The Consumer Credit Act 1974 regulates
many credit agreements in the UK. Some categories of
agreement are exempt for example; trade credit on terms of
payment within 30 days; a running-credit account (such as credit
cards, where the whole of the credit is repayable in one instalment);
a low interest agreement (not exceeding an annual percentage rate of
1 per cent above the highest base rate of an English or
Scottish bank); non-commercial agreements; and small agreements
(defined under s.17 of the 1974 Act).
When an individual enters into a consumer
credit agreement or hire-purchase
is not signed on the premises of the lender or owner, they
may have an opportunity to change their mind, and cancel
it. This is know as the cooling-off
period (cancellation provisions are set out in
ss.67-73 of the 1974 Act).
The cooling-off period begins when the debtor or hirer
signs the agreement it ends 7 days after the copy or second
statutory notice is received by the debtor or hirer. If you decide to
cancel your agreement this must be done in writing obtain
legal advice from a solicitor or help from an advice agency advisor
if you are in doubt.
When you enter into a consumer credit agreement regulated by the 1974
Act, the agreement must be in the proper
prescribed form (as set out in the Consumer Credit
(Agreement) Regulations 1983, SI 1983/1553). This requirement is
designed to protect the debtor, as the prescribed form contains
important information and details of debtor protections and remedies
under the 1974 Act.
The agreement must also be properly signed
by both parties. You are legally entitled to a copy of the agreement
(ss.62-63 of the 1974 Act).
If your agreement is not in the proper prescribed form or was
improperly executed (signed) it may only be enforced by order of the
sheriff court (s.65(1), 1974 Act); it may be that the agreement is not
enforceable at all (subject to the discretion of the court).
Companies that lend or collect money must be licensed by the Office
of Fair Trading (OFT). If you have a complaint about the way a
lender or debt collector has treated you contact the OFT at: www.oft.gov.uk
The OFT website also contains advice on consumer credit and details
of how to get in contact with the OFT.
Early settlement You
are entitled to complete your payments under a consumer credit
agreement at any-time (s.94, 1974 Act) this is known as early
settlement. You may be entitled to a rebate on the interest payable
see the Consumer Credit (Rebate on Early Settlement)
Regulations 1993 (SI 1983/1562) as amended by SI 1989/596.
Default Where you
are in default of a consumer credit agreement the creditor cannot
take any action against you until he/she has served a default
notice, and the period of time in that notice has
past. This is in a prescribed form, and will tell you what the breach
is (the default ground) and what you need to do to remedy it. In
other words, the default notice gives you a chance to
rectify the problem. If you do not rectify the default notice,
the agreement can be treated as terminated in law. This
means the creditor can now enforce the agreement by court action.
It is important to remember that debtors are entitled to make
'time orders' under section 129 of the Consumer Credit Act
1974. This means you can ask the court to allow you time to pay
back the debt. In deciding whether to make a time order, the
sheriff must consider whether it is just to do so, taking into
account whether the sum offered is reasonable having regard to the
means of the debtor. If you want time to pay - you should obtain
assistance from a law centre, local firm of solicitors, or advice
agency as soon as possible. On this site you can download
a time order application (under the 1974 Act),
leading Scottish caselaw and further practical assistance.
If you receive a default notice
and are in arrears of payment, you can get free
money/debt advice from a local law centre or money advice
agency. It is always better to obtain assistance as soon as possible.