Pre contract information: Disclosure of information by the creditor or lender
Introduction
The Consumer Credit Act 1974 makes it compulsory for the creditor to provide specific information to the borrower, before a contract is formed. The information must be provided in a prescribed format, amended by the Consumer Credit (Disclosure of Information) Regulations 2004. The credit agreement will not be valid if this information has not been provided by the creditor.
The purpose of this provision is to ensure the borrower is fully informed before entering into a contract. As such, the borrower is able to shop around and potentially achieve a better deal prior to entering into the agreement.
Manner of Disclosure
The manner of disclosure of information has been provided by “The Consumer Credit (Disclosure of Information) Regulations 2004”. The regulations specify that the information must be:
Separate from the document embodying the relevant agreement;
Headed with the words "Pre-contract Information"
Easily legible and, where applicable, of a colour which is readily distinguishable from the background medium upon which they are displayed;
Not interspersed with any other information or wording apart from subtotals of total amounts and cross references to the terms of the agreement;
Of equal prominence except that headings may be afforded more prominence whether by capital letters, underlining, larger or bold print or otherwise; and
Contained in a document which:
Is separate from the document containing the actual agreement and also separate from any other document referred to in the actual agreement;
Is headed with the words "Pre-contract Information"
Does not contain any other information or wording apart from the heading and the necessary information;
Is on paper or on another durable medium which is available and accessible to the debtor or hirer; and
Is of a nature that enables the debtor or hirer to remove it from the place where it is disclosed to him (all this means is that the debtor must be able to physically take a copy and read it somewhere in his own time).
Information required includes:
Name and details of the lender;
Extra credit charges or credit fees;
What would happen if the debtor failed to meet payments;
Hidden prices;
Late fees;
Early settlement penalty;
(In case of a running account) credit agreements at intervals of not more than 12 months and minimum repayments;
The APR and all other costs/charges;
Whether the APR is variable (and if so, the information must be given as to the circumstances which may lead to a change and the likely change or variation in the rate);
Whether the loan is secured and if so, on what;
A wealth warning if it is secured on the debtor’s home;
Information on cancellation rights.
If by chance you find any error in this information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
Do not create a contractual relationship;
Do not form part of any other advice, whether paid or free.
