Consumer Credit Act UK: Know Your Rights (2025)

Overview

The Consumer Credit Act 1974, updated significantly by the Consumer Credit Act 2006 and now sitting alongside Financial Conduct Authority rules, is the central piece of legislation regulating consumer borrowing in the UK. It governs the relationship between lenders and individual borrowers, placing obligations on creditors and giving borrowers a defined set of rights that cannot be signed away in the small print.

The Act applies to most regulated credit agreements entered into by individuals, whether that is a loan from a high street bank, a store card, a credit card, a car finance deal, or a hire purchase arrangement. It covers what must be disclosed before you agree, how the agreement itself must be written, your right to change your mind, how early repayment works, and what happens if you fall behind.

Since 2014, the Financial Conduct Authority has taken over day-to-day regulation of consumer credit firms, so the Act now works hand in hand with the FCA Handbook, particularly the CONC sourcebook. Together they form the rulebook that every responsible UK lender has to follow.

Key steps

1. Check whether your agreement is regulated. Not every credit deal falls under the Act. Most borrowing by individuals for personal use is regulated, but some high-value loans, certain buy-to-let mortgages and lending purely for business purposes may sit outside it. Look at your agreement, which should clearly state whether it is regulated under the Consumer Credit Act.
2. Read the pre-contract information carefully. Before you sign, the lender must give you a standard pre-contract information document setting out the total amount payable, the APR, the duration, any fees, and what happens if you miss payments. Take your time with this. If anything is unclear, ask questions before you commit rather than after.
3. Use your withdrawal right if you have second thoughts. For most regulated credit agreements, you have 14 days from signing (or from receiving your copy of the agreement) to withdraw without giving a reason. You will need to repay the capital drawn down plus any interest accrued, but no penalty applies. Notify the lender in writing to be safe.
4. Understand your Section 75 protection when paying by credit card. If you buy goods or services costing more than a low threshold and up to a higher statutory cap using a credit card, the card provider is jointly liable with the retailer if something goes wrong. This is incredibly powerful for faulty goods, failed holidays or businesses that go under. Keep your receipts.
5. Know what to do if you fall behind. If you miss payments, the lender must send statutory notices, including a default notice, before they can take enforcement action or terminate the agreement. You have rights to time to pay, to request a copy of the agreement, and in some cases to apply to court for a time order. Do not ignore letters, because early engagement almost always improves the outcome.