Lenders: Their responsibilities to you
The information you must be given
“Initial disclosure”: Information you must be given in advance
Credit Contracts and Consumer Finance Act 2003, ss 17, 32–35, Schedule 1
The lender must give you the following key information before you enter into the consumer credit contract (this is called “initial disclosure”):
- the lender’s full name (including their trading name if this is different), their address, and their name and registration number on the financial services provider register
- the initial amount owing
- the amount of each payment you’ll make, and the number of payments
- the credit limit
- how much interest you’ll pay (including the annual interest rate) and how the interest will be calculated (see “Interest and fees”)
- any credit fees and charges you’ll have to pay, such as establishment fees, insurance fees and “break” fees (these are fees you’re charged if you repay the debt early – called “prepayment fees” in the Act) (see “Interest and fees”)
- a description of any security interest, including a description of the property that’s subject to the security and whether a disabling device will be attached to the property – for example, a remote-operated starter interrupter if the property is a car (see “Use of disabling devices on goods”)
- what happens if you miss payments, including any default interest charges or default fees you’ll have to pay (see “Interest and fees”)
- a statement of your right to cancel the contract during the “cooling off” period after you get this initial disclosure statement (see “When you can cancel a credit contract” )
- a statement of your right to ask the lender to change the terms of the credit contract if you face some unforeseen hardship (see “Unforeseen hardship: Applying to have the contract terms changed”)
- contact details for the dispute resolution scheme that the lender belongs to as a financial service provider (see “Dispute resolution schemes” ).
This information must be provided in writing in the form of a disclosure statement. The disclosure statement can be a single document or a number of related documents, and it can be included within the credit contract itself. The information must be clear, concise and accessible.
If you don’t get a disclosure statement with all this information, you can cancel the contract (see “When you can cancel a credit contract”). If you cancel, the lender won’t be able to enforce the contract, and they may also face penalties (see “Enforcing the credit contract laws against lenders”).
Ongoing information you must be given
Credit Contracts and Consumer Finance Act 2003, ss 18–26A
As well as providing an initial disclosure statement (see above), lenders must provide you with ongoing information as follows:
- “Continuing disclosure” – The lender must give you a statement, every six months (or every 45 days for revolving credit contracts like credit cards), that includes information such as opening and closing balances for the relevant period, interest payments made, any fees or charges, and the amount and due date for your next payment. (In some cases, this continuing disclosure isn’t required.)
- Changes – The lender must give you full written details of any changes to your contract (called “variation disclosure”). The lender must give you the information within a set time, but this time period will depend on whether it’s a change you’ve agreed to or one that the lender has a right to impose on you, under the contract.
- Information on request – The lender must provide certain information if you make a written request for it (“request disclosure”) – for example, the amount currently owing, the amount required to fully pay off the contract, details of any changes made to the contract, or a copy of the contract. The lender can charge you a reasonable fee for doing this. They have to give you the information no later than 15 working days after they get your written request (or, if they charge a fee, no later than 15 working days after you pay the fee.
- Transfer to new lender – The lender has 10 working days to tell you if they transfer their rights as lender under the contract to someone else. This includes giving you the new lender’s details and telling you how this transfer will affect you.
Note: Guarantors also have to be given certain information (see “Guarantors”).
Standard form contracts and costs of borrowing
Credit Contracts and Consumer Finance Act 2003, ss 9J-9L
Lenders must make the following key information publicly available:
- Standard form contracts – Lenders who use standard form contracts must make those contract terms publicly available. In general, a “standard form” contract is one that a lender has prepared in advance for all their contracts of one type.
- Costs of borrowing under secured contracts – Lenders whose contracts involve a security interest in any of the borrower’s property, and a right to repossess it, must make all the costs of borrowing publicly available. This includes their credit fees (such as establishment fees, “break” fees and insurance fees), default fees, annual interest rates and default interest rates (see “Interest and fees” in this section).
Making this information “publicly” available means making it available in the following ways:
- Websites – If the lender has a website, the information must be displayed prominently and clearly on the site.
- Business premises, vehicles and stalls – If the lender operates from a place that’s open to the public (for example, if they have an office reception area), they must prominently display a clear notice stating that a copy of the information is available free of charge if a person asks for it. They must also display this notice if they sell goods on credit from a vehicle, stand or stall (for example, from a truck shop).
- Available on request – A lender must also provide a copy of the information immediately, and free of charge, if a person asks for it (whether or not the lender has a website or premises that are open to the public).