Protection of the Small Business as a Credit Consumer: Paying Lip Service to Protection of the Vulnerable or Providing a Real Service to the Struggling Entrepreneur?

Abstract

The UK consumer credit legislation is designed to provide protection for consumers, including those borrowing for business purposes in certain circumstances. The amendments to the Consumer Credit Act 1974, brought about by the Consumer Credit Act 2006, had as an aim the protection of vulnerable consumers, including the small business borrower. However, the inclusion of those acting for business purposes appears to stand alone in relation to other consumer protection legislation, both in the UK and at a European level. The question is whether this can be theoretically justified; the recent reform in Australia, together with the European law's approach to the ‘business consumer’, gives some means of comparison, and allows some measurement of validity of UK legislative protection. In addition, further amendments to the UK regulation have now been effected, in line with the requirements of the Consumer Credit Directive 2008. The result is a complicated set of rules and it is unclear to what extent the law, as it now stands, in terms of the business borrower, really assists those it strives to protect. Further reform may be necessary.