Credit Contracts and Consumer Finance Act 2003: Proposed Regulations

November 2003

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3. Allowable Assumptions

The Bill requires creditors to disclose certain information to debtors at specified times. The information required to be disclosed at the commencement of a credit contract is listed in Schedule 1.

Some of the information is required to be disclosed by creditors if ascertainable. Section 33 of the Act provides that information is treated as ascertainable if it is ascertainable on the basis of the prescribed assumptions.

The other function of assumptions is to provide certainty to creditors by clarifying when assumptions may be made. Otherwise, creditors may be left in doubt when information is uncertain.

At the time of its introduction the allowable assumptions were contained in a schedule to the Bill. It has been decided to move them to regulations. The reason for this is that the assumptions can be amended or new ones added in a much more flexible manner.

The allowable assumptions proposed are detailed below. They are identical to those formerly listed in the Third Schedule of the Consumer Credit Bill.

Interest charges

In disclosing the information referred to in paragraphs (k) and (l) of Schedule 1, the creditor may assume-

(a) that, in the case of an annual interest rate, the rate disclosed will not vary over the term of the credit contract or any shorter period for which it applies; and

(b) in the case of a variable interest rate, that the variable interest rate applicable over the period for which it applies is the same as the equivalent variable interest rate as at the date that the disclosure statement is prepared;

and

(c) that the debtor will make payments required by the credit contract at the times required by the credit contract.

Payments

In disclosing the information referred to in paragraph (o) of Schedule 1, the creditor may assume that the debtor will make payments required by the credit contract at the times required by the credit contract.

Business day

Disclosure relating to payments, charges, or fees may be made on the assumption that every day is a business day.

Charges and fees

Disclosures relating to charges (other than interest charges) and fees may be made on the following assumptions:

(a) that there will be no change in the charges and fees as disclosed and no new fees or charges imposed; and

(b) that the charges and fees will be paid by the debtor at the times required by the credit contract.

Date of advance being made

If disclosure involves an advance being made under the credit contract on a certain date and that date is not ascertainable at the time the disclosure statement is prepared, disclosure may be made on the assumption that the advance is made on a date specified in the disclosure statement as being the date on which the advance is most likely to be made.

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