Consumer Credit Act 1974 - your consumer rights

This gives people who enter into credit agreements protection in the following ways. As long as the credit was for between £100 and £30,000.

a) If you have signed a credit agreement and you want to cancel it you can do so within a certain period of time as long as you did not make the deal over the phone and you did not sign the agreement at the seller's shop, office or workplace, (this can include an exhibition stand). Therefore if you signed the agreement in your own home you will be able to cancel after you have signed the agreement.

The seller is supposed to send you a written notice telling you how you can cancel and how long you have to cancel. You must cancel by writing to the address given on the notice. You will be entitled to the return of any deposit paid or goods traded in part-exchange if you cancel the agreement in time.

b) A creditor, (the one who provides credit) cannot demand early payment, try to get the goods back or end the agreement without first serving a written notice on you giving you 7 days notice of their intention to take such action, (Default Notice).

The notice has to be written in a particular way. If you receive a notice you should get legal advice to check that it is a proper notice.

The notice should contain the following:

  • The notice should say how much should be paid to bring payments up to date.
  • When payments should be made.
  • What will happen if payments are not made.
  • How the agreement can be brought to an end and that if payments are made the agreement will not be brought to an end.

c) If you have paid a third of the total price of the goods under a HP agreement then the creditor cannot take the goods back without first getting a court order. Even if they apply for a court order you can ask the court to suspend the "Return Order" and accept your offer to pay the outstanding amounts by instalments.

If you agree that they can have the goods back they will not need a court order. If you do not agree and the creditor has not got a court order, but takes the goods back anyway you can sue the creditor and claim back all the money you have paid under the agreement. The creditor cannot enter your premises to repossess the goods without your permission or without a court order.

d) If a credit agreement is unfair then you can apply to the court and ask them to look at the agreement and put in place a new agreement or alter the old one. However, the court will only do this if it can be shown that the agreement is "extortionate".

To decide this the court will look at such things as your age, experience, "business knowledge", state of health and the amount of financial pressure put on you when you entered the deal.

The court also considers the creditor's position, such as the level of risk accepted by the creditor, including the value of any security, the creditor's relationship to you, whether the creditor deliberately inflated the cash price to make the credit charges seem reasonable.

The court can also consider any other relevant matters.

e) A seller can be the person who grants you credit or they may arrange for you to get credit from a 3rd party or that 3rd party may arrange to supply the goods to you. Your protection is that you can choose who to sue.

You can either sue the seller or the provider of the credit or both. This helps you because if the seller goes bust you can try and get your money from the credit provider instead.

f) You must be given certain written information about the credit agreement which must include;

i) The total charge for credit.

ii) The Annual Percentage Rate (APR).

iii) The cash price for the goods.

Not all credit agreements have the above protection.
For example, credit agreements involving Limited Companies, Public Companies, Building Societies, Local Authorities, Insurance Companies, Friendly Societies, Charities, Housing and Land Companies or Institutions do not have the same protection.

If you are in doubt as to whether the credit agreement you have entered into has protection under the Consumer Credit Act 1974 you should seek legal advice.

You are entitled to a copy of the Agreement to keep. If a credit agreement is broken the court can decide to either;

i) Make a time order giving the borrower extra time to pay.

ii) Make an order that the borrower must return the goods to the creditor.

iii) Make a transfer order allowing the borrower to keep part of the goods, but return the other part.

Credit Cards and Store Cards

Consumer Law