There is growing awareness of Consumer Rights in relation to The Consumer Credit Act (CCA). We will deal with the most useful ones here.
Cooling off and your right to cancel
You will benefit from a cooling off period if the credit agreement was made in one of the following ways:
- For agreements signed away from the creditor’s normal business premises – i.e. at your home, place of work or at an exhibition stand
- For agreements made at a distance (this also includes banking, insurance, pensions and investments)
- For financial products and services marketed by an intermediary or broker (even where this is face to face)
For agreements which fall under (1), you will have a cooling off period of 5 days, which begins from the time you receive the second copy of the agreement (containing the cancellation form). For contracts which fall under (2) and (3), you benefit from a 14 day cooling off period (30 days for life insurance and personal pensions). Unlike the cooling off period for goods bought under the Distance Selling Regulations (DSRs), the creditor may make a reasonable charge for any service (such as insurance cover) which was operating during this time.
There are specific guidelines on how you should cancel the contract, which must be notified to you by the creditor before or immediately after the contract is made. If the creditor does not make this information available to you, then your cooling off period will not begin until this happens.
Credit Cards – Section 75
Section 75 of the Consumer Credit Act imposes equal liability on the creditor for breaches by the supplier. In other words, if the company you are buying from goes bust or disappears, or if the goods turn out to be faulty and you can’t get recompense from that company, the credit card company shares responsibility to refund you for the entire amount. However, it is important to remember that this is the case only for amounts between £100 and £30,000.
More recently, section 75 was also extended to cover transactions made overseas or to foreign companies. This also includes buying goods for delivery to the UK from overseas by telephone, mail order or over the internet.
There is now widespread awareness of this loophole as a means of enhanced consumer protection. As a result, credit card companies are getting increasingly reluctant to accept claims so easily. If you are having difficulty pursuing a claim against a credit card issuer, or they are telling you that you must first get a court judgement against the supplier, report it to the Financial Ombudsmen (www.financial-ombudsman.org.uk). They may even be able to award you compensation.
CCA Request – Section 77 – 79
Under these two sections of the Consumer Credit Act, it is your right to request a copy of the executed credit agreement from the creditor, along with specific and current information concerning the debt (s 77 relates to fixed-sum loan agreements, s 78 refers to running-account credit (credit cards) and s 79 to hire agreements).
With regard to loans, the specific information must include:
- The total sum to be paid, as per the agreement
- The sum still outstanding and the due dates for each installment
- The total sum payable, if different from the agreement.
The creditor has a period of 12 days working days in order to provide the agreement and the statement. If they cannot provide the information, the debt cannot be enforced until they do. If the creditor are still unable to provide the documents after one month, they commit a criminal offence.
In addition to this requirement, new regulations now require loan providers to provide statements to be sent to the consumer no later than one year after the contract was made. Failure to do this will mean repayments (and interest) can be halted until the statement is sent.
Your request must be made to the creditor (via the debt collection agency if one is involved) with the payment of £1)
Is my credit agreement legally unenforceable?
There has been a lot of publicity surrounding the ability to get out of debt by going through credit agreements with a fine toothcomb in order to spot any breaches of the regulations. In other words, looking for ways in which credit agreements may be rendered legally unenforceable. As mentioned in the previous section, the various Consumer Credit Regulations are very strict on what information must be presented, when it must be presented, and the order and manner in which it is to be shown. If any of the required information is missing, or simply not provided to you within seven days, the supplier may be in breach of these regulations. However, amendments made to the Act in 2006 closed this loophole, so now a court can still enforce a credit agreement even if the creditor has not complied. However, the creditor will still have to get a court order to do this, and may well not bother if the sum is not significant.
Accessing your Credit File
If you have been turned down for a credit agreement, you have the right, under sections 157-159 of the Act, to request that the lender provides you with details of the credit reference agency they used to access your credit file. You must do this in writing within 28 days and the lender must respond to your request within 7. There is more on this in our section on accessing your credit file.
- Consumer Credit Act Required Information
- Ending a Credit Agreement
- Defaults, Arrears and Debt Collection Agencies
- Consumer Credit Act
- Accessing your Credit File