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SERVICES

Credit Unions

The Consumer Credit Act 1974, section 93A, states: ‘Summary diligence shall not be competent in Scotland to enforce payment of a debt due under a regulated agreement or under any security related thereto.’ This means that bank loans, for example, cannot be recovered by summary diligence.

Credit unions, however, as a matter of public policy to encourage use of them, have been exempted from the Consumer Credit Act since the Consumer Credit (Exempt Agreements) Order 1989.

Credit unions’ lending is exempt and not a regulated consumer credit activity, so long as the credit union maximum interest rate cap applies. This means that a credit union’s loan agreement can be used to recover debt by warrant – thus without the delay and expense to the parties of a court action – if the loan agreement is capable of being registered for preservation and execution.