Consumer Credit Act: Your Protection Against Unfair Finance

The Consumer Credit Act 1974 is one of the most powerful pieces of consumer protection legislation in the UK. It gives you significant rights when dealing with finance agreements, including the ability to challenge unfair agreements and hold credit card companies liable for faulty goods.

Section 75: Joint Liability

Section 75 makes your credit card company equally liable with the retailer for breach of contract or misrepresentation on purchases between £100 and £30,000.

How It Works

• You buy something costing £100-£30,000
• You pay any part of it by credit card (even just a £1 deposit)
• The goods are faulty, not as described, or the company breaches the contract
• You can claim against your credit card company for a full refund

Why This Is Powerful

• Company gone bust? Claim from your card company instead
• Retailer refusing refund? Card company must investigate
• Easier claims: Card companies often settle quickly to avoid Ombudsman
• Full protection: Covers the entire purchase, not just the amount paid by card

Section 140A: Unfair Relationships

This is the most powerful tool for challenging mis-sold finance. It allows courts to declare credit agreements "unfair" and provide remedies.

What Makes a Relationship Unfair?

The court considers whether the relationship between you and the creditor is unfair because of:

• The terms of the agreement: Excessive interest rates, unfair charges, one-sided terms
• The way the creditor has exercised their rights: Aggressive collection, unfair treatment
• Any other thing done by the creditor: Mis-selling, poor affordability checks, high-pressure tactics

Common Section 140A Claims

• Inadequate affordability assessments
• Mis-selling of the underlying product (solar panels, kitchens, etc.)
• Failure to explain terms properly
• Lending to vulnerable customers without adequate protections
• Excessive interest rates or charges
• Unfair commission arrangements (like PPI)

Remedies Available

If the court finds the relationship unfair, they can:

• Require repayment of sums paid by the debtor
• Reduce or discharge the amount owed
• Set aside any duty to pay
• Alter the terms of the agreement
• Direct accounts to be taken between the parties

Section 56: Deemed Agency

This section makes the finance company responsible for what the salesperson (dealer) told you.

How It Protects You

• The salesperson is treated as the finance company's agent
• Anything they said or did is attributed to the finance company
• The finance company can't say "that wasn't us, that was the dealer"

Practical Application

If a kitchen salesperson promised your kitchen would be "German engineered luxury quality" but it's actually budget-grade, the finance company is liable for that misrepresentation under Section 56.

Section 77/78: Right to Information

You have the right to request a copy of your credit agreement and account statements.

What You Can Request

• Copy of the executed agreement (the one you signed)
• Statement of account showing payments and charges
• Must be provided within 12 working days
• Fee: £1 (if any)

Why This Matters

• You need the agreement to check if it's properly executed
• Unenforceable agreements can't be used to recover the debt
• Missing signatures or terms can invalidate the agreement

Section 87-89: Default Notices

Before taking action for arrears, the creditor must serve a proper default notice.

Requirements

• Must specify the breach
• State what you need to do to remedy it
• Give you at least 14 days to comply
• Warn of consequences if you don't comply

If They Get It Wrong

An invalid default notice means the creditor can't:

• Terminate the agreement
• Demand early repayment
• Recover possession of goods
• Enforce any security

Section 94: Right to Terminate HP Agreements

For hire purchase agreements, you can terminate and return the goods if you've paid at least half the total price.

How It Works

• You've paid 50% or more of the total amount payable
• You can terminate the agreement
• Return the goods in reasonable condition
• You owe nothing more (unless you've damaged the goods)

How to Use These Protections

In Your Complaint Letter

Reference the specific sections that apply:

• "Under Section 140A of the Consumer Credit Act 1974, I believe this agreement creates an unfair relationship because..."
• "Section 56 makes you liable for the salesperson's misrepresentations..."
• "I am exercising my Section 75 rights to claim against you for..."

Evidence to Gather

• Copy of the credit agreement
• All correspondence and sales materials
• Evidence of affordability issues (bank statements, income proof)
• Records of what you were told vs. what you received
• Default notices (check if they're valid)

Where to Complain

1. Finance company: Start with a formal complaint citing the relevant sections
2. Financial Ombudsman: If rejected, escalate within 6 months
3. Court: For Section 140A claims over £415,000 or if Ombudsman doesn't uphold

Recent Case Law

Plevin v Paragon (2014)

Established that undisclosed commission can make a credit relationship unfair under Section 140A. Led to billions in PPI compensation.

Kerrigan v Elevate (2021)

Confirmed that inadequate affordability assessments can make a relationship unfair, even if the customer could technically afford payments.

Time Limits

• Section 75 claims: 6 years from breach or 3 years from discovery
• Section 140A claims: Can be raised at any time while the agreement exists, or within 6 years of it ending
• Ombudsman complaints: 6 years from the event or 3 years from discovery

Frequently Asked Questions

Does Section 75 apply to debit cards?

No, only credit cards. However, debit card purchases may be covered by the chargeback scheme (a voluntary scheme, not a legal right).

Can I use Section 140A if I've paid off the agreement?

Yes, you can claim a refund of payments made if the relationship was unfair, subject to the 6-year limitation period.

What if the finance company says the agreement is too old?

Section 140A claims can be made while the agreement exists or within 6 years of it ending. The finance company can't refuse to investigate just because the agreement is old.

The Consumer Credit Act gives you powerful rights. Understanding and using these protections can make the difference between being stuck with an unfair agreement and achieving a full refund or debt cancellation.