Consumer Credit Act 1974
1974 c. 39
An Act to establish for the protection of consumers a new system, administered by the Director General of Fair Trading, of licensing and other control of traders concerned with the provision of credit, or the supply of goods on hire or hire-purchase, and their transactions, in place of the present enactments regulating moneylenders, pawnbrokers and hire-purchase traders and their transactions; and for related matters.
[31st July 1974]
(1) A consumer credit agreement is an agreement between an individual ( “the debtor”) and any other person ( “the creditor”) by which the creditor provides the debtor with credit of any amount.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) A consumer credit agreement is a regulated credit agreement within the meaning of this Act if it—
(a) is a regulated credit agreement for the purposes of Chapter 14A of Part 2 of the Regulated Activities Order; and
(b) if entered into on or after 21st March 2016, is not an agreement the purpose of which is the acquisition or retention, by an individual acting for purposes outside those of any trade, business or profession carried on by the individual, of property rights in land or in an existing or projected building.
(3A) A reference in paragraph (3)(b) to any land or building—
(a) in relation to an agreement entered into before IP completion day, is a reference to any land or building in the United Kingdom or within the territory of an EEA State;
(b) in relation to an agreement entered into on or after IP completion day, is a reference to any land or building in the United Kingdom.
(4) Subsection (1) does not apply in relation to an agreement that is a green deal plan (see instead section 189B).
(1) In this Act “credit ” includes a cash loan, and any other form of financial accommodation.
(2) Where credit is provided otherwise than in sterling it shall be treated for the purposes of this Act as provided in sterling of an equivalent amount.
(3) Without prejudice to the generality of subsection (1), the person by whom goods are bailed or (in Scotland) hired to an individual under a hire-purchase agreement shall be taken to provide him with fixed-sum credit to finance the transaction of an amount equal to the total price of the goods less the aggregate of the deposit (if any) and the total charge for credit.
(4) For the purposes of this Act, an item entering into the total charge for credit shall not be treated as credit even though time is allowed for its payment.
(1) For the purposes of this Act—
(a) running-account credit is a facility under a consumer credit agreement whereby the debtor is enabled to receive from time to time (whether in his own person, or by another person) from the creditor or a third party cash, goods and services (or any of them) to an amount or value such that, taking into account payments made by or to the credit of the debtor, the credit limit (if any) is not at any time exceeded; and
(b) fixed-sum credit is any other facility under a consumer credit agreement whereby the debtor is enabled to receive credit (whether in one amount or by instalments).
(2) In relation to running-account credit, “credit limit ” means, as respects any period, the maximum debit balance which, under the credit agreement, is allowed to stand on the account during that period, disregarding any term of the agreement allowing that maximum to be exceeded merely temporarily.
(3) For the purposes of any provision of this Act that specifies an amount of credit (except section 17(1)(a)) , running-account credit shall be taken not to exceed the amount specified in that provision( “the specified amount ”) if—
(a) the credit limit does not exceed the specified amount; or
(b) whether or not there is a credit limit, and if there is, notwithstanding that it exceeds the specified amount,—
(i) the debtor is not enabled to draw at any one time an amount which, so far as (having regard to section 9(4)) it represents credit, exceeds the specified amount, or
(ii) the agreement provides that, if the debit balance rises above a given amount (not exceeding the specified amount), the rate of the total charge for credit increases or any other condition favouring the creditor or his associate comes into operation, or
(iii) at the time the agreement is made it is probable, having regard to the terms of the agreement and any other relevant considerations, that the debit balance will not at any time rise above the specified amount.
11 Restricted-use credit and unrestricted-use credit.
(1) A restricted-use credit agreement is a regulated consumer credit agreement—
(a) to finance a transaction between the debtor and the creditor, whether forming part of that agreement or not, or
(b) to finance a transaction between the debtor and a person (the “supplier ”) other than the creditor, or
(c) to refinance any existing indebtedness of the debtor’s, whether to the creditor or another person,
and “restricted-use credit ” shall be construed accordingly.
(2) An unrestricted-use credit agreement is a regulated consumer credit agreement not falling within subsection (1), and “unrestricted-use credit ” shall be construed accordingly.
(3) An agreement does not fall within subsection (1) if the credit is in fact provided in such a way as to leave the debtor free to use it as he chooses, even though certain uses would contravene that or any other agreement.
(4) An agreement may fall within subsection (1)(b) although the identity of the supplier is unknown at the time the agreement is made.
