Consumer Credit Act

The Consumer Credit Act (CCA) of 1974 applies to most businesses that lend money to consumers or offer goods and services. The Act requires that these businesses obtain a consumer credit license from the Office of Fair Trading (OFT) .

It also sets down rules for how certain credit and hire agreements should be set out to ensure they are easy for the consumer to understand. For example, they must include an Annual Percentage Rate (APR) which represents a total charge for the credit - not just the headline rate.

Under the Consumer Credit Act, consumers also have the right to a 'cooling off period' of seven days after signing a credit agreement face-to-face and can claim money back on faulty goods or services that cost under £30,000.

The Consumer Credit Act 2006 is part of the Department of Trade and Industry's (DTI) programme to reform the Act of 1974. One provision, which will be implemented in 2008, is the abolition of the upper limit of £25,000 for CCA-regulated loans. The new Act, which was given Royal Ascent in March 2006, will also give the OFT greater powers to investigate licensees and ensure they are operating under the terms set down in the Act.

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