535	8â Matters arising during the currency of credit or hire agreements

7â Documentation of credit and hire agreements

The CCA 1974 includes conditions on how regulated agreements are to be documented.125 These rules were originally implemented by the Consumer Credit (Agreements) Regulations 1983,126 as amended by the Consumer Credit (Agreements) (Amendment) Regulations 2004.127 The scope of these Regulations is broad, and they apply to all consumer credit agreements and consumer hire agreements that fall within the CCA 1974. In relation to a credit agreement, the Regulations specify that the following information must be documented: the type of agreement; the parties involved; important information, including the amount of credit and the duration of the agreement; and there must be a signature box.

8â Matters arising during the currency of credit or hire agreements

The CCA 1974 provides that a creditor may be held responsible for any breach of contract or misrepresentation by a supplier of goods or services on credit.128 Section 75 provides that a creditor will be ‘jointly and severally liable’ with the supplier if:

•the cash price of the item is more than £100 but not more than £30,000;129

•the credit agreement is regulated under the Act;130 and

•credit is advanced under arrangements between the credit provider and the supplier.131

This section applies to purchases on credit cards (depending upon the cash price of the goods or services) and also retail credit. The provisions of section 75 were amended by the Consumer Credit Directive, which inserted a new section 75A in the Act, which provides that the creditor may be liable in a small number of instances where section 75 does not apply, i.e., where:

•the cash price of the item exceeds £30,000 but the amount of credit does not exceed £60,260;132

•the credit agreement is a linked agreement;133 and

•the supplier cannot be traced or is insolvent or does not respond or the consumer has taken reasonable steps to pursue the supplier but has not obtained satisfaction (this need not include court action).

Borrowers and hirers are permitted to request the creditor to send them information about their credit agreements. If this is not provided within twelve working days, the debt becomes unenforceable until they receive the

125CCA 1974, s.179.

126SI 1983/1553, as amended by SIs 1984/1600, 1985/666, 1988/2047, 1999/3177 and 2001/3649.

127SI 2004/1482.â 128â CCA 1974, s.75.

129Ibid. s.75(3)(b), as amended by SI 1983/1878.

130Ibid. s.75(3).â 131â Ibid.â 132â Ibid. s.75A(6)(a).â 133â Ibid. s.75A(6)(b).

536		The Consumer Credit Act 1974
		information they asked for. The CCA 1974 outlines the information that cred-
		itors are required to provide to debtors under fixed-term, running account
		and hire agreements.134 Under the Act, a debtor is permitted to obtain a copy
	of their agreement, copies of some of the other documents mentioned in
	their agreement and a statement of account.135 Furthermore, where the regu-
		lated agreement is for a fixed sum, the creditor must provide the debtor with a
		statement.136
		If the creditor fails to provide the information, the creditor will not be per-
		mitted to require the debtor to pay the debt before it is due, obtain a court
		judgment against the debtor or take back anything hired or bought on credit,
		or take anything used as security in the agreement. However, the creditor will
		be allowed to ask the debtor to pay what they owe, send a default notice, pass
		information on to a credit reference agency, pass information on to a debt col-
		lector, sell the debt to someone else or take the case to court. The OFT took
		the view that ‘the sanction under the Act for non-compliance with an informa-
		tion request is unenforceability of the credit or hire agreement for so long as the
		creditor or owner fails to comply with his duty. Where there is such a failure,
		the courts have no discretion to allow enforcement.’137

9â Credit advertising

For the purpose of the CCA 1974, an advertisement is defined as:

including every form of advertising, whether in a publication, by television or radio, by display of notices, signs, labels, showcards or goods, by distribution of samples, circulars, catalogues, price lists or other material, by exhibition of pictures, models or films, or in any other way, and references to the publishing of advertisements shall be construed accordingly.138

The CCA 1974 applies to any advertisement published for the purposes of a business carried on by the advertiser which indicates139 that he is willing either to provide credit or enter into an agreement for bailment or the hiring of goods by him.140 Casanova stated that:

the threshold question is to consider whether the advertisement indicates that the creditor is willing to provide credit. Generally, an advertisement which consists

134 Ibid. ss.77, 78 and 79. For a judicial discussion of these sections see Carey v. HSBC Bank plc [2009] EWHC 3417 (QB).

135 CCA 1974, s.77(1). This will cost the debtor a £1 payment. 136 Ibid. s.77A.

137 OFT, Guidance on Sections 77, 78 and 79 of the Consumer Credit Act 1974: the Duty to Give Information to Debtors and the Consequences of Non-compliance on the Enforceability of the Agreement (London, 2010) 2.

138 CCA 1974, s.189(1).

139 For a discussion of the meaning of ‘indicating’ under the CCA 1974 see Jenkins v. Lombard North Central Plc [1985] RTR 21.

