What is the consumer credit act 1974?

The consumer credit act was created in 1974 and requires businesses that lend money to consumers, that sell products or services on credit or engage in certain credit activities to hold a license to carry out their business activities. This license should be obtained from the Office of Fair Trading. Businesses found to be operating without a license will be breaking the law and the individuals involved will therefore be subject to a fine and possible imprisonment. The act provides protection to individuals in certain cases.

People who enter into credit agreements may be protected if the amount of credit that has been supplied in less than 25,000.

If a credit agreement has been signed and the individual wishes to cancel the policy it is possible within a certain time period. The act makes this possible, except in cases when a deal was completed over the phone and if the agreement was not signed in the sellers shop, office or workplace. Exhibition stands are also regarded as being a workplace and therefore these are exempt from the ruling. If an individual has signed a credit agreement within their own home it is therefore possible to cancel it within a certain time period. The seller should inform the buyer of how long they have to cancel the contract that has been agreed. In order to cancel the agreement it is the responsibility of the buyer to cancel in writing by contacting the supplied address. A buyer is entitled to the return of a deposit if one has been paid and they are also within their rights to obtain back any items involved within a part exchange deal.

A creditor can not demand the early payment or attempt to obtain back the goods that have been involved within a credit agreement without first providing a written notice providing seven days notice with their intention to take action. This letter should include certain information including how much is required to be paid in order to bring payments up to date, what payments are required to be made, the action that will be taken if payments are not made and how this agreement can be brought to an end.

In cases of hire purchase the consumer act 1974 states that if one third of the price of the total price of the goods has been paid then the goods cannot be obtained by a creditor unless a court order is put in place.