Consumer Credit Act 1974
What this means for your business
- Enforced by
- FCA, Trading Standards
- Applies to
- United Kingdom
- On this page
- 48 compliance obligations, 17 practical guides
What you must do
48 compliance obligations under this legislation — 2 can result in imprisonment.
Management duties 11
Accept rescission notices sent to designated agents
If a customer wants to cancel a regulated credit or hire agreement, the law says the notice can be served on the credit‑broker who negotiated the deal or anyone who acted for the customer during negotiations. Your business must treat any notice sent to those people as a valid rescission and have a process to receive and record it.
Accept statutory declaration when pawn receipt is lost
If a customer loses their pawn‑receipt but wants to redeem the pawn, you must allow them to use a prescribed statutory declaration (or a written statement for small credits) instead of the receipt. Treat the original receipt as no longer usable and follow the normal redemption procedure (section 117). This ensures the customer can get their pawn back even without the paper document.
Avoid clauses that bind a person to a future regulated credit agreement
If you include a term in any contract that obliges a consumer to later enter a regulated credit or hire agreement, that part of the contract is automatically void. Your business must make sure no agreement tries to lock a person into a future credit deal, otherwise the whole agreement can be unenforceable.
Do not charge excessive interest on default
If your business provides a regulated consumer credit agreement, you must not charge the borrower interest on any overdue amount at a rate higher than the interest rate built into the total credit charge, or the rate calculated under the FCA rules. In practice, this means the interest you apply when a customer defaults must be capped at the agreed‑up‑front rate.
Ensure credit‑tokens are properly accepted before liability arises
If your business issues credit‑tokens (e.g., vouchers or store credit), you can only be held liable for their use once you have accepted the token. Acceptance happens when the token is signed, a receipt is signed, or the token is first used by you or someone you have authorised. Make sure one of these steps occurs before you treat the token as valid.
Ensure one creditor satisfies all Act requirements when there are multiple creditors
Unlimited fineIf a credit deal involves more than one creditor or owner, you only need to make sure the Consumer Credit Act's obligations are carried out for any one of them. You don’t have to repeat the same checks for every creditor – just pick one and get them done, and all are considered compliant. Keep a record of who handled the compliance so you can prove it later.
Ensure security enforcement complies with Consumer Credit Act limits
If your business gives a security (such as a mortgage, guarantee or pledge) for a consumer credit agreement, you must not enforce that security to obtain a better deal than the credit agreement itself allows. When the agreement is cancelled, terminated, or a court refuses enforcement, you must apply the restrictions set out in section 106 to the security, and you may only enforce the security after the agreement is actually made unless you give notice to apply section 106 earlier.
Handle unredeemed pawns according to the law
If you run a pawn‑broking or secured loan business and a customer does not redeem their pawn by the end of the redemption period, you must act. Depending on the size of the loan and the length of the redemption period, the pawn either becomes your property or you must arrange to sell or otherwise realise it. You cannot simply keep the pawn idle.
Handle withdrawal notices for prospective consumer credit agreements
If you are a credit provider, credit‑broker or act on behalf of a borrower, you must accept any written or oral notice that a party wants to pull out of a prospective regulated credit agreement. Once you receive such a notice you must treat the agreement (and any linked transactions) as if it had been made and then cancelled under the Act.
Include delivery demand in default notice and request surrender before legal action
If you sell goods on a hire‑purchase, conditional sale or consumer hire agreement and need to take court action to get them back, you must have asked the buyer in writing to return the goods. Your default notice must contain a clear demand for delivery, and you must send a written request to surrender the goods before you start the legal claim. This ensures the court treats the buyer’s possession as ‘adverse’ and supports your right to recover the goods.
Treat ineffective securities as void and return assets
If a security you have taken on a regulated credit agreement is ruled ineffective under the Consumer Credit Act, you must treat it as if it never existed. You must promptly give back any property held as security, cancel any registration of that security and repay any money you received from it. These steps must be taken immediately once the security is deemed ineffective.
