Consumer Credit Act
The Consumer Credit Act is a huge piece of legislation. Understanding it is not an easy task, made harder still by all the amendments and reforms which have taken place in recent years. Nevertheless, these changes have been designed to benefit consumers by providing further clarification and additional rights. In this section, we will look at the basics of the Act, types of credit agreements, consumer rights, creditors’ obligations and what to expect in situations of default or arrears.
The first step is to ask yourself a few basic questions:
- What type of credit agreement do you have?
- How was the contract made?
1. Types of credit agreements
The Consumer Credit Act will regulate the majority of credit agreements. There are exceptions, such as mortgages, loans secured on property, short term agreements and charge cards. In addition to credit and store cards, personal loans and overdrafts, a credit agreement will govern the following types of contracts:
- Finance options for the purchase of goods and services (credit sale agreements)
- Hire purchase agreements
- Hire agreements
- Conditional sale agreements
Credit sale agreements
This is the most common type of financing option when purchasing high-priced goods and services such as cars, electronic goods, or home improvements. It is basically a loan to over the purchase price of the item, with the loan paid back the loan in equal monthly instalments over several months or even years. The consumer (the ‘debtor’) may pay a large initial deposit (such as with the purchase of a car), or not pay anything at all for the first year or two. Either way, you will legally own the goods as soon as the credit sale agreement is made, even if you have paid nothing at all. Where ‘interest-free credit’ is advertised, you will have a specified time to pay back the outstanding balance, otherwise the due balance will automatically roll into a longer term credit agreement where interest will be payable.
Hire purchase (HP) agreements
Under this arrangement, you will pay monthly instalments to hire the item, but will not legally own it until the final instalment has been paid. This type of agreement may also give you the option to buy with a lump sum at the end of the period, such as with ‘balloon payments’ on car finance.
Hire agreements
This is simply the hire of goods at a (usually low) monthly fee. You will never own the item, but must keep up the payments for the term of the contract to avoid having the goods repossessed and being sued for the outstanding debt.
Conditional sale agreements
This is very similar to the HP agreement described above. Even though you will be in possession of the goods in question, you will only own them on the condition that you have paid all the instalments. However, the agreement may also specify other conditions to be met before ownership can take place.
2. Way in which the contract was made
Basically, this refers to where you signed the contract. Was it in the presence of the creditor at their place of business? Was it in the presence of the creditor but away from their place of business? Was it at home? Or were you with a broker – either in their office or at home? This will have important implications for your cooling off rights, the information which must be supplied to you and the way in which it must be presented. We will look at cooling off and required information in the following two sections.
- CCA: Required Information
- CCA: Your Rights
- Ending a Credit Agreement
- Defaults, Arrears and Debt Collection Agencies
- Debt Management Companies
- Accessing your Credit File
Related posts:
Hi
I purchased a Toshiba Computer from Currys on 3rd April 2008. The computer has developed a problem of indiscriminate crashing and unless the work is backed up after each word is typed, it is lost.
I have been back to Currys who say that I am forced to accept a repair, however as the fault is inherent from the beginning I believe that they should either replace or refund the value of the computer £399.
As the guarantee period is coming to an end and I have lost faith in the Techguys I asked for a replacement or a refund this was refused. Could you confirm my position. I also understand that the credit card company could also be involved under the Consumer Credit Act 1974 section 75 is this correct?
Alan, Currys are within their rights to insist on a repair and are not obliged in the first instance to offer you a replacement or a refund. See our section on Consumer Remedies, Sale of Goods:
http://whatconsumer.co.uk/and-if-my-statutory-rights-are-breached/
The guarantee period is irrelevant. You cannot invoke S.75 if Currys fulfil their obligations under the law in this way.
Dear Sirs,
I took out a hire purchase agreement for a car. The salesman came to my house and signed the HP agreement. He also took away other details like insurance etc. and a few hours later I collected the car from the dealer. I thought I had to sign the agreement on their premises or if away from their premises and use a different document giving a 5 day cooling off period. If that is so is the agreement unenforcebale?
Yours sincerely,
James
James, You have a cooling off period only for agreements which were discussed face to face, and then signed away from the lender’s normal business premises. In practice very few agreements are concluded in this way, so you must be sure. If no informaiton regarding your cooling off period was presented to you at any time, the agreement may be legally unenforceable.
Hello
If I use my credit card to pay for an airline ticket with say, Lufthansa, but I book through a website other than Lufthansa, say Opodo, am I covered by s.75 CCA 1974 (as amended in 2006) i.e. if the flight is cancelled or the airline goes bust can i claim my money back from the credit card provider?
