Extortionate credit in the UK

Authors: Professor Elaine Kempson, Claire Whyley
Funded by: Department of Trade and Industry
Published by: Department of Trade and Industry
Publication date: June 1999

The Consumer Credit Act 1974 states that a credit bargain is extortionate if it requires the debtor or a relative to make payments which are grossly exorbitant; or if it otherwise contravenes the ordinary principles of fair trading. Comprising a review of data and literature on extortionate credit, supplemented by interviews with key stakeholders in this area, this research provided information relating to:

• forms of extortionate credit;
• its legislative and regulatory framework;
• the then nature of the market for this type of credit;
• possible alternatives and the reasons they were not utilised;
• the subject and outcomes of court cases;
• the adequacy of the Consumer Credit Act to protect consumers against extortionate credit, and
• interest rate ceilings in other countries and their effectiveness.

Possible regulatory and legislative changes were recommended, along with other measures to address the problem of extortionate credit.

Extortionate credit in the UK: A report to the DTI (PDF, 194kB)