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Prescribed and unprescribed terms on consumer credit agreements

• Prescribed terms
• Non-prescribed terms

A credit agreement is not properly executed unless it contains all the prescribed terms and conforms to regulations made under section 60(1) of the Consumer Credit Act 1974, and is signed in the prescribed manner.1s61 CCA 1974 The consequence of a failure or omission to state fully and correctly any of the prescribed terms is to render the agreement improperly executed and therefore unenforceable except by order of the court.

’Prescribed terms’ and ’non-prescribed terms’ must be included in a regulated agreement for it to be properly executed.

 

1     s61 CCA 1974 »

Prescribed terms

Generally, prescribed terms should be set out first, followed by non-prescribed terms. A clear explanation of the client’s obligations must be included above the signature box or space.

The prescribed terms are:1Sch 6 Consumer Credit (Agreements) Regulations 1983

•the amount of credit or credit limit (or how the credit limit is determined);
•the interest rate;
•details of the repayments expressed by reference to a combination of:
◦the number;
◦the amount;
◦the frequency;
◦the dates;
◦how they are determined;
◦any way in which the creditor can vary what is payable.

 

1     Sch 6 Consumer Credit (Agreements) Regulations 1983 »

Non-prescribed terms

Certain other information, known as ’non-prescribed terms’, must be included in an agreement for it to be properly executed:

•consumer credit heading;
•the agreement is regulated under the CCA 1974;
•names and addresses of all parties to the agreement. Although this should be spelt correctly, it is very unlikely a court would decide an agreement was improperly executed if a name was incorrectly spelt;
•financial information expressed as a combination of:
◦the amount of credit or credit limit (or the manner it is to be determined);
◦the total amount payable if fixed, or an estimate if the rate is variable;
◦the duration of agreements;
◦the timings of repayments;
◦the APR and whether it is variable;
•other financial information including:
◦description of any goods or services;
◦the cash price;
◦any advance payment – eg, a deposit;
◦the total charge for credit;
◦the rate of interest;
◦details of any security;
◦key information;
◦statement of consumer rights, including cancellation rights (or where applicable, a statement that the agreement is not cancellable);
◦default charges;
◦signature box or space for both parties to sign;
◦cancellation box (where appropriate);
◦separate signature box for the client to confirm the purchase of any insurance product.