Notifications 8
Give arrears notices on time under consumer credit agreements
If your business provides consumer credit (fixed‑sum or running‑account agreements), you must send the debtor a notice of any sums in arrears within the time limits set out in the Consumer Credit Act. Failing to do so means you lose the right to enforce the agreement and the debtor does not have to pay interest or default charges for that period.
Give creditor notice and wait 14 days before applying for a time order
If your business wants to apply to the court for a time order (a change to the payment schedule) on a regulated credit agreement, you must first send a written notice to the lender or owner stating that you intend to apply and outlining any payment proposal. After sending the notice you must wait at least 14 days before filing the application.
Provide arrears notice to borrowers under running‑account credit agreements
If you lend on a running‑account credit agreement (for example a store card or revolving credit) and a customer misses two consecutive scheduled payments after having made at least two earlier payments, you must send them a notice showing the missed sums and an arrears information sheet. The notice has to be sent by the time you are required to give your next statutory statement under the Act.
Provide debtor with a copy of the overdraft agreement
When you grant an authorised overdraft (business or personal) you must give the borrower a document that sets out the terms of the agreement. This copy must be handed to the debtor before or at the moment the agreement is made, unless the required information has already been supplied under the Consumer Credit (Disclosure of Information) Regulations, in which case it can be provided after or immediately after the agreement.
Provide debtor with copy of signed credit agreement
When you create a regulated credit agreement that is an excluded agreement, you must give the debtor a copy of the signed agreement (and any documents it refers to). If the debtor signs the paper in your presence you must hand it over straight away; otherwise you must send it within seven days. Different types of agreements have slight timing tweaks, but the rule is the same – the borrower must get the full agreement promptly.
Provide debtor with notice of cancellation rights
When you enter into a cancellable credit or hire agreement, you must give the borrower a clear notice that explains their right to cancel, how to do it and who to contact. The notice has to be printed in every copy of the agreement you give them and also sent separately (unless an exception applies) within seven days of the agreement being made.
Provide prescribed pre‑contract information to borrowers
Before you sign any regulated consumer credit agreement (except deferred‑payment credit agreements), you must give the borrower the information the regulations require, in the format they specify. If you fail to do this, the agreement can only be enforced by a court order, which limits your ability to recover the debt.
Serve surety with copy of default notice
If you send a default notice (or a notice under sections 76(1) or 98(1)) to a debtor or hirer, you must also give a copy of that notice to any surety who is a different person. If you don’t, you can only enforce the security against the surety with a court order.
Other requirements 6
Do not enter premises to repossess goods without a court order
If your business is a creditor under a regulated hire‑purchase, conditional sale or consumer hire agreement, you must not go onto the debtor’s premises or land to take back the goods unless a court has ordered you to do so. Attempting to repossess without a court order breaches the Consumer Credit Act and can lead to civil action.
Ensure statements/notices under the Consumer Credit Act are accurate
If you give a customer a statement or notice that falls under sections 77, 78, 79, 97, 107, 108, 109 or 103 of the Consumer Credit Act, that statement becomes legally binding on you. You must make sure it is correct, because a court can order you to pay relief if it is found to be wrong.
Seek court enforcement order when a debtor dies
If a customer who owes you money under a credit agreement dies, you must apply to the court for an enforcement order if you cannot be sure the debt will be paid. You need to show the court that the debtor’s current and future obligations are unlikely to be discharged.
Take required action before the default‑notice deadline
If you get a default notice under a consumer credit agreement, you must carry out the specific step set out in that notice (the action listed in section 88 (1)(b) or (c)) before the date shown. Doing so means the breach is treated as if it never happened, protecting your credit agreement from further enforcement.
Terminate agreement and refund if goods are recovered unlawfully
If your business takes back goods in breach of section 90 of the Consumer Credit Act (for example, under a hire‑purchase agreement), the credit agreement automatically ends. You lose any claim against the debtor and must pay back every instalment the debtor has already paid.
Use a court order to enforce credit agreements or surety payments
If you run a business that lends money or guarantees payments, the Consumer Credit Act says you can only enforce those contracts or guarantees by getting a court order. In other words, you can’t just take money back or take other steps – you must apply to the court to enforce the sum.
