Lecture 11 - Formalities and withdrawal from regulated agreements
Creditor’s pre- contractual obligations
Disclosure of information
- S. 55 Disclosure of information: Regulations may require specified information to be disclosed in the
prescribed manner to the debtor or hirer before a regulated agreement is made. If such regulations
are not complied with, the agreement is enforceable against the debtor on an order of the court only
- The Consumer Credit (Disclosure of Information) Regulations 2010: require that the creditor
discloses key information relating to the agreement, so that the debtor can understand the effect of
the agreement
- Application: consumer credit agreements entered into after 1 February 2011
- Excluded agreements: consumer credit agreements made predominantly for business purposes, or
where the credit exceeds £60,260, or where it is secured on land
- Required pre-contractual information includes: the type of credit, name of the creditor, total amount
payable and the credit limit
Pre-contractual explanations
(Reg. 3 of the Consumer Credit Regulations 2010)
- Before a regulated consumer credit agreement, is made, the creditor must provide the debtor with an
adequate explanation regarding the credit agreement in order to place him in a position enabling him
to assess whether the agreement is adapted to his needs and his financial situation.
- The creditor must in particular explain:
(a) the features of the agreement which may make the credit to be provided under the agreement
unsuitable for particular types of use,
(b) how much the debtor will have to pay periodically and, where the amount can be determined, in
total under the agreement,
(c) the features of the agreement which may operate in a manner which would have a significant
adverse effect on the debtor in a way which the debtor is unlikely to foresee,
(d) the principal consequences for the debtor arising from a failure to make payments under the
agreement at the times required by the agreement
(e) the effect of the exercise of any right to withdraw from the agreement
Assessment of creditworthiness
(Reg. 5 of the Consumer Credit Regulations 2010)
Before making a regulated consumer credit agreement, or before significantly increasing the amount
of credit, the creditor must undertake an assessment of the creditworthiness of the debtor.
- A creditworthiness assessment must be based on sufficient information obtained from—
(a) the debtor, where appropriate, and
(b) a credit reference agency, where necessary
Copy of draft consumer credit agreement
- S. 55C CCA: Before a regulated consumer credit agreement is made, the creditor must, if requested,
give to the debtor without delay a copy of the prospective agreement
Withdrawal from prospective regulated agreements
- Antecedent negotiations (see sections 56(1) and 57(3)) CCA
- The dealer is deemed to be the agent of the creditor in antecedent negotiations with the consumer
- A party can withdraw from the prospective agreement by giving notice to the other party
- Effect of withdrawal. See sections 57(1) and (4)
- Same effect as an agreement cancelled under s. 69 CCA
Formalities for making regulated agreements
- The Consumer Credit (Agreements) Regulations 2010 require the inclusion of detailed information,
such as:
Names and addresses of the parties
Duration of the contract
Amount of credit
Creditor’s pre- contractual obligations
Disclosure of information
- S. 55 Disclosure of information: Regulations may require specified information to be disclosed in the
prescribed manner to the debtor or hirer before a regulated agreement is made. If such regulations
are not complied with, the agreement is enforceable against the debtor on an order of the court only
- The Consumer Credit (Disclosure of Information) Regulations 2010: require that the creditor
discloses key information relating to the agreement, so that the debtor can understand the effect of
the agreement
- Application: consumer credit agreements entered into after 1 February 2011
- Excluded agreements: consumer credit agreements made predominantly for business purposes, or
where the credit exceeds £60,260, or where it is secured on land
- Required pre-contractual information includes: the type of credit, name of the creditor, total amount
payable and the credit limit
Pre-contractual explanations
(Reg. 3 of the Consumer Credit Regulations 2010)
- Before a regulated consumer credit agreement, is made, the creditor must provide the debtor with an
adequate explanation regarding the credit agreement in order to place him in a position enabling him
to assess whether the agreement is adapted to his needs and his financial situation.
- The creditor must in particular explain:
(a) the features of the agreement which may make the credit to be provided under the agreement
unsuitable for particular types of use,
(b) how much the debtor will have to pay periodically and, where the amount can be determined, in
total under the agreement,
(c) the features of the agreement which may operate in a manner which would have a significant
adverse effect on the debtor in a way which the debtor is unlikely to foresee,
(d) the principal consequences for the debtor arising from a failure to make payments under the
agreement at the times required by the agreement
(e) the effect of the exercise of any right to withdraw from the agreement
Assessment of creditworthiness
(Reg. 5 of the Consumer Credit Regulations 2010)
Before making a regulated consumer credit agreement, or before significantly increasing the amount
of credit, the creditor must undertake an assessment of the creditworthiness of the debtor.
- A creditworthiness assessment must be based on sufficient information obtained from—
(a) the debtor, where appropriate, and
(b) a credit reference agency, where necessary
Copy of draft consumer credit agreement
- S. 55C CCA: Before a regulated consumer credit agreement is made, the creditor must, if requested,
give to the debtor without delay a copy of the prospective agreement
Withdrawal from prospective regulated agreements
- Antecedent negotiations (see sections 56(1) and 57(3)) CCA
- The dealer is deemed to be the agent of the creditor in antecedent negotiations with the consumer
- A party can withdraw from the prospective agreement by giving notice to the other party
- Effect of withdrawal. See sections 57(1) and (4)
- Same effect as an agreement cancelled under s. 69 CCA
Formalities for making regulated agreements
- The Consumer Credit (Agreements) Regulations 2010 require the inclusion of detailed information,
such as:
Names and addresses of the parties
Duration of the contract
Amount of credit
