Farm Partnerships – Current awareness

Consumer credit is generally assumed to be only relevant to arrangements with, well: consumers i.e. individuals who are acting for purposes outside of their trade business or profession. However, this is not true. It can also apply to sole traders and partnerships.

This means that sometimes when lending money or renting or lending equipment to a partnership, the arrangement may, inadvertently, trigger the consumer credit regime. For instance, if there is a loan or rental of agricultural machinery to a farm partnership of three or fewer partners this may be a regulated consumer hire agreement unless an exemption applies.

The regime only has potential to apply to partnerships if they comprise three or fewer partners.

The consumer credit regime imposes stringent requirements on lenders and lessors. These requirements include obtaining authorisation from the Financial Conduct Authority before entering into regulated agreements by way of business and various obligations related to the form of the agreement, notice provisions, termination provisions, the provision of copy documents and the use of electronic transmissions of documents.

Failure to comply may result in the agreement being unenforceable, a prison sentence and/or an unlimited fine.

If you are concerned your proposed agreement may be subject to the consumer credit regime or you would like more information on how the regime could relate to your business, please contact Victoria Spellman in our Business Services Team on 01473 611 211 or [email protected]