Consumer Credit Act and Your Rights
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
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Dear Sir,
I was paying my house insurance by monthly instalments on direct debit(DD).
I stopped the DD in December, which would have been the last payment for 2008.
The insurers are now claiming back the instalment although I never made a claim for that (or any other)year.
Additionally, I never entered into an agreement, as such.
The company just sent me a renewal quote in Dec. 2007 for the forthcoming year. The letter stated that the insurance would be renewed automatically and I need do nothing.
I was away from home at the time. By the time I returned, the insurance was up and running.
Is what they are claiming correct? Can they do this? Please advise.
Vincent, the company have to give you reasonable time to cancel the automatic renewal, it shouldn’t be less than about 3 weeks. Don’t forget you have a 14 days cooling off period to cancel this, if it came by post.
My partner and I booked airline tickets with Zambian Airways last year using our credit card. The airline have subsequently suspended operations. In this instance are the credit card company equally liable under section 75? If so, how do we go about claiming?
Beth, yes, as long as the total transaction came to over £100 which I assume it would have done. You simply write to the credit card company outlining the circumstances and details of the transaction, and request a reimbursement within reasonable time.
I have an unsecured loan with Northern Rock taken out at the time of remortgage 2003 which is the method used by Northern Rock in giving out their offer of %125 mortgages. the interest rate on the unsecured loan is and has been variable after a fixed rate period all as the signed agreement, Is this a legal method for offering and servicing an unsecured loan?
Does section 79 concerning the making the information in the consumer credit agreement available when a debt collection company is chasing the wrong person for a debt and therefore there is no information truely applicable to accused debtor? My wife is being chased for a debt she does not owe. The debt collection agency has suspended collection of it but will not recind the allegation. Neither will they supply any information regarding the debt, which is thought to be for unpaid rent. No debt breackdown, no date unpon which the debt became due, no property address, no rental agreement, no information indicating why they thought my wife was responsible. The owner of the debt will not reply to us. We cannot clear this matter up unless we receive information and it looks like the debt collection agenecy did not have sufficient justification for chasing my wife for it and have been ecremely harassing before they suspended collection.
Hello,
I happened to registered with a computer training college named Advent Consults on the 30th May,2009,who took a loan on my behalf from barclays finance for this course.I had been paying back this money through direct debit until January,2010.In january,i was sent a mail that advent consult has gone into liquidation,therefore could no longer provide my service,while the loan with Barclays finance is still hanging.I called barclays for the way forward.i was told since i had already signed a loan aggrement,they must provide another provider of their own choice for me to continue with.What if i dont like the terms of service of their new provider?What happens to my previous payment?please i need an answer.Thanks. John
It is all about reasonableness – would a reasonable person see the choice as adequate. This would be the view of the judge if it goes that far.
I have a loan agreement with Barclays to pay a service provider for a plumbing course. The provider has now gone out of business but I’m told the loan still stands. Does the bank have a legal time scale or deadline to find a new supplier before the agreement is cancelled or can they keep the agreement valid indefinitely? Should I have heard from an insolvency broker by now on behalf of Access to Trade Skills (the supplier who went bust in January)? In the terms and conditions of the loan there is no notice of any sort of cooling off period or cancellation process, only a statement saying I apparently have no right to cancel at all under the CCA 1974! Does this mean that Barclays bank is above the law? Any advice gratefully recieved. Thank you.
I am in the exact same situation as you with the same company. I am so apauled that Barclys would have taken on Anglo Capital Ltd (the company behind access to trade skills)as they must of known they where going bust. I want Barclys to cancel the agreement and pay me back my money that they have taken from me for a service i am no longer receiving. I called up trading standards and they advised me to write a letter to Barclys partner finance which i am in the proccess of doing right now expressing my wish to cancel or get some sort of settlement, otherwise just like it says in point 3 of the agreement where its says ‘your rights’ it says “if the contract is not fulfilled, perhaps because the supplier has gone out of business, you may still be able to sue us.” so if nothing comes of this letter then sue i will try.
i owed a friend £500, he asked me if i could pay someone he owed money to.i paid over the phone using my debit card i later found out that they were 4 other transactions totalling £2400 made by this person. the bank says it is not fraud as i authorised the first payment i foned this company and they said this person owed them more money, i have told my friend about it but he is out of employment. any advice would be greatly appreciated! thanks.
Leighlor, you need to get on the phone to your bank and ask them to reverse the other three payments that you did not authorise and are fraudulent.
I think Budget Insurance are playing dirty. We had our contents (feb-feb) with them for what we thought was 1 year, as we look around every year and change companies regularly. As the renewal of our buildings policy drew close (nov 09), we checked for combined building/contents policies and chose one, which we took out. It was not with Budget, but the Budget policy only had 2 months to run, so we didn’t bother cancelling it. We heard nothing from Budget around Feb. when the contents would have been due and so did nothing.
Next we noticed Budget had taken £122 from our account as a renewal.
My wife rang to tell them there was a mistake and was bullied into accepting a £99 refund as there was an admin charge for cancelling the policy and 8 days of policy run which was £2 something.
Even if you accept that the renewal invitation was lost in the post and so they assumed it was okay to take my money, under the 14 day distant selling rules, surely I am well within this by at least 6 days.
Does this not mean the refund should have been in full? Given that my contents were already insured elsewhere and the policy was renewed without my permission.
Please if anyone can, please clarify my position before I call them back.
Many thanks.
Phil Chave
Blagdon UK.