A debtor-creditor-supplier agreement is a regulated consumer credit agreement being—
(a) a restricted-use credit agreement which falls within section 11(1)(a), or
(b) a restricted-use credit agreement which falls within section 11(1)(b) and is made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier, or
(c) an unrestricted-use credit agreement which is made by the creditor under pre-existing arrangements between himself and a person (the “supplier ”) other than the debtor in the knowledge that the credit is to be used to finance a transaction between the debtor and the supplier.
A debtor-creditor agreement is a regulated consumer credit agreement being—
(a) a restricted-use credit agreement which falls within section 11(1)(b) but is not made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier, or
(b) a restricted-use credit agreement which falls within section 11(1)(c), or
(c) an unrestricted-use credit agreement which is not made by the creditor under pre-existing arrangements between himself and a person (the “supplier ”) other than the debtor in the knowledge that the credit is to be used to finance a transaction between the debtor and the supplier.
(1) A credit-token is a card, check, voucher, coupon, stamp, form, booklet or other document or thing given to an individual by a person carrying on a consumer credit business, who undertakes—
(a) that on the production of it (whether or not some other action is also required) he will supply cash, goods and services (or any of them) on credit, or
(b) that where, on the production of it to a third party (whether or not any other action is also required), the third party supplies cash, goods and services (or any of them), he will pay the third party for them (whether or not deducting any discount or commission), in return for payment to him by the individual.
(2) A credit-token agreement is a regulated agreement for the provision of credit in connection with the use of a credit-token.
(3) Without prejudice to the generality of section 9(1), the person who gives to an individual an undertaking falling within subsection (1)(b) shall be taken to provide him with credit drawn on whenever a third party supplies him with cash, goods or services.
(4) For the purposes of subsection (1), use of an object to operate a machine provided by the person giving the object or a third party shall be treated as the production of the object to him.
(1) A consumer hire agreement is an agreement made by a person with an individual (the “hirer ”) for the bailment or (in Scotland) the hiring of goods to the hirer, being an agreement which—
(a) is not a hire-purchase agreement, and
(b) is capable of subsisting for more than three months, . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) A consumer hire agreement is a regulated agreement with the meaning of this Act if it is a regulated consumer hire agreement for the purposes of Chapter 14B of Part 2 of the Regulated Activities Order.
(1) A small agreement is—
(a) a regulated consumer credit agreement for credit not exceeding £50, other than—
(i) a hire-purchase agreement,
(ii) a conditional sale agreement, or
(iii) a regulated deferred payment credit agreement; or
(b) a regulated consumer hire agreement which does not require the hirer to make payments exceeding £50,
being an agreement which is either unsecured or secured by a guarantee or indemnity only (whether or not the guarantee or indemnity is itself secured).
(2) For the purposes of paragraph (a) of subsection (1), running-account credit shall be taken not to exceed the amount specified in that paragraph if the credit limit does not exceed that amount.
(3) Where—
(a) two or more small agreements are made at or about the same time between the same parties, and
(b) it appears probable that they would instead have been made as a single agreement but for the desire to avoid the operation of provisions of this Act which would have applied to that single agreement but, apart from this subsection, are not applicable to the small agreements,
this Act applies to the small agreements as if they were regulated agreements other than small agreements.
(4) If, apart from this subsection, subsection (3) does not apply to any agreements but would apply if, for any party or parties to any of the agreements, there were substituted an associate of that party, or associates of each of those parties, as the case may be, then subsection (3) shall apply to the agreements.
(1) This section applies to an agreement (a “multiple agreement ”) if its terms are such as—
(a) to place a part of it within one category of agreement mentioned in this Act, and another part of it within a different category of agreement so mentioned, or within a category of agreement not so mentioned, or
(b) to place it, or a part of it, within two or more categories of agreement so mentioned.
(2) Where a part of an agreement falls within subsection (1), that part shall be treated for the purposes of this Act as a separate agreement.
(3) Where an agreement falls within subsection (1)(b), it shall be treated as an agreement in each of the categories in question, and this Act shall apply to it accordingly.
(4) Where under subsection (2) a part of a multiple agreement is to be treated as a separate agreement, the multiple agreement shall (with any necessary modifications) be construed accordingly; and any sum payable under the multiple agreement, if not apportioned by the parties, shall for the purposes of proceedings in any court relating to the multiple agreement be apportioned by the court as may be requisite.
(5) In the case of an agreement for running-account credit, a term of the agreement allowing the credit limit to be exceeded merely temporarily shall not be treated as a separate agreement or as providing fixed-sum credit in respect of the excess.
(6) This Act does not apply to a multiple agreement so far as the agreement relates to goods if under the agreement payments are to be made in respect of the goods in the form of rent (other than a rentcharge) issuing out of land.
