Overview - The Consumer Credit Act (CCA) 1974
The Consumer Credit Act (CCA) 1974 requires that businesses who offer goods or services on credit contract hire or leasing, or vehicle related finance to consumers to have a suitable Consumer Credit Licence. The Consumer Credit Licensing regime was administered by the Office of Fair Trading;
The FCA replaced the Office of Fair Trading (OFT) as the regulator of Consumer Credit in April 2014.
The Consumer Credit Act (CCA) was introduced in 1974, amended in 2006-2010 to include additional consumer protection measures.
The UK Government created the CCA to regulate the credit industries, to ensure adequate protection for private consumers, who use credit to buy goods and services on hire purchase or credit card in the UK; for example, buying a vehicle on hire purchase or buying clothes with a credit card.
The Act places requirements on lenders to provide greater transparency in how credit is sold to consumers and to ensure that there is a fair balance between lenders and consumers that is applicable to all consumer related credit agreements.
For consumer transparency of the Annual Percentage Rate (APR), the CCA ruling is that the APR must be included in credit agreements and take into account all costs including other charges (such as Option to Purchase and Documentation Fees) which affect the cost of borrowing. A typical APR must be included in most credit advertisements.
A regulated agreement is a credit agreement that relates to consumers and is regulated by the Consumer Credit Act 1974.
If the agreement is regulated then the customer/borrower enjoys the full protection of the CCA.
A regulated consumer must be made aware of his/her obligations and rights, and agreements should make clear all contractual terms, in particular: repayments, the annual percentage rate, he protection and remedies available, relevant to the agreement and finance.
The CCA allows the consumer to terminate the agreement before the end of the contractual term. If the consumer elects to voluntary terminate, he/she complies with the following:
Voluntary termination rights to not apply to Hire or Personal contract hire agreements.