Origins and the modern framework
The Consumer Credit Act 1974 was the UK's first comprehensive statute regulating consumer borrowing. It received Royal Assent on 31 July 1974 and brought together a patchwork of earlier legislation, including the Moneylenders Acts and the Hire-Purchase Acts. The Act was designed to protect borrowers from unfair lending practices and to provide a uniform legal framework for what was, at the time, a rapidly expanding consumer credit market.
The Act was originally administered by the Office of Fair Trading. From 1 April 2014, responsibility transferred to the Financial Conduct Authority. Many of the Act's most consumer-protective provisions remain in force today, while detailed rules on conduct, disclosure and creditworthiness now sit in the FCA's Consumer Credit Sourcebook (CONC).
The Consumer Credit Act 1974 still governs around £200 billion of UK consumer lending. Sections 75, 140A and the early-settlement rules remain among the most powerful consumer rights in any UK statute.
Why the Act still matters
The Act is currently undergoing the most significant reform in its history. HM Treasury published its Phase 1 consultation on 19 May 2025, with a Phase 2 consultation expected during 2026. The reform programme will move many CCA provisions into the FCA rulebook to align with the principles-based regime introduced by the Consumer Duty. The detailed timing depends on parliamentary scheduling, but core consumer rights such as Section 75 joint liability and Section 140A unfair relationships are expected to be preserved in some form throughout the reform.
Section 75: joint and several liability for credit card purchases
Section 75 of the Act creates joint and several liability between the supplier of goods or services and the credit provider where the goods or services are paid for with regulated credit. The provision is most commonly used in connection with credit card purchases, where it makes the card issuer equally liable to the consumer for any misrepresentation or breach of contract by the merchant.
The protection applies to any single transaction with a cash price between £100 and £30,000 inclusive. Where the transaction falls within this range and the consumer used a credit card or other regulated credit to pay any part of the price, the consumer can claim against the card issuer directly for any failure of the supplier. The amount claimed is not limited to the £30,000 transaction value: a holiday booked on a credit card for £2,000 that is not delivered can produce a claim against the card issuer for any consequential losses, including alternative travel and accommodation.
| Condition | Requirement | Practical effect |
|---|---|---|
| Transaction value | £100 to £30,000 | Single item value, not total credit-card spend |
| Credit type | Regulated CCA credit | Credit cards qualify; debit cards and most other payment methods do not |
| Use of credit | Any part of the price on credit | Even a £1 deposit on the credit card can engage Section 75 |
| Type of failure | Misrepresentation or breach of contract | Includes faulty goods, undelivered services, mis-described items |
| Claim amount | Up to total loss caused | Not limited to the transaction value where consequential losses are larger |
Section 75 covers most credit cards but not most debit cards
Section 75 only applies to regulated credit agreements. Credit cards and store cards are within scope. Debit cards, prepaid cards, gift cards and most digital wallets are not. Where the consumer used a debit card, a different protection (chargeback through the card scheme) may apply, but this is voluntary and time-limited rather than statutory. Section 75 is the most powerful consumer-payment right in UK law and is one reason a credit card is often a safer payment method for high-value transactions than a debit card.
Section 75A: linked credit for non-card purchases
Section 75A was added to the Act in 2010 to extend similar protections to fixed-sum credit agreements that do not qualify under Section 75. The most common application is to point-of-sale finance: a consumer buying a sofa, kitchen or vehicle on a finance agreement arranged by the seller, where the finance is provided by a separate lender linked to the seller.
Section 75A applies to agreements between £30,000 and £60,260. It requires the consumer to have first attempted reasonable steps to obtain redress from the supplier (typically writing to the supplier and waiting for a response). Where those steps have failed (the supplier is in liquidation, untraceable or simply refuses to remedy the issue), the consumer can pursue the lender directly under Section 75A.
The threshold and the prior-steps requirement make Section 75A less useful for most consumers than Section 75. Most retail purchases fall under £30,000 and are therefore covered by Section 75 directly where a credit card was used. Section 75A becomes relevant primarily in larger transactions paid for through point-of-sale finance, including some kitchen and motor finance arrangements.