(1) A transaction entered into by the debtor or hirer, or a relative of his, with any other person ( “the other party ”), except one for the provision of security, is a linked transaction in relation to an actual or prospective regulated agreement (the “principal agreement ”) of which it does not form part if—
(a) the transaction is entered into in compliance with a term of the principal agreement; or
(b) the principal agreement is a debtor-creditor-supplier agreement and the transaction is financed, or to be financed, by the principal agreement; or
(c) the other party is a person mentioned in subsection (2), and a person so mentioned initiated the transaction by suggesting it to the debtor or hirer, or his relative, who enters into it—
(i) to induce the creditor or owner to enter into the principal agreement, or
(ii) for another purpose related to the principal agreement, or
(iii) where the principal agreement is a restricted-use credit agreement, for a purpose related to a transaction financed, or to be financed, by the principal agreement.
(2) The persons referred to in subsection (1)(c) are—
(a) the creditor or owner, or his associate;
(b) a person who, in the negotiation of the transaction, is represented by a credit-broker who is also a negotiator in antecedent negotiations for the principal agreement;
(c) a person who, at the time the transaction is initiated, knows that the principal agreement has been made or contemplates that it might be made.
(3) A linked transaction entered into before the making of the principal agreement has no effect until such time (if any) as that agreement is made.
(4) Regulations may exclude linked transactions of the prescribed description from the operation of subsection (3).
In this Act, “the total charge for credit” has the meaning given by the Regulated Activities Order for the purposes of Chapter 14A of Part 2 of that Order.
48 Definition of canvassing off trade premises (regulated agreements).
(1) An individual (the “canvasser ”) canvasses a regulated agreement off trade premises if he solicits the entry (as debtor or hirer) of another individual (the “consumer ”) into the agreement by making oral representations to the consumer, or any other individual, during a visit by the canvasser to any place (not excluded by subsection (2)) where the consumer, or that other individual, as the case may be, is, being a visit—
(a) carried out for the purpose of making such oral representations to individuals who are at that place, but
(b) not carried out in response to a request made on a previous occasion.
(2) A place is excluded from subsection (1) if it is a place where a business is carried on (whether on a permanent or temporary basis) by—
(a) the creditor or owner, or
(b) a supplier, or
(c) the canvasser, or the person whose employee or agent the canvasser is, or
(d) the consumer.
49 Prohibition of canvassing debtor-creditor agreements off trade premises.
(1) It is an offence to canvass debtor-creditor agreements off trade premises.
(2) It is also an offence to solicit the entry of an individual (as debtor) into a debtor-creditor agreement during a visit carried out in response to a request made on a previous occasion, where—
(a) the request was not in writing signed by or on behalf of the person making it, and
(b) if no request for the visit had been made, the soliciting would have constituted the canvassing of a debtor-creditor agreement off trade premises.
(3) Subsections (1) and (2) do not apply to any soliciting for an agreement enabling the debtor to overdraw on a current account of any description kept with the creditor, where—
(a) the FCA has determined that current accounts of that description kept with the creditor are excluded from subsections (1) and (2), and
(b) the debtor already keeps an account with the creditor (whether a current account or not).
(4) A determination under subsection (3)(a)—
(a) may be made subject to such conditions as the FCA thinks fit, and
(b) shall be made only where the FCA is of opinion that it is not against the interests of debtors.
(5) If soliciting is done in breach of a condition imposed under subsection (4)(a), the determination under subsection (3)(a) does not apply to it.
(1) A person commits an offence, who, with a view to financial gain, sends to a minor any document inviting him to—
(a) borrow money, or
(b) obtain goods on credit or hire, or
(c) obtain services on credit, or
(d) apply for information or advice on borrowing money or otherwise obtaining credit, or hiring goods.
(2) In proceedings under subsection (1) in respect of the sending of a document to a minor, it is a defence for the person charged to prove that he did not know, and had no reasonable cause to suspect, that he was a minor.
(3) Where a document is received by a minor at any school or other educational establishment for minors, a person sending it to him at that establishment knowing or suspecting it to be such an establishment shall be taken to have reasonable cause to suspect that he is a minor.
(1) Regulations may require specified information to be disclosed in the prescribed manner to the debtor or hirer before a regulated agreement , other than a regulated deferred payment credit agreement, is made.
(2) If regulations under subsection (1) are not complied with, the agreement is enforceable against the debtor or hirer on an order of the court only (and for these purposes a retaking of goods or land to which the agreement relates is an enforcement of the agreement).
