate of the total charge for credit does not exceed the rate referred to in paragraph (5) below;

(b)subject to paragraph (4) below, a debtor-creditor-supplier agreement for fixed-sum credit where-

(i)the creditor is the creditor under an agreement secured by a land mortgage on any land which either is an exempt agreement by virtue of section 16(1) of the Act or of article 2 above, or is a personal credit agreement which would be an exempt agreement by virtue of either of those provisions if the credit provided were not to exceed £15,000;

(ii)the agreement is to finance a premium under a contract of life insurance which provides, in the event of the death before the credit under the agreement referred to in head (i) above has been repaid of the person on whose life the contract is effected, for payment of a sum not exceeding the amount sufficient to defray the sums which, immediately after that credit has been advanced, would be payable to the creditor in respect of that credit and of the total charge for that credit; and

(iii)there is no charge forming part of the total charge for credit under the agreement other than interest at a rate not exceeding the rate of interest from time to time payable under the agreement referred to in head (i) above,

and in respect of which the rate of the total charge for credit does not exceed the rate referred to in paragraph (5) below;

(c)subject to paragraph (4) below, a debtor-creditor agreement in respect of which the only amount included in the total charge for credit is interest which cannot under the agreement at any time exceed the higher of the following, that is to say-

(i)the sum of one per cent and the highest of any base rates published by the banks named in paragraph (6) below, being the latest rates in operation on the date 28 days before any such time; and

(ii)13 per cent;

and for the purposes of this sub-paragraph, "interest" means interest at a rate determined in accordance with the formula set out in paragraph (1) of regulation 7 of the Consumer Credit (Total Charge for Credit) Regulations 1980(7), and in that formula as applied by this paragraph "period rate of charge" has the meaning assigned to it in paragraph (2) of that regulation.

(2) Subject to paragraph (3) below, sub-paragraph (a) of paragraph (1) above does not apply to agreements which provide for an increase in, or permit the creditor to increase, the rate or amount of any item which-

(a)is included in the total charge for credit; or

(b)would fall to be so included, apart from the operation of regulation 14 of the Consumer Credit (Total Charge for Credit) Regulations 1980,

after the relevant date of the agreement within the meaning of regulation 1(2) of those Regulations.

(3) Sub-paragraph (a) of paragraph (1) above does apply to agreements-

(a)in relation to which the debtor, or any one of two or more debtors where each debtor is a relative of the other debtor or of one of the other debtors, is an employee of the creditor or of an associate of his and which provide for an increase in, or permit the creditor to increase, the rate or amount of any item such as is mentioned in paragraph (2) above on the termination of such employment with the creditor or such associate, as the case may be; or

(b)under which the rate or amount of any such item falls to be ascertained throughout the duration of the agreement by reference to the level of any index or other factor in accordance with any formula specified in the agreement;

and which do not provide for an increase in, or permit the creditor to increase, the rate or amount of any item mentioned in paragraph (2) above in any way other than those permitted by either or both of sub-paragraphs (a) or (b) of this paragraph.

(4) Paragraph (1) above does not apply to agreements under which the total amount to be repaid by the debtor to discharge his indebtedness in respect of the amount of credit provided may vary according to any formula specified in the agreement having effect by reference to movements in the level of any index or to any other factor.

(5) The rate mentioned in sub-paragraphs (a) and (b) of paragraph (1) above is the higher of the following, that is to say-

(a)the sum of one per cent and the highest of any base rates published by the banks named in paragraph (6) below, being the latest rates in operation on the date 28 days before the date on which the agreement is made; and

(b)13 per cent.

(6) The banks referred to in paragraphs (1)(c) and (5)(a) above are-

• Bank of England

• Bank of Scotland

• Barclays Bank PLC

• Clydesdale Bank PLC

• Co-operative Bank Public Limited Company

• Coutts & Co.

• Lloyds Bank PLC

• Midland Bank Public Limited Company

• National Westminster Bank Public Limited Company

• The Royal Bank of Scotland p.l.c.

• TSB England & Wales public limited company.

Exemption of certain consumer credit agreements having a connection with a country outside the United Kingdom

5. The Act shall not regulate a consumer credit agreement made-

(a)in connection with trade in goods or services between the United Kingdom and a country outside the United Kingdom or within a country or between countries outside the United Kingdom, being an agreement under which credit is provided to the debtor in the course of a business carried on by him; or

(b)between a creditor listed in Part IV of Schedule 1 to this Order and a debtor who is-

(i)a member of any of the armed forces of the United States of America;

(ii)an employee not habitually resident in the United Kingdom of any of those forces; or

(iii)any such member's or employee's wife or husband or any other person (whether or not a child of his) whom he wholly or partly maintains and treats as a child of the family.