Sections 94 to 97A: the right to early settlement
Sections 94 to 97A give borrowers a statutory right to settle a regulated credit agreement early. The right cannot be excluded or restricted by the agreement. It applies to virtually all regulated consumer credit. The provisions also limit the rebate the lender is entitled to retain from the unearned interest, ensuring the borrower benefits from settling early.
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The right to settle in full at any time (section 94)
The borrower can pay off the entire balance at any point during the agreement. Notice in writing is required for some longer agreements. The lender must accept the settlement and discharge the agreement.
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The right to a rebate of unearned interest (section 95)
Where the borrower settles early, the lender must rebate the proportion of interest and charges that relate to the period after settlement. The amount of rebate is calculated under the Consumer Credit (Early Settlement) Regulations 2004, with a small charge permitted to compensate the lender for the cost of unwinding the agreement.
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The right to a settlement statement on request (section 97)
The borrower can request a statement showing the exact amount required to settle the agreement at a specified date. The lender must provide this within 12 working days. The statement is binding on the lender for the period stated.
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The right to make partial early payments (section 94)
A borrower can make a payment of any amount towards the agreement at any time. The lender must apply the payment to reduce the balance and recalculate the remaining interest accordingly. Some lenders attempt to refuse partial early payments; they cannot do so for regulated agreements.
Some lenders attempt to charge "early redemption penalties" for settlement before a fixed term. For agreements regulated under the Act, only the limited rebate adjustment under section 95 is permitted; broader penalties are unlawful and recoverable. Mortgages have a separate regulatory regime and different rules apply.
Sections 99 to 100: voluntary termination of hire-purchase agreements
Sections 99 and 100 give borrowers a statutory right to terminate a hire-purchase or conditional sale agreement at any time before the final payment is due. The right is most commonly exercised in motor finance, where it is known as the "50 per cent rule" because of how the lender's entitlement is calculated.
The statutory formula limits what the borrower must have paid to terminate the agreement. The total liability is capped at half the total amount payable under the agreement, including any deposit. Where the borrower has already paid this 50 per cent figure, no further payment is required to walk away. Where the borrower has paid less than the 50 per cent figure, they must pay the difference to terminate.
Voluntary termination of a £20,000 motor finance agreement
A consumer enters a 5-year motor finance agreement for a car worth £18,000, with total amount payable (including interest) of £21,000 once a £2,000 deposit is included.
The 50 per cent figure is £10,500. The deposit counts towards this total.
After 30 monthly payments of £316 plus the £2,000 deposit, the borrower has paid £11,480 in total. This is more than the £10,500 figure, so they can terminate the agreement and return the car without owing any further amount.
If the borrower had only made 20 payments (total paid: £8,320) the borrower would need to pay £2,180 to bring the total up to £10,500 before terminating. The remaining 40 monthly payments would be cancelled.
The lender can also charge for damage to the vehicle beyond fair wear and tear, but cannot charge any other fees for exercising the statutory right.
Voluntary termination is a powerful right in motor finance specifically. Where the consumer's circumstances change (loss of income, change of needs, no longer wanting the car), terminating the agreement under section 99 is often more cost-effective than continuing payments or attempting to sell the vehicle. The right does not exist for personal loans or credit cards, only for hire-purchase and conditional sale agreements.
Sections 140A to 140D: unfair relationships
Sections 140A to 140D, added to the Act in 2006, give the courts wide power to intervene where the relationship between borrower and lender is unfair. The court can vary or set aside the agreement, order the lender to repay sums paid or grant any other remedy considered appropriate. The provisions apply to any credit agreement regardless of size and are not subject to the £30,000 or £60,260 limits that apply to other parts of the Act.
The unfair relationship test is broad. Section 140A allows the court to consider any matters it thinks relevant to the borrower or the lender, including the terms of the agreement, the way the lender has exercised any of its rights and any other relevant circumstance. A relationship can be unfair without any specific term of the agreement being unenforceable on its face.
The court may make an order under this section in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor.
Section 140A(1), Consumer Credit Act 1974
The Supreme Court considered Section 140A in the 2014 case of Plevin v Paragon Personal Finance, holding that a high commission paid to a broker without disclosure to the borrower could create an unfair relationship even where every term of the agreement was lawful. The decision opened a wave of mis-sold payment protection insurance (PPI) claims. More recently, the Supreme Court applied the same provision in Johnson v FirstRand Bank in August 2025, holding that undisclosed commission arrangements in motor finance could create an unfair relationship.
