What is the Consumer Credit Act

Explore by Category
By : Admin
Guide 06/12/2017 11:46am
392 view(s)

The main function of the Consumer Credit Act is to regulate credit card purchases and give protection when an individual enters into a loan or hire agreement. The act also gives the right to a cooling off period. The 1974 Consumer Credit Act (c 39) is an Act of the Parliament of the United Kingdom. It reformed the law relating to consumer credit significantly within the country.

In the UK consumer credit is regulated by the Consumer Credit Act 1974, which was amended in 2006, the Financial Services and Markets Act 2000 and several other regulations implementing the European Union consumer credit law. Together, the legislation covers different areas that includes the information provided by consumers before entering into a credit agreement, the content and form of credit agreements, the way of calculating annual percentage rates of interest (APR), procedures related to events of default, termination and early settlement, credit Advertising and assessing credit worthiness of the applicants.

All assessment should be based on the information obtained from a credit reference agency and the consumer. In addition to that there is certain information that needs to be provided before a regulated agreement is made.  Consumers should inform about the nature of the agreement, identity and address of the creditor, name and address of the credit intermediary, the type of credit, amount of credit, credit limit, duration of the agreement, rate of interest charges, the total amount payable, and timings of repayments.

Cooling Off Periods Of Credit Agreement

Once you have signed a credit agreement, you have the right to withdraw the agreement within the cooling off period. In such an event, you need to include a notice of your cancellation right along with the copy of your credit agreement and submitted within seven days. Cancelling a credit agreement within the cooling off period will get the complete agreement and any other linked transactions off the list. As a result, the loan company will have to repay back all sums that you have paid and you need to return any goods that you may have received. The cooling off period can be between five to fourteen days. Though there are several agreements that cannot be cancelled.

Your Right To Your Credit Files

When you apply for a credit card or a loan, the provider will check with a credit reference agency to find out about your credit history and other related details. Based on the details collected it will be decided whether you should be given a credit card or a loan. If you have been denied credit, you have the right to ask the credit provider about the credit reference agency they have used to gather the information. The three credit reference agencies are Equifax, Experian and CallCredit.

Inaccurate Credit Files

You can request for a copy of your credit file from any of the three credit reference agencies by paying a very minimal fee. If you find any inaccurate or out-of-date information in your file you can request for it to be amended, under the Consumer Credit Regulations 2000. All you will have to do is write to the agency, explain about the information that is wrong and why. You will also have to provide proof related to it.

Less Interest On Early Repayment

If you have decided to repay you loan all or a part of it, you do not have to pay the full amount of interest predetermined in the agreement. Instead, payable amount of interest will be reduced by a statutory 'rebate'.

Protection For Credit Card Purchases

Section 75 of the Consumer Credit Act offer extra protection for credit card purchases that costs between £100 and £30,000. But if the item or service that you have bought costs more than £30,000, then the protection under Section 75 of the Consumer Credit Act would not be applicable.

You can also claim if you are unable to trace the seller, the seller didn’t respond, the seller has become insolvent or you haven't obtained satisfaction after pursuing the seller. But if the seller offers you a compensation or replacement or compensation and you accept it, you can't claim under Section 75A.