Exemption of certain consumer hire agreements

6. The Act shall not regulate a consumer hire agreement where the owner is a body corporate authorised by or under any enactment to supply electricity or water and the subject of the agreement is a meter or metering equipment used or to be used in connection with the supply of electricity or water, as the case may be.

Articles 2 and 5

SCHEDULE 1BODIES WHOSE AGREEMENTS OF THE SPECIFIED DESCRIPTION ARE EXEMPT AGREEMENTS

PART Iinsurance companies

Abbey Life Assurance Company Limited

Abbey Life Pension and Annuities Limited

Albany Life Assurance Company Limited

Allchurches Life Assurance Limited

Alliance Assurance Company Limited

Allied Dunbar Assurance PLC

Ambassador Life Assurance Company Limited

American Life Insurance Company

Ansvar Insurance Company Limited

Atlas Assurance Company Limited

Australian Mutual Provident Society

Avon Insurance PLC

Black Horse Life Assurance Company Limited

Bradford Insurance Company Limited

Britannic Assurance Public Limited Company

The British & European Reinsurance Company Limited

British Equitable Assurance Company Limited

The British Life Office Limited

The British Oak Insurance Company Limited

British Reserve Insurance Company Limited

Caledonian Insurance Company

The Cambrian Insurance Company Limited

The Canada Life Assurance Company

Cannon Assurance Limited

Car and General Insurance Corporation Limited

Citibank Assurance Company Limited

City of Westminster Assurance Company Limited

City of Westminster Assurance Society Limited

Clerical, Medical and General Life Assurance Society

The Colonial Mutual Life Assurance Society Limited

Commercial Union Assurance Company plc

Commercial Union Pensions Management Limited

Commercial Union Life Assurance Company Limited

Confederation Life Insurance Company

The Contingency Insurance Company Limited

Co-operative Insurance Society Limited

Cornhill Insurance Public Limited Company

Criterion Insurance Company Limited

Crown Life Assurance Company Limited

Crown Life Insurance Company Limited

Crown Life Pensions Limited

Crusader Insurance PLC

The Dominion Insurance Company Limited

Eagle Star Insurance Company Limited

Ecclesiastical Insurance Office plc

Economic Insurance Company Limited

English & American Insurance Company Limited

The Equitable Life Assurance Society

Equity & Law Life Assurance Society plc

Essex and Suffolk Insurance Company Limited

Excess Insurance Company Limited

Federation Mutual Insurance Limited

Fine Art and General Insurance Company Limited

Friends' Provident Life Office

FS Assurance Limited

General Accident Fire and Life Assurance Corporation Public Limited Company

General Accident Life Assurance Limited

General Accident Linked Life Assurance Limited

General Portfolio Life Insurance Public Limited Company

Gisborne Life Assurance Company Limited

Gresham Life Assurance Society Limited

Guardian Assurance plc

Guardian Royal Exchange Assurance plc

Hill Samuel Life Assurance Limited

The Ideal Insurance Company Limited

The Imperial Life Assurance Company of Canada

Irish Life Assurance plc

The Iron Trades Employers Insurance Association Limited

Langham Life Assurance Company Limited

Legal and General Assurance Society Limited

The Licenses and General Insurance Company Limited

The Life Association of Scotland Limited

London Aberdeen & Northern Mutual Assurance Society Limited

London and Manchester Assurance Company Limited

London and Manchester (Pensions) Limited

London & Scottish Assurance Corporation Limited

The London Assurance

The London Life Association Limited

The Manufacturers Life Insurance Company

Marine and General Mutual Life Assurance Society

Maritime Insurance Company Limited

Medical Sickness Annuity & Life Assurance Society Limited

The Mercantile and General Reinsurance Company plc

Midland Assurance Limited

The Motor Union Insurance Company Limited

Minster Insurance Company Limited

Municipal Life Assurance Limited

Municipal Mutual Insurance Limited

NALGO Insurance Association Limited

National Employers' Life Assurance Company Limited

National Employers' Mutual General Insurance Association Limited

The National Farmers Union Mutual Insurance Society Limited

National House-Building Council

The National Insurance and Guarantee Corporation PLC

The National Mutual Life Association of Australasia Limited

National Mutual Life Assurance Society

National Provident Institution

National Vulcan Engineering Insurance Group Limited

N.E.L. Pensions Limited

The New Zealand Insurance plc

North British & Mercantile Insurance Company Limited

The Northern Assurance Company Limited

Norwich Union Asset Management Limited

Norwich Union Fire Insurance Society Limited

Norwich Union Insurance Group (Pensions Management) Limited

Norwich Union Life Insurance Society

NRG London Reinsurance Company Limited

Oaklife Assurance Limited

The Ocean Accident & Guarantee Corporation Limited

The Orion Insurance Company P.L.C.

