Consumer Credit Act Of 2006 Help Create The Recession?

Consumer Credit Act of 2006 is an act of Parliament in the United Kingdom.  The Consumer Credit Act is an update of the Consumer Credit Act of 1974.  It provides protections for credit consumers and allows them to bring suit against both providers of goods and credit.  It also better defines the requirements that must be expressed in every loan agreement entered between a creditor and credit user.

Factor that Contributed to the Recession

There were many factors that led to the recession. These include the improper and irresponsible use of credit by consumers. Banks and other lenders that engaged in excessive risk taking activities such as credit swap defaults and other instruments also contributed to the recession. Governments who were lax in enforcing existing regulations design to protect consumers are also culpable.

Determining the Exact Cause of the Recession

It is difficult to say with certainty which of these factors led directly or indirectly to the worldwide recession and financial collapse of the banking and consumer credit industry. It will take years for analysts and economists to determine with certainty the contributors and make a determination if legislation such as the Consumer Credit Act of 2006 was a key factor in the recession.