The Consumer Credit Act 1974 enables borrowers to challenge unfair credit agreements in court and obtain redress, if the overall relationship is unfair to the borrower.
This is in addition to consumers being able to take disputes to the Financial Ombudsman Service (FOS). See alternative dispute resolution scheme.
The provisions were introduced by the Consumer Credit Act 2006. They applied to new agreements from 6 April 2007, and to pre-existing agreements from 6 April 2008. Agreements completed before the new provisions took effect remain subject to the previous extortionate credit bargains provisions.
The 2006 Act also enhanced the right to apply for a time order, which is a court procedure that can give borrowers more time to repay a debt.
Section 140A of the 1974 Act provides that a court may determine that the relationship between a lender and a borrower arising out of a credit agreement (or the agreement taken with any related agreement) is unfair to the borrower because of:
The courts have a wide range of powers where a credit relationship is found to be unfair, including:
In addition, where unfair relationships harm the collective interests of consumers, the OFT and other enforcers (including Local Authority Trading Standards services) can take enforcement action under Part 8 of the Enterprise Act 2002.
The OFT has published guidance on Part 8 action and unfair relationships. The guidance was updated in August 2011. See Unfair relationships - Enforcement action under Part 8 of the Enterprise Act 2002 (pdf 440kb).
It is not the role of the OFT to take up complaints on behalf of individual consumers. If a consumer has a complaint against a lender, and considers that the overall relationship is unfair, s/he should speak to a Citizens Advice Bureau or other debt adviser.
Alternatively, if the consumer has pursued the complaint with the lender but is dissatisfied with the outcome, s/he can approach the Financial Ombudsman Service.
Section 129 of the 1974 Act provides that a court can make a time order, giving the consumer more time to repay a debt under a regulated consumer credit or consumer hire agreement, if the court considers it 'just' to do so. In addition, section 136 provides that an agreement may be amended as a consequence of a time order - for example, by reducing the rate of interest or extending the term of the agreement.
The consumer can apply for a time order following receipt of a default notice, or a notice of enforcement action under the Act. The court can also make a time order as part of proceedings brought by the lender for enforcement of the agreement or to recover possession of goods or land (for example, mortgage repossession).
A consumer can also apply for a time order following receipt of an arrears notice, provided that s/he first gives notice to the lender and submits an alternative payment proposal, and at least 14 days elapse before an application is made to the court.
A guide to time orders is available on the National Debtline website.
These are based on information of which we are aware and so may not be a comprehensive list. We would welcome details of any additional or new judgments as they arise (please email nicola.balbier@oft.gsi.gov.uk). The case summaries have been based on the judgments themselves, however for copyright reasons the OFT is unable to release copies of the actual judgements. Copies can be obtained by application to the relevant court or a law website. Note also that the summaries have been prepared for guidance only. They should not be relied upon as an accurate expression of the law.
View the list of unfair relationships cases and download case summaries.
Back to: Changes introduced by CCA06
This feature requires Javascript and Cookies to be enabled on your browser
Register for email alerts or amend your existing account details here.