Pearl Assurance Public Limited Company

Pensions Management (SWF) Limited

Permanent Insurance Company Limited

Phoenix Assurance Public Limited Company

Pioneer Mutual Insurance Company Limited

Property Growth Pensions & Annuities Limited

Provident Life Association Limited

Provident Mutual Life Assurance Association

Provincial Insurance Public Limited Company

Provincial Life Assurance Company Limited

The Prudential Assurance Company Limited

Railway Passengers Assurance Company

Refuge Assurance, public limited company

Regency Life Assurance Company Limited

The Reliance Fire and Accident Insurance Corporation Limited

The Reliance Marine Insurance Company Limited

Reliance Mutual Insurance Society Limited

Royal Exchange Assurance

Royal Insurance Public Limited Company

Royal Insurance (Int.) Limited

Royal Insurance (U.K.) Limited

Royal Life Insurance Limited

Royal Life (Unit Linked Assurances) Limited

Royal Life (Unit Linked Pension Funds) Limited

The Royal London Mutual Insurance Society Limited

The Royal National Pension Fund for Nurses

Royal Reinsurance Company Limited

Schroder Life Assurance Limited

Scottish Amicable Life Assurance Society

Scottish Equitable Life Assurance Society

Scottish General Insurance Company Limited

Scottish Insurance Corporation Limited

The Scottish Life Assurance Company

The Scottish Mutual Assurance Society

The Scottish Provident Institution

Scottish Union and National Insurance Company

Scottish Widows' Fund and Life Assurance Society

Sentinel Life plc

Skandia Life Assurance Company Limited

Standard Life Assurance Company

Standard Life Pension Funds Limited

The State Assurance Company Limited

Suffolk Life Annuities Limited

Sun Alliance and London Assurance Company Limited

Sun Insurance Office Limited

Sun Life Assurance Company of Canada

Sun Life Assurance Society plc

Target Life Assurance Company Limited

Teachers Assurance Company Limited

Trident Investors Life Assurance Company Limited

Trident Life Assurance Company Limited

Trinity Insurance Company Limited

United British Insurance Company Limited

United Friendly Insurance plc

United Kingdom Temperance and General Provident Institution

United Standard Insurance Company Limited

The University Life Assurance Society

The Victory Reinsurance Company Limited

Wesleyan and General Assurance Society

The Western Australian Insurance Company Limited

The White Cross Insurance Company Limited

World-Wide Reassurance Company Limited

The Yorkshire Insurance Company Limited

Zurich Life Assurance Company Limited

friendly societies

The Ancient Order of Foresters Friendly Society

Anglo-Saxons Friendly Society

Blackburn Philanthropic Mutual Assurance Society

British Benefit Society

British Order of Ancient Free Gardeners' Friendly Society

British United Order of Oddfellows Friendly Society

Brunel Assurance Society

Cirencester Benefit Society

City of Glasgow Friendly Society

Civil Servants' Annuities Assurance Society

Colmore Friendly Society

Coventry Assurance Society

Dentists' Provident Society

Devon and Exeter Men's Equitable Benefit Society

Devon and Exeter Women's Equitable Benefit Society

Grand United Order of Oddfellows Friendly Society

The Hampshire and General Friendly Society

Harvest Friendly Society

Hazel Grove Provident Burial Society

Hearts of Oak Benefit Society

Hoddesdon Provident and Annuity Society

The Ideal Benefit Society

Independent Order of Oddfellows Kingston Unity Friendly Society

The Independent Order of Odd Fellows Manchester Unity Friendly Society

The Independent Order of Rechabites, Salford Unity, Friendly Society

Leeds District of the Ancient Order of Foresters Investment Association

Leek Assurance Collecting Society

The Leicester District Foresters' Investment Society

Liverpool Victoria Friendly Society

The Loyal Order of Ancient Shepherds (Ashton Unity) Friendly Society

Loyal Past and Present Officers' Lodge, Norwich District, Independent Order of Oddfellows M.U. Friendly Society

The Manchester and Districts of the Ancient Order of Foresters Investment Association