The Johnson decision is the foundation of the current FCA motor finance redress scheme covering motor finance agreements between 6 April 2007 and 1 November 2024 (see our guide on claiming compensation for unfair lending). The wider point is that Section 140A remains a live and evolving consumer protection more than 50 years after the Act became law.
Sections 77 to 78A: the borrower's information rights
Sections 77, 78 and 78A give borrowers a statutory right to request key information about their credit agreement. The right exists during the agreement and after it has ended. It is one of the most useful tools available to a borrower considering a complaint or a Section 140A claim.
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Statutory copy of the credit agreement
For a £1 fee, the lender must provide a copy of the executed agreement signed by both parties (or an equivalent reconstituted document if the original cannot be located). The lender must comply within 12 working days. Failure to comply makes the agreement unenforceable until compliance, although in practice lenders almost always provide the document on request.
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Statement of account
The lender must provide a statement showing the amount paid to date, the amount currently owed and the amounts still to be paid. The statement is provided alongside the agreement copy and is essential for any claim about charges or interest applied to the account.
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Specific information about default and termination
Where a default notice has been issued or the agreement has been terminated, the borrower can request the precise reasons and the amounts claimed. This is particularly important where the borrower disputes the termination or where the claimed amount differs from the borrower's records.
Requesting these documents is the standard first step in any unfair-lending claim. Bank statements show what the borrower paid; the credit agreement shows what they were charged for; the statement of account shows the lender's view of the account history. Together, these three documents form the basis of most successful claims under Section 140A.
BNPL regulation and the reform programme
Buy-now-pay-later (BNPL) products have until now sat outside the Consumer Credit Act under a historical exemption for interest-free credit repayable in 12 months or fewer. This is changing. The government has confirmed that BNPL agreements offered by third-party lenders (formally called "Deferred Payment Credit" or DPC) will become regulated. The regime takes effect on Regulation Day, currently 15 July 2026, with detailed FCA rules under consultation in 2025-26.
The new BNPL regime brings these products inside the consumer protections that apply to other regulated credit. Financial Ombudsman escalation will be available. The Consumer Duty will apply. CONC affordability and creditworthiness rules (CONC 5.2A) will apply. Section 75 joint liability will apply for purchases between £100 and £30,000, although most BNPL transactions fall below the £100 threshold. Until Regulation Day, BNPL agreements remain outside these protections; consumers should check whether their BNPL provider is voluntarily applying equivalent protections in advance of regulation.
| Stage | Timing | Scope |
|---|---|---|
| Phase 1 consultation | Published 19 May 2025 | Information requirements, sanctions and criminal offences |
| Phase 1 response | During 2026 | Government's view on consultation responses |
| Phase 2 consultation | Expected during 2026 | Rights and protections, including Section 75 and Section 140A |
| BNPL Regulation Day | 15 July 2026 | BNPL inside FCA perimeter and CCA Section 75 |
| Implementation | 2027 to 2028 (estimated) | Most CCA provisions move to FCA rulebook in stages |
| Section 75 and Section 140A | Expected to be retained | Core consumer rights preserved in some form |
The reform aims to move from prescriptive statutory rules towards a more principles-based regime aligned with the Consumer Duty. The information-disclosure provisions and statutory sanctions are likely to move from the Act into the FCA rulebook, with the FCA having wider discretion to update rules without requiring primary legislation. The core consumer rights (Section 75, Section 140A, the early-settlement rules and the voluntary-termination rights) are expected to be preserved in some form, although the precise mechanism is still under consultation. Existing agreements will be subject to transitional provisions to be set out in Phase 2.
The Act's protections only apply where the lender is authorised to carry out consumer credit business. Before relying on Section 75, Section 140A or any other provision discussed above, confirm the lender is on the FCA Register: see our guide on verifying FCA authorisation. Where a lender is operating without authorisation, the agreement may itself be unenforceable and a different complaint route applies (see our guide on scams and loan sharks).