Ian, you will not be protected by ATOL, but you will still have the protection offered by S.75 – as long as the total transaction comes to over £100. If the flight is cancelled, you also have other statutory remedies, see:
http://whatconsumer.co.uk/the-package-holiday-regulations/
(bottom section)
Hi,
I note the comments above in response to Ian’s query.
What about if I booked a package holiday with a travel agent, amounting to £4,000+ of which the intial deposit of £400 was paid by credit card but the remaining balance paid by debit card?
Would the full £4,000+ be protected by S75 of the CCA 1974 if the travel agent ceased to trade?
Chann1e, yes, you are covered for the value of the goods you have bought, provided that value is more than £100, even if you haven’t paid for the whole lot on credit card.
Please can you advise me. My partner Nicki is an agent of Littlewoods catalogue agent of many years, A customer placed an order for goods to the value of £1800 almost a year ago of which they have failed to pay for . The customer signed a credit agreement but Littlewoods tell me that this is ineffective as Littlewoods received the agreement after the goods were sent – the same agreement that they sent out after the goods. The customer no longer lives at the address given and according to Littlewoods can not be traced at that address or any other there after. Littlewoods have spoken to the customer and have been told that the customer is presently living in a camper van.Littlewoods tell Nicki that the onus is on the agent to pay the monies and have taken the matter to a collection agency who is threatening court action. Littlewoods refuse to give any help with this matter and totally ruined her good standing with the credit industry.
Chris, I can’t see how Nicki would be liable for this as she is not party to the credit agreement is she? Clearly Littlewoods have tried to recover the money themselves and failed, but I’m not sure they have a legal debt against Nicki. Ask Littlewoods for proof of this and put the matter in legal dispute – debt collection agencies cannot pursue you if this is the case. Regarding the credit agreement, it does not have to be sent out before despatch of the goods, as long as it is received by the consumer within 7 days after the contract was completed, this is fine. To find out when the 7 days runs from, you need to check the point at which contract was made – was it when the order was submitted online? Or when the goods were despatched? With mail order it is usually the latter. Also, I’m not sure her credit rating would have been affected. You are within your rights to see this at any time for the payment of a small fee.
Hi Catriona
The timeline as follows.
The item was ordered on line from Littlewoods last april raising no question of whether this was for a customer or not. When the customer failed to pay the second payment due to lack of work it was brought to attention of littlewoods who then sent the customer a credit agreement to sign, they did this and it was returned. Littlewoods are now saying that the agreement is invalid as it was signed to late and have now placed the onus of the debt on Nicki as she should had issued a credit agreement and also done a credit check. Personally i have never known any catologue agent to have to do this.
Regards
Chris
Chris, no me neither. I’m not sure of the relationship and contractual status between the agent and the retailer. If it makes no mention of this liability in the contract of service between them I don’t know how they can enforce the debt. Request that Littlewoods provide evidence of this liability – a debt cannot be legally enforceable unless there is proof of this either in the form of a signed credit agreement or a contract clause.
I entered into a Hire-Purchase agreement 5 weeks ago for a new TV. The TV still hasn’t been delivered and I’m still making payments. I want to cancel, I think I’ve made a mistake using this company.
As I have not received the TV yet can I cancel without having to pay them anything?
If not, is there anything in the Consumer Credit act that says they give me the TV I’m paying for and give it me quickly?
Thanks
Lee
Lee, the CCA deals more with contracts for finance and rather than the actual goods themselves. If you made the contract at a distance, then the TV should be delivered within 30 days. If you did not, then you should look at what the contract states for delivery. If nothing is stated, you can rely on the assumption that the item should be delivered within reasonable time. You could very well argue that 5 weeks is not reasonable time and seek to rescind the contract on this basis. In any case, you should not be paying for a TV which you are not yet in possession of, perhaps some mistake has been made?
i was going to take a flight to atlanta usa last year from london, i bought a ticket through an agent and the flight was booked via toronto canada and i wasnt advised i needed a transit to go through canada,luckily i found out about 2 days before travel, i rushed down to canadian embassy but unfortunately i was refused a transit to canada despite the fact that i had my american visa valid for that period,i qiuckly rang the travel agency but till now they have refused to give me a refund, please is it possible to get my money back almost 600pounds? please help!!!!!!!!!!!!!
Bob, Most airlines and travel companies state in their Terms that they will not be responsible for any cancellations due to refused Visas. However there is an obligation for tour operators to provide explicit information to you about Visa requirements prior to booking. See: http://whatconsumer.co.uk/the-package-holiday-regulations/
If you do not fly and you cannot get back the cost of the ticket, you should at least be able to recoup taxes and fees.
