The Consumer Credit Act 1974 establishes a new system for protecting consumers
The Consumer Credit Act 1974 is administered by the Director General of Fair Trading (OFT); It provides for the licensing and other control of traders concerned with the provision of credit, or the supply of goods on hire or hire-purchase, and their transactions, in place of the present enactments regulating moneylenders, pawnbrokers and hire-purchase traders and their transactions.
Licensed credit lending
The Consumer Credit Act 1974 requires most businesses that lend money to consumers or offer goods or services on credit or engage in certain ancillary credit activities to be licensed by the OFT. Trading without a licence in such cases is a criminal offence and can result in a fine and/or imprisonment.
The Act also regulates the way in which consumer credit licensees carry on business. For example, there are rules on advertising, pre-contract disclosure, credit agreements and post-contractual information. In addition, the Act confers certain rights on consumers, including in relation to withdrawal from a credit agreement, early settlement, and section 75 (joint and several liability).
- Pre-contract information;
- Credit and hire agreements;
- Post contract information;
- Early settlement;
- Exempt agreements;
- Brokerage fees;
- Equal liability;
- Credit advertising;
- Unenforceable credit agreements (information requests under sections 77, 78 and 79);
- Information sheets;
- Unfair relationships
Important points for online business include the provision of pre-contractual and post contractual information.