Hi - I'm not sute how this topic got ressurected but anyway 
I'm quite happy to copy my findings - the following is a 
copy of a memo I sent to our Head of Financial Accounts - 
he was responsible for initiating the enquiry.

"Peter - you asked me to look at the implications of
offering undergraduate fulltime home students the facility 
of paying their tuition fees by direct debit with specific 
reference to the Consumer Credit Act.

I spoke to a Trevor Single at the Office of Fair Trading 
and he explained that we can offer the students 4 
instalments and not be subject to the Consumer Credit Act 
regulations. Any more than 4 instalments and we have to 
conform to the regulations. I therefore sent for, and 
received, the following OFT booklets: - 

Consumer Credit Act 1974: Cancellable agreements
Consumer Credit Act 1974: Non-Cancellable agreements
Consumer Credit Act 1974: Matters arising during the 
lifetime of an agreement 

In summary the Act lays down a comprehensive legal 
framework to regulate consumer credit and consumer hire and 
covers most forms of lending, up to £25,000. Businesses 
must be licensed by the Office of Fair Trading. 

The main aim of the legislation is to ensure that borrowers 
are given full and accurate information, to enable them to 
choose the best agreement for their purposes, and to inform 
them of the legal rights that the Act gives them. 

While there are some criminal offences in the Act, most of 
its provisions are matters of civil law, and breaches often 
make the agreement unenforceable against the debtor. The 
licensing system does, however, allow the Director-General 
to consider persistent breaches of civil provisions in 
assessing whether a company should be allowed to retain its 
license. 

Among the many sets of regulations under the Act, are those 
detailing how the Annual Percentage Rate of charge for 
credit (the APR) is calculated, and the rebate of interest 
to which a debtor is entitled, if he pays a loan early. The 
Trading Standards Service uses computer programs to perform 
these often complex calculations. 

As you can see from the above, the spirit of the Act is
aimed at those businesses providing credit to customers and 
charging them interest for this facility - which is 
obviously not our intention. However, the Office of Fair 
Trading (OFT) fail to make this distinction and have 
bundled organisations like ours in with commercial 
businesses. 

In an attempt to see what other Universities were doing I 
sent an e-mail to the University's mailbase for finance 
officers. This is a summary of a couple of the more 
relevant responses: - 

Bath - registered with local authority under the Consumer 
Credit Act - they were advised that failing to register 
would limit their ability to strike flexible payment 
agreements with debtors i.e. £10 per week etc. - 
'registration was simple and well worth the peace of mind' 

Salford - 'The fact that institutions have failed to comply 
with the Act by offering more than 4 instalments is not 
necessarily a problem.  It would be if you wished to take a 
student to court for non-payment of an instalment but that 
is probably unlikely.  Any student who felt particularly 
antagonistic could challenge the arrangement but, given 
that the arrangement would have been made to make life 
easier for the student I suspect it would not be taken 
seriously by a court, although clearly you would be 
reprimanded for failureto comply with the Act'. 

My feeling at the end of this exercise is that the evidence 
received is inconclusive. It  would appear that if we do 
offer 5 or more instalments then technically we must 
register with the OFT for a licence. The registration 
process itself is not onerous but complying with all the 
other requirements of the Act, do appear onerous i.e. 
ensuring that borrowers are given full and accurate 
information, to enable them to choose the best agreement 
for their purposes, and to inform them of the legal rights 
that the Act gives them - adopting the prescribed procedure 
and using appropriate forms and wording etc. 

There was a mixed reaction with regard to how other
University's have acted. Some have registered, others 
haven't bothered. 

It is difficult to draw a sensible conclusion from this 
information and provide you with some useful advice. My 
feeling is that if we do offer 5 or more instalments, no 
one is going to complain and therefore detection of any 
non-compliance would be difficult.  There is no intention 
to charge interest and as such this would not become a 
contentious issue. 

However, the section that explains that any breaches often 
make the agreement unenforceable against the debtor, is 
worrying because the Consumer Credit Act is highly 
regulated and if our administration is not scrupulous in 
adhering to those regulations, then students may be able to 
avoid debt payments on a technicality. 

Not sure how much this helps."

Ray Lockyer

On Fri, 9 Feb 2001 17:03:25 -0800 Godwin To 
<[log in to unmask]> wrote:

> Raymond.
> 
> 
> Did you get anywhere on this?
> 
> Leeds got some legal advice from their lawyer who 
confirmed that 4 and > above needs a licence. Maybe some 
HEIs failed to rekon this legal > requirement!!
> > godwin To
> goldsmiths College > 
> > 
> --On 18 January 2000 09:13 -0500 "Lockyer, Raymond" > 
<[log in to unmask]> wrote: > 
> > Can anybody help - UWE is considering offering its 
students > > the facility of paying their tuition fees by 
direct debit. > > However, having contacted the DTI and OFT 
it would appear > > that if we offer 4 or more instalments 
then we will be > > caught by the Consumer Credit Act and 
have to get a licence > > and have each student, paying by 
DD, complete a credit > > agreement - plus we would have to 
comply with all the other > > regulations within the act.
> > > > However, speaking to colleagues in other HEIs it 
would > > appear that, although they are offering payment
> > arrangements involving 4 or more instalments, they are 
not > > taking up the credit licence.
> > > > Am I missing something - are we exempt - we will 
not be > > charging interest - is this relevant? Has anyone 
had a > > legal opinion? Do we have to comply with the 
Consumer > > Credit Act if we offer DDs with 4 or more 
instalments? > >
> > Any help would be gratefully received. > >
> > Thanks > >
> > Ray Lockyer > >
> > ---------------------------------------- > > Lockyer, 
Raymond > > Email: [log in to unmask]
> > "University of the West of England" > >

----------------------------------------
Lockyer, Raymond Email: [log in to unmask]
"University of the West of England"