Hello,I was wondering if I can get advice. My husband has taken a distance learning course with Advent IT Training in June 2009. Because he’s self-employed, Advent told him that he can’t get a loan and therefore,I took the loan for him with Barclays finance that Advent has been in partnership.The loan is for 5 years nearly 5000£ but interest free.The training course was meant to last for 2-2,5 years.We have been paying for 8 months now,but then suddenly,we got an email from Advent saying they’ve ceased trading.I contacted Barclays and was told that they are trying to find another supplier and that they’d notify 1 week later.Not heard from them,I contacted them again on friday and was told that previous advice was incorrect and although they are looking for another supplier,they simply don’t know how long will it take,but they refused to cancel the agreement between us on the basis that contract I signed with Advent was breached.
Hi Claire,
Barclays are equally liable under Section 75 and if they cannot find an alternative supplier they will need to give you a refund.
Tony
thanx for reply
so I can’t really do anything to cancel the loan and agreement we had now?I just need to wait for them?They told me they don’t know how much time it will take them to find alternative provider though.Surely,they can’t be doing it for too long still not letting me get away?
hi
We are in the same position as claire above.
my husband was studying with advent for an i.t course and then out of the blue they emailed to say that they were no longer going to be able to continue with the training.
what id like to know is
1.why was claire in breach of the contract with advent????
2.it does not state anywhere in the small print that if advent ceased to trade that the alternative was to transfer them onto another training course.
3.we have paid the sum of £6000.on our credit agreement although it is our contract with barclays it also states on the credit agreement that advent consluting ltd are the named retailer name.
4.also finally why would anyone choose this option as this same situation could well happen again as alot of companys are going into adminastration.then we would be back to square one if this happened again???????????
i read the answer that tony wrote in relation to the time they are taking to find an alternative arrangment for training……..we recieved the email from advent on the 27th jan we have heard nothing since,although i have called them.
how long should we give them until we start with a small claim???
i am not encouraged by there lack of contact to say the least!!!!
sorry for the rambling but paying £6000 for a folder and 2 books and 1 workshop is not finacially viable for us or anyone i would think.
is there any other things we might be able to consider to resolve this
thanks
sharon.
We payed 3000 euros reservation fee for an off plan property in Spain in April 2006 on our credit card. The property should have been built in September 2007, but was delayed with a new completion date of September 2008. The developer started the build on site in the summer of 2008, but stopped the build in October 2008. Since then we have been trying to recover our reservation fee, deposit and interest on the money we have paid. In June 2009 we recovered via the bank (due to having a bank guarantee) our deposit. Our solicitor in Spain has been trying since to recover our reservation fee plus the interest on our payments via the court without any success. We have been informed last week by our solicitor that even though the law says we are entitled to the reservation fee and interest we won’t receive it because the company has no money and they are now very likely to go into liquidation.
Can we claim back the 3000 euros reservation fee through our credit card company.
i purchased a vehicle through polar ford 2.500 cash the rest on a credit agreement with ford credit within two weeks the vehicle was taken back to polar ford for repair they sent it to a back street garage for repair where it was badly damaged can i claim against the finance company under section 75 as i have wrote to them and they say they are not equally liable
I bought a car four days ago. I part exchanged my car and placed a deposit of 3700 for the newer car. I then paid a further £6000 for the balance. Two days after driving the car away from the garage the car began to lose power, headlights turning off when i needed them on, system failure warning sign on the computer, loss of power to the steering when driving. The car is second hand though relatively new. I researched the problem and found a website with many people complaining of the same problems. They indicated that their vehicles of the same model and year were in and out of the garage nearly every week for repairs which were never rectified. Due to this i did not want to keep the car anymore. I notified the dealership of the problem and havent driven the car since then. I was advised that i could claim a full refund, and that i do not have to give the dealership a chance to rectify the problem as i would therefore be ‘accepting’ the car. I have tried to ‘reject’ the car as advised but the General Manager of the dealership will not accept my rejection and refuses a full refund, telling me he will fix the car. I do not want to keep the car any more as i believe it will be unreliable in the future. Am i covered, and am i right in believing that i can claim a full refund?
Hi,
IT Training. My partner – who is out of work – got an unsolicited call from a consultancy in the city TECHWORKS RECRUITMENT, offering her the opportunity to meet a RECRUITMENT consultant. Two and a half hours later (of hard sell by two ‘recruitment consultants’) – she was told she needed to better her chances in the field by taking some IT training. As instructed, she reluctantly enrol in an IT Course… with same company TECHWORKS E-LEARNING.
She was made to sign a Credit agreement, regulated by the CCA 1974, on the premises and pay a deposit for her training course of £500 cash (by debit card). The amount outstanding £546 over 12 months at £45.50 0% APR.
