Consumer credit law

• Terms of a credit agreement
• Request for information
• Unfair relationships

Consumer credit is regulated by the Consumer Credit Act 1974 (CCA 1974), amended in 2006. This law protects consumers because it places legal obligations on lenders. If lenders do not meet these obligations, a credit agreement may be unenforceable.

Terms of a credit agreement

The CCA 1974 prescribes terms that must be in all credit agreements. These include:

•a statement of the total amount borrowed (not including charges);
•the rate of interest and if it is variable;
•a notice of cancellation in a required form (if it is cancellable);
•details of how it is to be repaid, and the amount and frequency of payments.

Check the credit agreement carefully to make sure that these terms are included. If any of these terms are not included, you may be able to challenge the agreement.

Note: what terms need to be included can often depend on the date that the agreement was taken out, as the rules change over time. Depending on when the credit agreement was taken out, the lender may also be legally obliged to include other terms in the agreement.

Request for information

The lender must give the customer certain information related to credit agreements in their name.

If requested, they must share with the customer a ‘true copy’ of the agreement, related documents, and a statement of account. Lenders sometimes provide a ‘reconstituted agreement’, which has not been signed, instead of a ‘true copy’. An agreement may be invalid if it is not signed. However, a court may rule in the lender’s favour if they later provide a signed agreement.

Unfair relationships

It is possible to challenge the liability of a credit agreement based on an unfair relationship between the client (as a consumer) and the lender.

A court may find there to be an ‘unfair relationship’ if the lender has mis-sold a customer a financial product for personal gain – eg, by deliberately misleading them.

The relationship with the abuser will not normally be considered where the court is ruling on an unfair relationship in relation to a credit agreement.

If the court decides that the relationship between the lender and the customer is unfair, they can alter the terms of the credit agreement, reduce the amount owed, make the lender refund any money paid or remove any obligation on the customer to repay.