A credit card is a device which is used by many of us as a way of paying for things which we can then pay off either immediately or over a specified period of time.
If you have a credit card from a particular bank you will be provided with a credit card statement which will provide information to you in relation to a variety of things.
Is there any legislation which governs the use of credit cards and other systems of credit in the UK?
The Consumer Credit Act 2006
The Consumer Credit Act covers all situations where credit is used to purchase goods. This can be anything from the use of a hire purchase agreement, using a store credit card is using a credit card which is provided to you by the bank.
What does the Consumer Credit Act say about the statement which I will receive?
In relation to a fixed sum credit agreement whereby you are entitled to credit up to a fixed sum the statement must provide information in relation to the money borrowed, the money paid back, the interest and the outstanding amount remaining to be paid.
What is a fixed sum credit agreement?
A fixed sum credit agreement is defined by Section 77A of the Consumer Credit Act 2006. It is essentially an agreement whereby you are permitted by borrow a certain fixed sum on credit. For example if you have a credit card with your bank which has a balance of a certain amount this will be a fixed sum credit agreement.
What are the requirements for a fixed sum credit agreement under the Consumer Credit Act?
- Under the Consumer Credit Act the creditor (the individual who has lent the money on credit) shall – within a period of one year beginning with the day after the day on which the agreement is made) give the debtor (the person borrowing the money) a statement.
- After the statement has been given the creditor shall give the debtor further statements at intervals of not more than one year.
What happens if I do not receive a statement?
If the creditor fails to provide the debtor with a statement then the creditor will not be entitled to enforce the agreement on the creditor during the period whereby the creditor has not provided the statement. Therefore, the debtor will not be liable to pay any interest during this period.
If this is the case then the debtor will also not be liable to pay any default sum, such as a standard monthly payment, that may have become payable during this period without a statement.
What happens if there are no further sums which are to be payable under the credit agreement?
If there are no further sums to be paid back to the creditor under the fixed sum credit agreement then there will no longer be the requirement for the a statement to be provided by the creditor to the debtor.
In practice do I need to be aware of this legislation?
If you simply borrow credit from your bank through your credit card then it is unlikely that you will need to be aware of this legislation and seek to enforce it as banks provide monthly credit card statements to all customers who hold a credit card.
If you however, have borrowed credit under a hire purchase agreement or using a store card whereby you will receive statements much less frequently or not at all then this legislation and the enforcement of it may be of interest to you.