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What is the Consumer Credit Act?

The Consumer Credit Act is an important law that covers most commercial lending in the UK. It sets out what creditors must do when they lend money and when they collect it.

The Act also sets out your rights when you borrow money.

Since 1974, the Act has been changed many times, and nowadays gives more protection to consumers than ever.

What debts does the Consumer Credit Act cover?

Debts which are covered by the Consumer Credit Act are often called regulated debts.

This applies to most of the common household borrowing. In most cases, the following debt types will be regulated by the Consumer Credit Act:


Types of debt which are not regulated by the Consumer Credit Act include:

  • Mortgages
  • Debts to individuals, such as family or friends
  • Debts to unlicensed lenders or loan sharks
  • Household bills, including gas, electric and water
  • Debts to local or central Government, including council tax, benefit overpayments and taxes
  • Some credit union loans
  • Charge cards
  • Some types of business debt

This is just a selection of common types of debt, and there are many more which can be regulated or unregulated. In some cases, a debt could be either depending on the date you took out the debt and the amount your borrowed.

In the past, some larger debts weren’t covered by the Consumer Credit Act. For example, before 2008, debts over £25,000 were not regulated.

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What are the benefits of the Consumer Credit Act?

If a debt is regulated by the Consumer Credit Act, you’ll normally have stronger rights than if you were dealing with an unregulated debt.

Examples of these rights include:

  • If you fall into arrears, a regulated creditor must issue a default notice and give you time to bring your account up to date before they can take any further action
  • All regulated creditors must hold a licence, and it’s a criminal offence for them to trade without one
  • Creditors must send you regular statements and arrears letters if you fall behind on regulated debts
  • All regulated debts can be investigated by the Financial Ombudsman Service if you make a complaint and you’re unhappy with the outcome. Some unregulated debts can be too, but not all
  • In some cases, regulated creditors are limited in the type of court action they can take. For example, in England and Wales a regulated creditor can’t use High Court enforcement officers to collect an unpaid County Court judgment

What rights do I have with unregulated debts?

If you owe money to an unregulated debt you may not have all the rights the Consumer Credit Act brings. In some cases, your rights will depend on the terms and conditions you agreed with the lender.

In most cases there are still legal requirements that unregulated creditors have to follow, and most are overseen by trade bodies or ombudsman services which ensure they treat their customers fairly.

If you’ve fallen into arrears with an unregulated debt and you need help to understand your rights, contact us on our freephone phoneline for advice.