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Consumer Credit Act 1974

The Act regulates the way that credit is offered to consumers. Most people who offer credit or hire facilities (including credit brokers who arrange credit) must be licensed by the Office of Fair Trading (OFT). Applicants have to satisfy the OFT that they are fit to have a licence. It is a criminal offence to operate without a licence.

The Act and Regulations made under it also specify the form and content of credit agreements and advertisements. For example, you may see ‘APR’ on some advertisements for credit. This is short for the Annual Percentage Rate of charge and is a measurement of the total cost of credit, expressed as an annual rate. The APR is calculated according to standard formulae laid down in Regulations under the Act.

The Act gives you the right to withdraw from a credit agreement, without giving any reason, within 14 days following the conclusionof the agreement. You must repay the credit and any interest that is owed.

If credit has been arranged to enable you to buy goods where the cash price is over £100 but not more than £30,000 and the goods are faulty, you may be able to claim compensation from the credit company instead of the seller. So if you bought a faulty laptop on a credit agreement or with a credit card and the seller goes bankrupt, you may still be able to get your money back from the credit company.