WHAT is the cooling off? we immediately cancelled the agreement, in writing, when she realised that what she had done!, and called the bank to cancel the Direct Debit set-up. She has been left feeling despondent and conned. She has a MA but was convinced that she needed IT skills to find a decent job – which is rubbish in her field. She should have never have been invited to there office and feels conned – she thought she was going to an interview.
Please help – they are saying that ‘She has no right to cancel under the Consumer Credit Act, the Time Share act of the Financial Services (distance marketing) regulations.’
Please help!! – need our £500 back.
hi
i bought two lots of ebooks online. to cut a long story short BOTH CAME WITH a 60 day money back NO QUESTIONS ASKED, FOR ANY REASON full refund money back guarantee. i have all 50 mails i have sent asking for my refund in the past two weeks.one company is from hong kong, with address, and one is in the USA. and quite respected a company. i have tried the bank, visa (on which i paid),the trading standards, the fraud squad, the police…NOBODY WILL HELP ME. it adds to 200 pounds and i am really very angry. please please please help
I am a customer of virgin media.
I have never signed a credit agreement with them. I asked them to send me a signed original copy of the contract im alleged to be bound to.
They sent me a blank credit agreement asking for me to sign and return it to them.
The thing is….i have paid late payment fees and DD charged to virgin media for over a year, as well as the service price…i have no contract therefore should not be bound by the T&Cs that they have just sent me?
Virgin media claim by using the service i have agreed to the T&Cs and am in contract with them.
I cannot see this can be true as the T&Cs could say anything… £20k late payment fee for example, and if ive not had the chance to read them and agree to them how can that be classed as agreement?
I cannot see how using a service automatically binds you into a legal agreement…? if this were or is the case then i will quite hapily provide services to people and then charge them whatever i want as they are now contracted to me?
I want to claim back all charges on my account…not the service charges…this is because i have not agreed to them…i have not signed anything stating that i agree to be bound by the T&C’s.
Any help would be much appreciated
Hi,I had my car serviced and MOT at the Ford garage, Friday 23rd July 10, i got a call around 4pm to say my car had failed its MOT and needed new wipers, boots for the steering and brakes needed attention to pass, they also advised me that the steering rack needed replacing that there was an oil leak the total cost for all the jobs would be £1715, I questioned this as i had a visual health check at the from there garage only 2 months earlier and only the brakes a new tyre and 2 bulbs were needed, i had the health check to decide whether to keep the car or trade it in but because only a few jobs needed doing i thought i would keep it and bought there service and MOT which you pay on a monthly basis.
I questioned all the repairs that needed doing and they said things like the boots could happen any time, i went home decided to leave the car there i wanted to have a think about it.
The next day i went back and said i wanted to make a complaint, they took me to an office with a man called James i told him there were lots of discrepancy’s on there form which was used for the MOT and they used the same type of form for the health check, he had a look and said the boots should have shown signs of wear he also said if i had the boots done i wouldn’t need the steering rack replacing which was the biggest cost at £1129 and he crossed that of the form. He said the Manager Andrew Cross wasn’t in but he would show him the forms which he photocopied and they would get in touch.
On the 26th July 10 i got a call from Andrew Cross and he said he would get my car fixed and MOT and back on the road with no cost to me, i got it back on the weds 28th July 10.
The car seemed fine so last night the 5th Aug 10 i decided to get my service book stamped and i also wanted a list of jobs that they had done for my records, i got these and went home and shown my husband the list, he asked if they had done my wipers which were a fail i looked at the list but they weren’t listed so i checked them today 6th Aug 10 and noticed they hadn’t been changed , i thought this very srange considering they had been a fail on the MOT, So i rung the garage and spoke to Andrew Cross and he said he would check with the mechanic, which the mechanic said they could have just been cleaned to pass even though they wanted to charge me £40 for the pair Andrew said it was not an acceptable answer, i agreed and told him if i had been a gullible person i would have been out of pocket to the tune of £1715 and i have told him i want compensation for there unacceptable behaviour, so i have a meeting with them on thurs 12th Aug 10 and i was wondering if you could give me some advice.
i have a car on hire purchase and have fallen behind with the payments because i have terminal cancer and simply cannot afford them, my only income is E.S.A and D.L.A. am i correct in thinking it is illegal to harrass somebody with a terminal illness as i am getting countless phone calls a day despite the fact i have written to them explaining the situation and have included letters from my G.P. and consultant confirming my dianosis?
I would send them a letter stating that time is of the essence and if they are unable to find a similar course within two weeks you will be demanding a refund and will start a small claim if necessary.