140 CCA 1974, s.43(1)(a) and (b).

537	9â Credit advertising

simply of the name or logo of the creditor would not be an advertisement falling within section 43(1), as it would not indicate that the advertiser was willing to provide credit.141

The advertisement is exempt from the CCA 1974 if the advertiser does not carry on a consumer credit business or consumer hire business,142 a business in the course of which he provides credit to individuals secured on land143 or a business which comprises or relates to unregulated agreements.144 Furthermore, the Act enables the Secretary of State to introduce and implement regulations that control and administer both the manner and substance of the subject matter of the credit advertisement.145 The CCA 1974 made it a criminal offence for an advertisement to convey ‘information which in a material respect is false or misleading’.146 However, this was repealed by the Consumer Protection from Unfair Trading Regulations 2008.147 The Act also makes it a criminal offence for a person, with a view to financial gain, to send a document to a minor inviting him to borrow money,148 obtain goods on credit or hire,149 obtain services on credit,150 or to apply for information or advice on borrowing money.151 Furthermore, the CCA 1974 imposes restrictions on the provision of credit card cheques.152

The first Regulations applying to consumer credit advertising were introduced in 1980.153 These were subsequently revoked and replaced by the Consumer Credit (Advertisements) Regulations 1989, which applied to advertisements by people who undertook consumer credit businesses, consumer hire business and business in the course of which credit secured on land was provided to individuals.154 The Regulations set down the requirements for the form and content of three categories of advertisements: simple,155 intermediate156 and full.157

The 1989 Regulations were replaced by the Consumer Credit (Adver tisements) Regulations 2004, as part of a series of amendments that preceded the implementation of the CCA 2006.158 The 2004 Regulations came into effect on 31 October 2003 and apply to all credit advertisements and hire advertisements irrespective of the form in which they are published. The Regulations provide, inter alia, that the advertisements must be clear and understandable; the advertisement must contain information about the credit on offer; other types of information are also required to be displayed and important information about the annual percentage rate should be easily identifiable.159 The

141J. Casanova, ‘Establishing Internet credit card programmes in the United Kingdom’ (2001) 16(3) Journal of International Banking Law 70, 74.

142	CCA 1974, s.43(2)(a).â	143â Ibid. s.43(2)(b).â	144â Ibid. s.43(2)(c).
145	Ibid. s.44(1).â 146â Ibid. s.46(1).â 147â SI 2008/1277, Sch. 4 para. 1.
148	CCA 1974, s.50(1)(a).â	149â Ibid. s.50(1)(b).â	150â Ibid. s.50(1)(c).

151Ibid. s.50(1)(d). See Alliance & Leicester Building Society v. Babbs [1993] CCLR 77.

152CCA 1974, s.51A.

153Consumer Credit (Advertisements) Regulations 1980, SI 1980/54.

154	SI 1989/1125.â 155â Ibid. reg. 2(2)(a).â	156â Ibid. reg. 2(2)(b).
157	Ibid. reg. 2(2)(c).â 158â SI 2004/1484.â	159â OFT, Credit Advertising (London, 2008) 2.

538		The Consumer Credit Act 1974
		Regulations aim to make certain that credit advertisements provide a trans-
		parent and even-handed view of the nature and costs of the credit available.
		Importantly, the 2004 Regulations apply to all forms of advertising, whether
		in print, on television, the radio, the Internet, teletext or by telephone canvass-
		ing. The Regulations provide that all credit advertisements are required to con-
		tain the name of the lender, and where the interest rate is provided, the APR is
		also to be exhibited.160 The 2004 Regulations do not apply to advertisements for
	loans or the hire of goods to businesses, to financial promotions or to adver-
	tisements for mortgages which are a first charge on the borrower’s home.161
		The Regulations contain a list of information that is to be included in credit
		advertisements162 and a matching list for inclusion in hire advertisements.163
		Importantly, the 2004 Regulations also apply to the APR and the advertiser is
		required to stipulate the characteristic APR in any advertisement that contains
		certain financial information. The characteristic or ‘typical APR’ is the rate the
		advertiser would expect to charge in at least two-thirds of the transactions he
		will enter into as a result of the advertisement.164 The definition of ‘typical APR’
		was amended in 2007 and it is now provided that ‘the typical APR is an APR
		at or below which the advertiser reasonably expects, at the date on which the
		advertisement is published, that credit would be provided under at least 66% of
		the agreements which will be entered into as a result of the advertisement’.165 It
		is a criminal offence to publish a consumer credit advertisement that breaches
		the obligations contained in the 2004 Regulations.166
			The 2004 Regulations were amended by the Consumer Credit (AdverÂ
		tisements) Regulations 2010,167 which apply to unsecured credit, including
		credit cards, loans and hire-purchase agreements. They also apply to all forms
		of advertising on the television or radio, the Internet, teletext or telephone can-
		vassing. The Regulations provide that if an advertisement includes an interest
		rate or any amount relating to the cost of the credit, this triggers the require-
		ment to include a ‘representative example’, including a ‘representative APR’. This
		must be representative of agreements expected to be entered into as a result of
		the advertisement, and at least 51 per cent of borrowers must be expected to
		receive the advertised APR or better. The representative APR is also triggered by
		reference to a non-status or comparative indication or incentive. Furthermore,
		the OFT have stated that ‘the representative example must include, in add-
		ition to the representative APR, the annual rate of interest, any non-interest
		charges required to be paid for the credit, and the amount of credit. In addition,
		where applicable, it must include the duration of credit, the total amount pay-
		able, the periodic instalments, and the cash price of goods or services financed
		by the credit. All of this information must be shown together and of equal
	160		See SI 2004/1484.â 161â Ibid. reg. 10.â 162â Ibid. Sch. 2.
	163		Ibid. Sch. 3.â 164â Ibid. reg. 8.
	165		See Consumer Credit (Advertisements) (Amendment) Regulations 2007, SI 2007/827.
	166		CCA 1974, s.167.â 167â SI 2010/1012 and SI 2010/1970.