What is the Consumer Credit Act 1974 and how to start a claim?

A common question we get asked is ‘What is consumer credit’, simply Consumer credit refers to the borrowing of money by individuals for the purpose of purchasing goods or services.

Consumer credit can take on various forms, including but not limited to credit cards, personal loans, instalment loans, lines of credit, and store credit accounts. Each form of consumer credit has its own terms and conditions, such as interest rates, repayment schedules, and credit limits. These terms are determined by the lender and may vary depending on factors such as the borrower’s credit history, income, and overall financial situation.

Due to these terms and conditions, we find a lot of businesses not obeying these regulations and as a result, often see consumers starting a consumer credit dispute claim.

In this article, we explain what consumer credit is, how the Consumer Credit Act 1974 protects consumers, and why some consumers may bring a claim.

What is Consumer Credit?

As we discussed above, Consumer credit refers to the borrowing of money by individuals for the purpose of purchasing goods or services from a financial instate such as your bank or credit card provider.

The regulation and oversight of consumer credit in the UK is governed by the Financial Conduct Authority (FCA), which sets rules and guidelines to protect consumers and promote responsible lending practices.

What is the Consumer Credit Act 1974 and how does it protect consumers?

The Consumer Credit Act 1974 is a piece of legislation in the UK that governs consumer credit agreements. It was implemented to act as a protection for consumers who enter into credit agreements and to regulate the activities of lenders and other credit providers.

The Consumer Credit Act 1974 provides consumers with protection under these credit agreements, for the following:

• Bank loans
• Credit & store cards
• Hire purchase agreements
• Conditional sale agreements
• Secured or unsecured loans

Individuals and partnerships of up to three people are protected by the Consumer Credit Act 1974, but limited companies are not.

What information should I know before entering into a credit agreement?

Before entering into a credit agreement, consumers should be provided with specific details in relation to the agreement. This is the lender’s legal obligation.

We would always advise people who are considering entering into a credit agreement to check they have been provided with the following:

• Interest Rate – Make sure you know whether the interest rate is fixed or variable, as well as any other factors that may affect the rate over time.
• Repayment Terms – Understand the frequency and amount of repayments you will need to make, whether it’s monthly, quarterly, or otherwise. Ensure that you can comfortably meet the repayment obligations within your budget.
• Fees and Charges – Always ask about any additional charges that may incur and get this in writing. This may include application fees, late payment fees, early repayment fees, or annual charges.
• Rights and Responsibilities – It’s critical to understand your legal rights and responsibilities as a borrower. Familiarise yourself with the consequences of missed or late payments, the procedure for addressing disputes, and any penalties or charges that may be imposed.
• Early Repayment Options – See if your consumer credit agreement allows for early repayment options, this provides you with flexibility and potentially saves you money on interest if you are able to pay the debt/credit sooner.
• Other – In addition to the above points, you should be made aware of the nature of the agreement, the identity & address of the creditor, and the name & address of the credit intermediary

Why do people bring Consumer Credit dispute claims?

Consumers bring a Consumer Credit dispute claim for a variety of different reasons. We find no two reasons are the same and each case is unique.

The most common reasons people bring a claim are due to:

• Errors on credit reports
• Unauthorised charges or fraudulent activity
• Billing disputes
• Dissatisfaction with products or services
• Violations of consumer protection laws

Overall, people make dispute claims against consumer credit lenders to rectify errors, protect their financial well-being and ensure their rights as consumers are upheld.

How to start a consumer credit dispute claim?

As all consumers are protected in the Consumer Credit Act 1974, we would always advise seeking advice from a qualified expert, such as our dispute resolution team, if you feel like something is wrong. All consumers can use the Consumer Credit Act to make a claim if the Act is not followed – including if the consumer has fallen into arrears with payments.

This can include making a complaint to the Financial Institution and raising the issue with the Financial Ombudsmen. Alternatively, the dispute resolution process can be started which ultimately could mean going to court.

How can the Taylor Bracewell Dispute team help?

Our Disputes team can provide assistance and guidance in various aspects of consumer credit disputes. Here are some ways they can help:

• Legal advice – Our team specialise in handling consumer credit disputes. They have in-depth knowledge of relevant laws, regulations, and case precedents, allowing them to provide expert advice and representation specific to your situation.
• Case evaluation – The team can evaluate your specific situation and assess the components of your consumer credit dispute. They will review the relevant documents, evidence, and applicable laws to determine the strength of your case and provide an informed opinion on potential outcomes.
• Negotiation and settlement – The team can engage with the creditor or lender on your behalf to negotiate a resolution. They will use their expertise in dispute resolution techniques to work towards a fair settlement that addresses your concerns and protects your rights.
• Representation in legal proceedings – If necessary, the Taylor Bracewell Disputes team can represent you in legal proceedings related to your consumer credit dispute. This includes preparing and filing legal documents, presenting arguments in court, and advocating for your interests throughout the process.
• Be supportive throughout – The team understands that it can be a daunting and stressful process, this is why they offer personalised legal advice tailored to your specific dispute. They will help you understand your rights, obligations, and available options, allowing you to make informed decisions yourself.

Seeking legal advice is crucial when you experience a sense of unease or uncertainty in your circumstances. These feelings often indicate the presence of a potentially viable claim that could yield successful outcomes.

If you require any further information or wish to speak to our disputes team, don’t hesitate to contact our Doncaster team on 01302 341414 or our Sheffield team on 0114 272 1884 by filling out our online enquiry form.