(1) Before a regulated consumer credit agreement, other than an excluded agreement, is made, the creditor must, if requested, give to the debtor without delay a copy of the prospective agreement (or such of its terms as have at that time been reduced to writing).
(2) Subsection (1) does not apply if at the time the request is made, the creditor is unwilling to proceed with the agreement.
(3) A breach of the duty imposed by subsection (1) is actionable as a breach of statutory duty.
(4) For the purposes of this section an agreement is an excluded agreement if it is—
(a) an agreement secured on land,
(b) an agreement under which a person takes an article in pawn,
(c) an agreement under which the creditor provides the debtor with credit which exceeds £60,260 and which is not a residential renovation agreement, or
(d) an agreement entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him.
(5) Article 60C(5) and (6) of the Regulated Activities Order applies for the purposes of subsection (4)(d).
(6) This section does not apply to a regulated deferred payment credit agreement.
(1) In this Act “antecedent negotiations ” means any negotiations with the debtor or hirer—
(a) conducted by the creditor or owner in relation to the making of any regulated agreement, or
(b) conducted by a credit-broker in relation to goods sold or proposed to be sold by the credit-broker to the creditor before forming the subject-matter of a debtor-creditor-supplier agreement within section 12(a), or
(c) conducted by the supplier in relation to a transaction financed or proposed to be financed by a debtor-creditor-supplier agreement within section 12(b) or (c),
and “negotiator ” means the person by whom negotiations are so conducted with the debtor or hirer.
(2) Negotiations with the debtor in a case falling within subsection (1)(b) or (c) shall be deemed to be conducted by the negotiator in the capacity of agent of the creditor as well as in his actual capacity.
(3) An agreement is void if, and to the extent that, it purports in relation to an actual or prospective regulated agreement—
(a) to provide that a person acting as, or on behalf of, a negotiator is to be treated as the agent of the debtor or hirer, or
(b) to relieve a person from liability for acts or omissions of any person acting as, or on behalf of, a negotiator.
(4) For the purposes of this Act, antecedent negotiations shall be taken to begin when the negotiator and the debtor or hirer first enter into communication (including communication by advertisement), and to include any representations made by the negotiator to the debtor or hirer and any other dealings between them.
(1) The withdrawal of a party from a prospective regulated agreement shall operate to apply this Part to the agreement, any linked transaction and any other thing done in anticipation of the making of the agreement as it would apply if the agreement were made and then cancelled under section 69.
(2) The giving to a party of a written or oral notice which, however expressed, indicates the intention of the other party to withdraw from a prospective regulated agreement operates as a withdrawal from it.
(3) Each of the following shall be deemed to be the agent of the creditor or owner for the purpose of receiving a notice under subsection (2)—
(a) a credit-broker or supplier who is the negotiator in antecedent negotiations, and
(b) any person who, in the course of a business carried on by him, acts on behalf of the debtor or hirer in any negotiations for the agreement.
(4) Where the agreement, if made, would not be a cancellable agreement, subsection (1) shall nevertheless apply as if the contrary were the case.
58 Opportunity for withdrawal from prospective land mortgage.
(1) Before sending to the debtor or hirer, for his signature, an unexecuted agreement in a case where the prospective regulated agreement is to be secured on land (the “mortgaged land ”), the creditor or owner shall give the debtor or hirer a copy of the unexecuted agreement which contains a notice in the prescribed form indicating the right of the debtor or hirer to withdraw from the prospective agreement, and how and when the right is exercisable, together with a copy of any other document referred to in the unexecuted agreement.
(2) Subsection (1) does not apply to—
(a) a restricted-use credit agreement to finance the purchase of the mortgaged land, or
(b) an agreement for a bridging loan in connection with the purchase of the mortgaged land or other land.
(1) An agreement is void if, and to the extent that, it purports to bind a person to enter as debtor or hirer into a prospective regulated agreement.
(2) Regulations may exclude from the operation of subsection (1) agreements such as are described in the regulations.
(1) The Treasury shall make regulations as to the form and content of documents embodying regulated agreements, other than regulated deferred payment credit agreements, and the regulations shall contain such provisions as appear to them appropriate with a view to ensuring that the debtor or hirer is made aware of—
(a) the rights and duties conferred or imposed on him by the agreement,
(b) the amount and rate of the total charge for credit (in the case of a consumer credit agreement),
(c) the protection and remedies available to him under this Act, and
(d) any other matters which, in the opinion of the Treasury, it is desirable for him to know about in connection with the agreement.
(2) Regulations under subsection (1) may in particular—
(a) require specified information to be included in the prescribed manner in documents, and other specified material to be excluded;
(b) contain requirements to ensure that specified information is clearly brought to the attention of the debtor or hirer, and that one part of a document is not given insufficient or excessive prominence compared with another.
