Pre-contract information

The Consumer Credit Act 1974 lays down rules requiring information to be given to borrowers or hirers before entry into a consumer credit or hire agreement.

For agreements entered into following face-to-face discussions, the relevant regulations are the Consumer Credit (Disclosure of Information) Regulations 2004 (the Regulations).

If the agreement was entered into at a distance, without face-to-face contact between the parties, the relevant regulations are the Financial Services (Distance Marketing) Regulations 2004 made by HM Treasury.

There are also rules under the Consumer Credit Act about the cancellation of a regulated agreement, and withdrawal from an agreement before it is made. Special rules apply in the case of agreements secured on land.

The Consumer Credit (Disclosure of Information) Regulations

These Regulations apply to all regulated consumer credit agreements and consumer hire agreements, apart from distance contracts and agreements secured on land.

The Regulations require specified information to be provided to the borrower before a regulated agreement is made. Essentially, this is the same information as is required in the credit agreement.

The information must be of equal prominence, and easily legible. It must be contained in a document headed 'Pre-contract information' which must be separate from the credit agreement. No other information may be included in addition.

The document must be available and accessible to the borrower, so that he can take it away if he wishes. This is so that he can use it to compare credit offers.

If the above requirements are not met, the lender can only enforce any agreement against the borrower by getting a court order. Local authority trading standards services or the OFT can take enforcement action against the lender, using powers in Part 8 of the Enterprise Act 2002.

The Department for Business, Enterprise and Regulatory Reform (BERR) has issued guidance on the regulations. Download the BERR guidance (pdf 64 kb).

If there are any queries on the regulations these should be addressed to credit.guidance@oft.gsi.gov.uk.

The Financial Services (Distance Marketing) Regulations

These Regulations apply to credit agreements and other financial services contracts entered into at a distance, without face-to-face communications.

The Regulations require specified information to be provided to the consumer in good time, before the consumer is bound by the contract.

In the case of credit contracts, the information must include:

• the name and address of the creditor
• a description of the main characteristics of the credit
• the total price payable for the credit
• the arrangements for payment, and
• information regarding cancellation or termination.

The information must be provided in a clear and comprehensible manner, and on paper or another durable medium which is available and accessible to the consumer.

The Regulations also provide a right of cancellation where a contract is entered into at a distance, other than in the case of agreements secured on land. The period of cancellation is 14 days from the conclusion of the contract or (if later) the date on which the consumer received the full terms and conditions.

Breach of the Regulations can be enforced by the OFT or local authority trading standards services, or by the Financial Services Authority (FSA).

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