Econ 101

Consumer Credit Act 1974

// September 1st, 2009 // Credit

The Consumer Credit Act 1974 was passed by the Parliament of the United Kingdom to help protect the consumer when they borrow money from different financial institutions. This act is a massive piece of legislation with several amendments and other changes that have been made to it since it was passed in 1974. Let’s try to understand the basic idea of this act and what it is used for.

One of the main features of this act is that almost all businesses that sell any kind of goods of services either on credit or cash to consumers must be licensed by the Office of Fair Trading. If they don’t have this license from the Office of Fair Trading then their business is illegal and the person running the business can be fined or imprisoned or both.

The act also protects consumers who are unhappy with the outcome of their settlement with the business or other organization and this act can help the consumer reach a favorable settlement option.

This act initially protected consumers for a credit amount up to £25,000 but with certain amendments made recently the protection now is also given to consumers with a credit of over £25,000.