Business, Legal & Accounting Glossary
The Consumer Credit Act (CCA) of 1974 applies to most businesses that lend money to consumers or offer goods and services. The Act requires that these businesses obtain a consumer credit license from the Office of Fair Trading (OFT).
It also sets down rules for how certain credit and hire agreements should be set out to ensure they are easy for the consumer to understand. For example, they must include an Annual Percentage Rate (APR) which represents a total charge for the credit – not just the headline rate.
With certain credit agreements under the Consumer Credit Act, consumers have the right to a ‘cooling-off period’ of seven days after signing such agreements. This assumes 1)- You signed it anywhere other than on the premises of the trader or creditor; such as at home or in the office and 2)- You discussed the credit face-to-face with the trader or creditor before you signed the agreement.
Should you decide to cancel it’s worth noting that the cancellation period ends five days after you receive the second copy of the agreement, which the creditor is obliged to send you. You must cancel in writing.
The Consumer Credit Act 2006 is part of the Department of Trade and Industry’s (DTI) programme to reform the Act of 1974. One provision, which will be implemented in 2008, is the abolition of the upper limit of £25,000 for CCA-regulated loans. The new Act, which was given Royal Ascent in March 2006, will also give the OFT greater powers to investigate licensees and ensure they are operating under the terms set down in the Act.
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This glossary post was last updated: 15th February, 2020