Payments and fees 8
Accept and process early repayment requests
If a customer wants to pay off their consumer credit agreement early, you must accept their notice (even if it is spoken) and the payment. You then need to calculate any rebate, deduct any compensation the law allows, and formally discharge the debt for the amount paid. The payment must be received within 28 days of your receiving the notice unless a later date is agreed.
Calculate and apply fair compensatory charge on early repayment
If you lend money under a regulated consumer credit agreement with a fixed interest rate and the borrower pays off early, you may charge a compensatory amount – but only when the early repayment is over £8,000 (or totals over £8,000 in any 12‑month period), the agreement isn’t an overdraft/current‑account facility and the payment isn’t funded by PPI. The charge must be fair, objectively justified and capped at the lower of a set percentage of the repayment (1% or 0.5% depending on the length of the period) or the interest that would have been earned until the agreed discharge date.
Charge only simple interest on default sums
If a customer (debtor) fails to pay and you issue a default sum, you may only add simple interest – no compound or other types of interest. Make sure your credit or hire agreements and any invoices reflect this simple‑interest calculation.
Comply with court time orders for payment or remedy
If a court issues a time order under the Consumer Credit Act, you must pay the debt in the instalments set out or fix any breach of the credit agreement within the time the court specifies. Failure to do so could lead to further enforcement action.
Forward notices or payments received as an agent to the creditor
Unlimited fineIf your business receives a notice or a payment on behalf of a creditor under a regulated consumer credit agreement, you must pass that notice on or send the money to the creditor straight away. Failing to do so can lead to prosecution and unlimited fines.
Handle cancellations of consumer credit agreements correctly
If you offer credit to consumers, you must still enforce repayment and interest even after the creditor cancels the credit contract. Debtors may repay without interest if they do so within one month of the cancellation notice, or before the first instalment date in an instalment plan. If the debt isn’t fully repaid by the scheduled instalment, you must give the debtor a written request showing the remaining instalment amounts, and only then can the debtor continue to pay.
Pay creditor the calculated amount when a hire‑purchase is terminated
If your business ends a hire‑purchase or conditional‑sale agreement, you must pay the creditor the amount set out in the Consumer Credit Act – usually half the total price minus what you have already paid. The amount can be adjusted by a court, increased if you have damaged the goods, and you must also give the goods back if you are still holding them.
Provide a rebate on early settlement of credit charges
If you lend money under a regulated consumer credit agreement, you may be required by regulation to give the borrower back a portion of the charges if they pay off the debt earlier than agreed. This means you have to calculate the rebate and pay it back when the debt is discharged early.
Offences and prohibitions 13
Canvass credit‑brokerage or debt services off‑premises
If you or your business approach customers away from your shop or place of business to promote credit‑brokerage, debt‑adjusting, debt‑counselling or credit‑information services, you are committing an offence. Conviction can lead to a fine and, in more serious cases, imprisonment.
Canvass debtor‑creditor agreements off trade premises
If you approach a potential borrower and try to get them to sign a debtor‑creditor agreement while you are outside your place of business (or you make a follow‑up visit that was not requested in writing), you are committing an offence. The same rule applies unless the FCA has explicitly exempted the type of current account you are offering. Breaching the rule can lead to a fine and/or imprisonment, depending on how the court decides the case.
Canvass debtor‑creditor agreements off‑trade premises
1 year imprisonmentIf you approach people on the street or in public places to offer debtor‑creditor agreements, you breach the Consumer Credit Act. On conviction you can receive up to a year’s imprisonment and/or an unlimited fine.
Directors liable for company consumer credit offences
2 years imprisonmentIf your company breaks a rule under the Consumer Credit Act and you are a director, manager, secretary or acting like one (or a member who controls the company), you are personally guilty of the same offence. You can face the same penalties as the company, which may include an unlimited fine and up to two years' imprisonment.
