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Equal liability

Under section 75 of the Consumer Credit Act 1974, the credit provider may be equally responsible for any breach of contract or misrepresentation by a supplier of goods or services on credit.

Section 75 provides that the credit provider will be 'jointly and severally liable' with the supplier if:

  • the cash price of the item is more than £100 but not more than £30,000
  • the credit agreement is regulated under the Act, and
  • credit is advanced under arrangements between the credit provider and the supplier.

Section 75 applies to purchases on credit cards (depending upon the cash price of the goods or services) and also retail credit. 

It does not apply to purchases using charge cards, debit cards or credit card cheques.

Additional protection is provided by the legislation implementing the Consumer Credit Directive, which comes fully into force on 1 February 2011. Under section 75A of the Act, the creditor may be liable in certain limited cases, for breach of contract, where section 75 does not apply.

Section 75A applies only if:

  • the cash price of the item exceeds £30,000 but the amount of credit does not exceed £60,260
  • the credit agreement is a 'linked agreement', i.e. the goods or services are specified in the credit agreement or the creditor uses the services of the supplier in connection with the making of the agreement, and
  • the supplier cannot be traced or is insolvent or does not respond or the consumer has taken reasonable steps to pursue the supplier but has not obtained satisfaction (this need not include court action).

A summary of the new provisions is in chapter 13 of the BIS guidance on the implementing regulations (pdf).

A summary of section 75 (and how to pursue claims where it applies) is on the Consumer Direct website.


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