National Deposit Friendly Society

National Equalized Druids Friendly Society

National United Order of Free Gardeners Friendly Society

New Tab Friendly Society

Northumberland and Durham Miners' Permanent Relief Fund Friendly Society

Nottingham Oddfellows Friendly Society

Nottingham Permanent Mutual Money Society

The Order of Druids Friendly Society

The Order of the Sons of Temperance Friendly Society

Original Holloway Society

Pioneer Benefit Society

Preston Catholic Collecting Society

Preston Shelley Assurance Collecting Society

Provident Reliance Friendly Society

Rational and County Assurance Society

Royal Liver Friendly Society

Scottish Friendly Assurance Society

The Scottish Legal Life Assurance Society

Sons of Scotland Temperance Friendly Society

Stepney District Distressed Members' Pension Benevolent Fund

Suffolk Friendly Society

The Sussex Widow and Orphans Society

Teachers Provident Society

Time Assurance Society

Tunbridge Wells Equitable Friendly Society

Tunstall and District Assurance Collecting Society

United Ancient Order of Druids Friendly Society

United Kingdom Civil Service Benefit Society

United Patriots' National Benefit Society

West Surrey General Benefit Society

Widow and Orphan Fund of the Woolwich District of the Independent Order of Odd Fellows Manchester Unity Friendly Society

Widow and Orphans' Fund, Stepney District of the Independent Order of Odd Fellows, Manchester Unity Friendly Society

Widows' and Orphans' Society, Ware District of Odd Fellows

Widow, Widowers and Orphans' Fund of the Godalming District of the Independent Order of Oddfellows, Manchester Unity, Friendly Society

Wiltshire Holloway Benefit Society

charities

The Central Board of Finance of the Church of England

Church Commissioners

The Church of England Pensions Board

The Church of Scotland

The Church of Scotland General Trustees

Church of Scotland Trust

Timber Trades Benevolent Society

The Winchester Diocesan Board of Finance

York Diocesan Board of Finance Limited

PART II

PART IIIbodies corporate named or specifically referred to in an order made under section 156(4), 444(1) or 447(2)(a) of the housing act 1985

Abbey Life Executive Mortgages Limited

Abbey Life Funding Limited

Abbey Life Home Loans Limited

Abbey Life Home Services Limited

Abbey Life Mortgage Finance Limited

Abbey Life Mortgage Loans Limited

Abbey Life Mortgage Securities Limited

Abbey Life Residential Loans Limited

CIS Mortgage Maker Limited

General Portfolio Finance Limited

Lombard Home Loans Limited

London and Manchester (Mortgages) (No. 1) Limited

London and Manchester (Mortgages) (No. 2) Limited

The National Home Loans Corporation Limited

National Mutual Home Loans plc

National Westminster Home Loans Limited

Royal London Homebuy Limited

PART IVcreditors whose agreements are exempt under paragraph (b) of article 5, subject to the provisions of that paragraph

A Federal Credit Union (as defined in the Federal Credit Union Act(19) of the United States of America of 26th June 1934)

American Book Distributors Inc.

American Express Bank Limited

Article 1(3)

SCHEDULE 2

Explanatory Note

(This note is not part of the Order)

This Order consolidates the Consumer Credit (Exempt Agreements) (No. 2) Order 1985 as amended, which provides that certain consumer credit and consumer hire agreements shall be exempt agreements for the purposes of the Consumer Credit Act 1974.

The Order provides that the following consumer credit agreements are exempt agreements:-

(a)certain agreements secured on land where the creditor is a building society, bank or body specified in Schedule 1 to the Order (Article 2);

(b)certain agreements where the number of payments to be made by the debtor does not exceed the number specified (Article 3);

(c)certain agreements where the rate of the total charge for credit is a rate which does not exceed the highest of the specified banks' base rate plus one per cent, or 13 per cent, whichever is the higher (Article 4);

(d)certain agreements having a connection with a country outside the United Kingdom or made between a U.S. Federal Credit Union and defined persons having a connection with the U.S. armed forces (Article 5).

The Order also provides that consumer hire agreements are exempt agreements where the owner is a body corporate authorised by statute to supply electricity or water and the subject of the agreement is a meter or metering equipment used in connection with that supply (Article 6).

Article 3(1)(a)(i) amends the previous Order to exempt agreements which are repaid by a maximum of 4 payments in a period not exceeding 12 months from the date of the agreement, and brings the provision into line with Council Directive 87/102/EEC (O.J. L42, 12.2.1987, p. 42).

Eleven further bodies are included in Schedule 1; one is deleted, and the names of two are amended.

Schedule 2 lists the Orders revoked by this Order.

The text of the Federal Credit Union Act referred to in Part IV of Schedule 1 is available for inspection by prior arrangement at the Department of Trade and Industry (Overseas Trade Division 2), 1 Victoria Street, London SW1H 0ET.