Fail to comply with a correction order
If a credit reference agency receives an order (from the FCA or the Information Commissioner) to correct or remove an entry in a consumer’s file and does not comply within the time specified, the agency commits a criminal offence. Conviction can lead to a fine and possibly imprisonment, although the Act does not set a specific amount or term.
Fail to comply with alternative procedure for business consumers
If your credit reference agency chooses to use the alternative procedure for business customers under s 160 and then does not send the required notice or information (as set out in s 160(3)‑(4)), you commit a criminal offence. Conviction can lead to a fine and/or imprisonment, but the exact penalties are not spelled out in this section and must be confirmed from the broader Consumer Credit Act provisions.
Fail to disclose credit reference agency details
If you are a creditor, owner or negotiator and you decide not to proceed with a regulated credit agreement because of information from a credit reference agency, you must tell the debtor that the decision was based on that information and give the agency’s name, address and telephone number. You must also provide the same details within the prescribed period if the debtor asks in writing, unless the request comes more than 28 days after negotiations end. Not doing so is a criminal offence.
Fail to provide consumer file on request
If a credit reference agency does not give a consumer a copy of their credit file (or a notice that no file exists) within the time limit after a written request – together with the required rights statement and after the consumer has paid the £2 fee – the agency commits a criminal offence. Conviction can result in a fine and/or imprisonment, although the exact penalties are not set out in this section.
Fail to provide location of goods when requested
Unlimited fineIf your business is a debtor or hirer under a regulated consumer credit agreement and a creditor or owner sends you a written request for the whereabouts of the goods, you must tell them where the goods are within seven working days. If you do not respond and the default lasts for 14 days, you commit a criminal offence. Conviction can lead to a fine (potentially unlimited) and, depending on the court, a term of imprisonment.
Fail to supply copies of pledge agreements
Unlimited fineIf you take a pledge or other security as part of a consumer credit agreement and do not give the borrower a copy of the pledge agreement (or the other required documents), you breach the Consumer Credit Act. On conviction you can be fined – the maximum is an unlimited fine (level 5 on the standard scale). The offence is dealt with in the Magistrates' Court.
Refuse to return pawn without reasonable cause
If you have taken a pawn under a regulated consumer‑credit agreement and you refuse to let the borrower redeem it without a good reason, you are committing a criminal offence. On conviction the court can treat the breach as if the pawn had been stolen, ordering restitution and potentially imposing a fine or prison term.
Send credit‑related circulars to minors
Unlimited fineIf your business sends any document inviting a child or young person to borrow money, obtain goods or services on credit, or seek credit advice, with a view to making money, you commit an offence. It does not matter whether the document is a letter, leaflet or online advert – if it reaches a minor you can be prosecuted. On conviction you face a fine (up to an unlimited amount) and the matter will be dealt with in the Magistrates' Court.
Take pawn from a minor
If you accept an article in pawn from someone you know is a child (or appear to be one), you are committing a criminal offence. The law treats this as a serious breach of consumer protection rules, and a conviction can lead to fines and possibly imprisonment.
Record keeping 2
Give debtor a copy of any unexecuted excluded credit agreement
If you present a consumer credit agreement that is an ‘excluded agreement’ to a customer for their signature, and the document does not become a binding contract, you must give them a copy of that agreement (and any documents it refers to) straight away. The same rule applies if you mail the agreement for signature – you must send the copy at the same time.
Incorporate required disclosures in consumer credit agreements
If you give credit or hire goods to consumers, you have to make sure the contracts contain all the information you’re legally required to give – your rights and duties, the total charge, any protection or remedies you offer, and any other material the Treasury requires. The regulations spell out exactly what must be included and how it must be presented. If a particular requirement is impossible, you can apply to the FCA for a waiver or variation.
Penalties for non-compliance
15 penalties under this legislation. 2 can result in imprisonment. 7 carry an unlimited fine.
