The Consumer Credit Act was passed in the United Kingdom in 1974. The Act was then amended in 2006. The Consumer Credit Act applies to financing, including credit cards, personal loans and hire purchase agreements.
Extending Credit
The Consumer Credit Act requires any business that provides loans, credit cards or extends credit to customers for goods and services to register with and be licensed by the Office of Fair Trading.
Disclosure
The Consumer Credit Act requires lenders to disclose the terms of the loan including the loan amount, interest rates, monthly payments, loan fees and cancellation options.
Payments in Arrears
Under the Consumer Credit Act of 2006, if a consumer falls behind by at least two payments, the creditor will send a notice within fourteen days and may only send notices at a maximum of every six months. If the creditor fails to give notice to the consumer, the consumer is not liable for any interest accrued during the time when notices were required to be given.
Unfair Relationships
The Consumer Credit Act of 2006 prohibits unfair relationships between creditors and consumers. For example, creditors may not change the terms of the agreement.
Exemptions
The Consumer Credit Act does not apply to credit extended for business purposes that exceeds 25,000 or hire agreements in which payments exceed 25,000.
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