(3) If, on an application made to the FCA by a person carrying on a consumer credit business or a consumer hire business, it appears to the FCA impracticable for the applicant to comply with any requirement of regulations under subsection (1) in a particular case, it may, by notice to the applicant direct that the requirement be waived or varied in relation to such agreements, and subject to such conditions (if any), as it may specify, and this Act and the regulations shall have effect accordingly.
(4) The FCA shall give a notice under subsection (3) only if it is satisfied that to do so would not prejudice the interests of debtors or hirers.
(5) An application may be made under subsection (3) only if it relates to—
(a) a consumer credit agreement secured on land,
(b) a consumer credit agreement under which a person takes an article in pawn,
(c) a consumer credit agreement under which the creditor provides the debtor with credit which exceeds £60,260 and which is not a residential renovation agreement ,
(d) a consumer credit agreement entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him, or
(e) a consumer hire agreement.
(6) Article 60C(5) and (6) of the Regulated Activities Order applies for the purposes of subsection (5)(d).
(1) A regulated agreement is not properly executed unless—
(a) a document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or on behalf of the creditor or owner, and
(b) the document embodies all the terms of the agreement, other than implied terms, and
(c) the document is, when presented or sent to the debtor or hirer for signature, in such a state that all its terms are readily legible.
(2) In addition, where the agreement is one to which section 58(1) applies, it is not properly executed unless—
(a) the requirements of section 58(1) were complied with, and
(b) the unexecuted agreement was sent, for his signature, to the debtor or hirer by an appropriate method not less than seven days after a copy of it was given to him under section 58(1), and
(c) during the consideration period, the creditor or owner refrained from approaching the debtor or hirer (whether in person, by telephone or letter, or in any other way) except in response to a specific request made by the debtor or hirer after the beginning of the consideration period, and
(d) no notice of withdrawal by the debtor or hirer was received by the creditor or owner before the sending of the unexecuted agreement.
(3) In subsection (2)(c), “the consideration period ” means the period beginning with the giving of the copy under section 58(1) and ending—
(a) at the expiry of seven days after the day on which the unexecuted agreement is sent, for his signature, to the debtor or hirer, or
(b) on its return by the debtor or hirer after signature by him,
whichever first occurs.
(4) Where the debtor or hirer is a partnership or an unincorporated body of persons, subsection (1)(a) shall apply with the substitution for “by the debtor or hirer ” of “by or on behalf of the debtor or hirer ”.
(5) This section does not apply to a regulated deferred payment credit agreement.
61A Duty to supply copy of executed consumer credit agreement
(1) Where a regulated consumer credit agreement, other than an excluded agreement, has been made, the creditor must give a copy of the executed agreement, and any other document referred to in it, to the debtor.
(2) Subsection (1) does not apply if—
(a) a copy of the unexecuted agreement (and of any other document referred to in it) has already been given to the debtor, and
(b) the unexecuted agreement is in identical terms to the executed agreement.
(3) In a case referred to in subsection (2), the creditor must inform the debtor in writing—
(a) that the agreement has been executed,
(b) that the executed agreement is in identical terms to the unexecuted agreement a copy of which has already been given to the debtor, and
(c) that the debtor has the right to receive a copy of the executed agreement if the debtor makes a request for it at any time before the end of the period referred to in section 66A(2).
(4) Where a request is made under subsection (3)(c) the creditor must give a copy of the executed agreement to the debtor without delay.
(5) If the requirements of this section are not observed, the agreement is not properly executed.
(6) For the purposes of this section, an agreement is an excluded agreement if it is—
(a) a cancellable agreement, or
(b) an agreement—
(i) secured on land,
(ii) under which the creditor provides the debtor with credit which exceeds £60,260, or
(iii) entered into by the debtor wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him,
unless the creditor or a credit intermediary has complied with or purported to comply with regulation 3(2) of the Consumer Credit (Disclosure of Information) Regulations 2010.
(6A) An agreement is not an excluded agreement by virtue of subsection (6)(b)(ii) if it is a residential renovation agreement.
(7) Article 60C(5) and (6) of the Regulated Activities Order applies for the purposes of subsection (6)(b)(iii).
(7A) This section does not apply to a regulated deferred payment credit agreement.
(8) In this section, “credit intermediary” means a person who in the course of business—
(a) carries on any of the activities specified in article 36A(1)(d) to (f) of the Regulated Activities Order for a consideration that is or includes a financial consideration, and
(b) does not do so as a creditor.