Canvass debtor‑creditor agreements off‑trade premises
Unlimited fine and/or 1 year imprisonment
Directors liable for company consumer credit offences
Unlimited fine and/or 2 years imprisonment
Ensure one creditor satisfies all Act requirements when there are multiple creditors
Unlimited fine
Forward notices or payments received as an agent to the creditor
Unlimited fine
Fail to provide location of goods when requested
Unlimited fine
Fail to supply copies of pledge agreements
Unlimited fine
Send credit‑related circulars to minors
Unlimited fine
Canvass credit‑brokerage or debt services off‑premises
Penalty applies
Canvass debtor‑creditor agreements off trade premises
Penalty applies
Fail to comply with a correction order
Penalty applies
Fail to comply with alternative procedure for business consumers
Penalty applies
Fail to disclose credit reference agency details
Penalty applies
Fail to provide consumer file on request
Penalty applies
Refuse to return pawn without reasonable cause
Penalty applies
Take pawn from a minor
Penalty applies
Practical guidance
Our guides explain how to comply with the requirements above.
Sector-Specific 17
Prepare for Buy Now Pay Later regulation
How Buy Now Pay Later providers should prepare for FCA regulation. Covers the current exemption under Article 60F(2), …
FCA consumer credit authorisation
How to get FCA authorisation to offer consumer credit, including lending, credit broking, and debt collection. Covers application …
Understanding UK consumer credit regulation
What consumer credit regulation is, why it exists, and who it applies to. Covers the relationship between the …
Meet pre-contract disclosure requirements for credit
How to provide the required pre-contract information to borrowers before entering a consumer credit agreement. Covers the SECCI …
Understand how the Consumer Duty applies to credit products
How the FCA Consumer Duty applies to consumer credit providers, brokers, and debt collectors. Explains the four outcomes …
Conduct and document affordability assessments for consumer credit
How to conduct, evidence, and document affordability assessments when lending to consumers. Covers the distinction between creditworthiness and …
Comply with debt collection rules
How to collect consumer debts compliantly under FCA rules. Covers CONC 7 requirements for arrears and default handling, …
Handle consumer credit complaints and the Financial Ombudsman
How to set up internal complaints handling for consumer credit, meet the 8-week resolution deadline, issue final response …
Section 75 claims and connected lender liability
What Section 75 of the Consumer Credit Act 1974 means for lenders, card issuers, and retailers. Explains how …
Comply with high-cost short-term credit rules
Additional compliance requirements for firms providing high-cost short-term credit (HCSTC), including the price cap regime, enhanced affordability assessments, …
Consumer credit compliance checklist
Annual compliance checklist for consumer credit firms covering FCA permissions, CONC requirements, advertising, pre-contract obligations, Consumer Duty, complaints …
Comply with credit broking rules
How to comply with FCA credit broking requirements. Covers who counts as a credit broker, the difference between …
Hire purchase and conditional sale agreements
How hire purchase and conditional sale agreements work under UK consumer credit law. Covers title retention, the one-third …
Buy Now Pay Later regulation: what businesses need to know
Buy Now Pay Later (BNPL) and other Deferred Payment Credit products come under FCA regulation from 15 July …
Comply with credit advertising rules
How to advertise consumer credit products compliantly under FCA rules. Covers representative APR requirements, triggered information, social media …
Handle early settlement and withdrawal requests
How to handle consumer requests for early settlement and exercise of the 14-day right of withdrawal from credit …
Consumer credit rates and thresholds reference
Quick reference for consumer credit rates, thresholds, and regulatory limits. Covers Section 75 thresholds, HCSTC price cap, FCA …
Sections and provisions
272 classified provisions from this legislation.
Duties 40
- s.55 Disclosure of information.
- s.57 Withdrawal from prospective agreement. of the following
- s.59 Agreement to enter future agreement void.
- s.60 Form and content of agreements.
- s.61B Duty to supply copy of overdraft agreement
- s.62 Duty to supply copy of unexecuted agreement : excluded agreements. other document referred
- s.63 Duty to supply copy of executed agreement : excluded agreements. other document referred
- s.64 Duty to give notice of cancellation rights. copy given
- s.66 Acceptance of credit-tokens. The debtor
- s.71 Cancellation: repayment of credit. interest
- s.86D Failure to give notice of sums in arrears sum of interest
- s.86A FCA to prepare information sheets on arrears and default
- s.86C Notice of sums in arrears under running-account credit agreements
- s.86F Interest on default sums
- s.89 Compliance with default notice.
- s.91 Consequences of breach of s. 90.
- s.92 Recovery of possession of goods or land. premises
- s.93 Interest not to be increased on default.
- s.94 Right to complete payments ahead of time. option
- s.95 Rebate on early settlement.
- ... and 20 more duties
Offences and penalties 14
- s.49 Prohibition of canvassing debtor-creditor agreements off trade premises.
- s.50 Circulars to minors.
- s.80 Debtor or hirer to give information about goods.
- s.114 Pawn-receipts.
- s.115 Penalty for failure to supply copies of pledge agreement, etc.
- s.119 Unreasonable refusal to deliver pawn.
- s.154 Prohibition of canvassing certain ancillary credit services off trade premises.
- s.157 Duty to disclose name etc. of agency.
- s.158 Duty of agency to disclose filed information.
- s.159 Correction of wrong information.
- s.160 Alternative procedure for business consumers.
- s.167 Penalties.
- s.169 Offences by bodies corporate.
- Schedule 1 Prosecution and Punishment of Offences
Powers 16
- s.32A Power to suspend licence
- s.122 Order in Scotland to deliver pawn.
- s.131 Protection orders.
- s.132 Financial relief for hirer.
- s.135 Power to impose conditions, or suspend operation of order.
- s.136 Power to vary agreements and securities.
- s.140B Powers of court in relation to unfair relationships
- s.142 Power to declare rights of parties.
- s.164 Power to make test purchases etc.
- s.174A Powers to require provision of information or documents etc.
- s.178 Local Acts.
- s.179 Power to prescribe form etc. of secondary documents.
- s.181 Power to alter monetary limits etc.
- s.182 Regulations and orders.
- s.183 Determinations etc. by FCA.
- s.188 Examples of use of new terminology.
Definitions 36
- s.9 Meaning of credit.
- s.10 Running-account credit and fixed-sum credit. credit limit
- s.11 Restricted-use credit and unrestricted-use credit.
- s.12 Debtor-creditor supplier agreements.
- s.13 Debtor-creditor agreements.
- s.14 Credit-token agreements.
- s.19 Linked transactions.
- s.20 Total charge for credit the total charge for credit
- s.48 Definition of canvassing off trade premises (regulated agreements).
- s.56 Antecedent negotiations. antecedent negotiations negotiator
- s.69 Notice of cancellation.
- s.73 Cancellation: goods given in part-exchange.
- s.86 Death of debtor or hirer.
- s.95B Compensatory amount: green deal finance
- s.116 Redemption period.
- s.125 Holders in due course.
- s.126 Enforcement of land mortgages. regulated mortgage contract
- s.127 Enforcement orders in cases of infringement.
- s.133 Hire-purchase etc. agreements: special powers of court.
- s.140C Interpretation of ss. 140A and 140B
- ... and 16 more definitions
Exemptions 58
- s.8 Consumer credit agreements.
- s.17 Small agreements.
- s.18 Multiple agreements.
- s.55C Copy of draft consumer credit agreement
- s.58 Opportunity for withdrawal from prospective land mortgage.
- s.61A Duty to supply copy of executed consumer credit agreement
- s.61 Signing of agreement.
- s.66A Withdrawal from consumer credit agreement
- s.67 Cancellable agreements.
- s.68 Cooling-off period.
- s.70 Cancellation: recovery of money paid by debtor or hirer.
- s.72 Cancellation: return of goods.
- s.74 Exclusion of certain agreements from Part V.
- s.75 Liability of creditor for breaches by supplier.
- s.75A Further provision for liability of creditor for breaches by supplier
- s.76 Duty to give notice before taking certain action.
- s.77B Fixed-sum credit agreement: statement of account to be provided on request
- s.77A Statements to be provided in relation to fixed-sum credit agreements
- s.77 Duty to give information to debtor under fixed-sum credit agreement.
- s.78A Duty to give information to debtor on change of rate of interest
- ... and 38 more exemptions