Consumer Credit Act 1974 (c. 39)

Part VIII U.K. Security

General U.K.

105 Form and content of securities. U.K.

(1) Any security provided in relation to a regulated agreement shall be expressed in writing.

(2) Regulations may prescribe the form and content of documents ( “security instruments ”) to be made in compliance with subsection (1).

(3) Regulations under subsection (2) may in particular—

(a) require specified information to be included in the pre-scribed manner in documents, and other specified material to be excluded;

(b) contain requirements to ensure that specified information is clearly brought to the attention of the surety, and that one part of a document is not given insufficient or excessive prominence compared with another.

(4) A security instrument is not properly executed unless—

(a) a document in the prescribed form, itself containing all the prescribed terms and conforming to regulations under subsection (2), is signed in the prescribed manner by or on behalf of the surety, and

(b) the document embodies all the terms of the security, other than implied terms, and

(c) the document, when presented or sent for the purpose of being signed by or on behalf of the surety, is in such state that its terms are readily legible, and

(d) when the document is presented or sent for the purpose of being signed by or on behalf of the surety there is also presented or sent a copy of the document.

(5) A security instrument is not properly executed unless—

(a) where the security is provided after, or at the time when, the regulated agreement is made, a copy of the executed agreement, together with a copy of any other document referred to in it, is given to the surety at the time the security is provided, or

(b) where the security is provided before the regulated agreement is made, a copy of the executed agreement, together with a copy of any other document referred to in it, is given to the surety within seven days after the regulated agreement is made.

(6) Subsection (1) does not apply to a security provided by the debtor or hirer.

(7) If—

(a) in contravention of subsection (1) a security is not expressed in writing, or

(b) a security instrument is improperly executed,

the security, so far as provided in relation to a regulated agreement, is enforceable against the surety on an order of the court only.

(8) If an application for an order under subsection (7) is dismissed (except on technical grounds only) section 106 (ineffective securities) shall apply to the security.

(9) Regulations under section 60(1) shall include provision requiring documents embodying regulated agreements also to embody any security provided in relation to a regulated agreement by the debtor or hirer.

Modifications etc. (not altering text)

C1 Ss. 105-107 excluded (E.W.S.) (15.7.2014) by The Financial Services and Markets Act 2000 (Regulated Activities) (Green Deal) (Amendment) Order 2014 (S.I. 2014/1850), arts. 1(2), 12(2) (with art. 1(3))

106 Ineffective securities. U.K.

Where, under any provision of this Act, this section is applied to any security provided in relation to a regulated agreement, then, subject to section 177 (saving for registered charges)—

(a) the security, so far as it is so provided, shall be treated as never having effect;

(b) any property lodged with the creditor or owner solely for the purposes of the security as so provided shall be returned by him forthwith;

(c) the creditor or owner shall take any necessary action to remove or cancel an entry in any register, so far as the entry relates to the security as so provided; and

(d) any amount received by the creditor or owner on realisation of the security shall, so far as it is referable to the agreement, be repaid to the surety.

Modifications etc. (not altering text)

C1 Ss. 105-107 excluded (E.W.S.) (15.7.2014) by The Financial Services and Markets Act 2000 (Regulated Activities) (Green Deal) (Amendment) Order 2014 (S.I. 2014/1850), arts. 1(2), 12(2) (with art. 1(3))

107 Duty to give information to surety under fixed-sum credit agreement. U.K.

(1) The creditor under a regulated agreement for fixed-sum credit in relation to which security is provided, within the prescribed period after receiving a request in writing to that effect from the surety and payment of a fee of [F1 £1], shall give to the surety (if a different person from the debtor)—

(a) a copy of the executed agreement (if any) and of any other document referred to in it;

(b) a copy of the security instrument (if any); and

(c) a statement signed by or on behalf of the creditor showing, according to the information to which it is practicable for him to refer,—

(i) the total sum paid under the agreement by the debtor,

(ii) the total sum which has become payable under the agreement by the debtor but remains unpaid, and the various amounts comprised in that total sum, with the date when each became due, and

(iii) the total sum which is to become payable under the agreement by the debtor, and the various amounts comprised in that total sum, with the date, or mode of determining the date, when each becomes due.

(2) If the creditor possesses insufficient information to enable him to ascertain the amounts and dates mentioned in subsection (1)(c)(iii), he shall be taken to comply with that sub-paragraph if his statement under subsection (1)(c) gives the basis on which, under the regulated agreement, they would fall to be ascertained.

(3) Subsection (1) does not apply to—

(a) an agreement under which no sum is, or will or may become, payable by the debtor, or

(b) a request made less than one month after a previous request under that subsection relating to the same agreement was complied with.

(4) If the creditor under an agreement fails to comply with subsection (1)—

(a) he is not entitled, while the default continues, to enforce the security, so far as provided in relation to the agreement; F2 . . .

(b) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) This section does not apply to a non-commercial agreement.

Textual Amendments

F1 "£1" substituted (1.5.1998) in s. 107(1) by S.I. 1998/997, art. 3, Sch.

F2 S. 107(4)(b) and preceding word repealed (26.5.2008) by The Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277), regs. 30(1)(3), Sch. 2 para. 25, Sch. 4 Pt. 1 (with savings in reg. 28(2)(3))

Modifications etc. (not altering text)

C1 Ss. 105-107 excluded (E.W.S.) (15.7.2014) by The Financial Services and Markets Act 2000 (Regulated Activities) (Green Deal) (Amendment) Order 2014 (S.I. 2014/1850), arts. 1(2), 12(2) (with art. 1(3))

108 Duty to give information to surety under running-account credit agreement. U.K.

(1) The creditor under a regulated agreement for running-account credit in relation to which security is provided, within the prescribed period after receiving a request in writing to that effect from the surety and payment of a fee of [F3 £1], shall give to the surety (if a different person from the debtor)—

(a) a copy of the executed agreement (if any) and of any other document referred to in it;

(b) a copy of the security instrument (if any); and

(c) a statement signed by or on behalf of the creditor showing, according to the information to which it is practicable for him to refer,—

(i) the state of the account, and

(ii) the amount, if any, currently payable under the agreement by the debtor to the creditor, and

(iii) the amounts and due dates of any payments which, if the debtor does not draw further on the account, will later become payable under the agreement by the debtor to the creditor.

(2) If the creditor possesses insufficient information to enable him to ascertain the amounts and dates mentioned in subsection (1)(c)(iii), he shall be taken to comply with that sub-paragraph if his statement under subsection (1)(c) gives the basis on which, under the regulated agreement, they would fall to be ascertained.

(3) Subsection (1) does not apply to—

(a) an agreement under which no sum is, or will or may become, payable by the debtor, or

(b) a request made less than one month after a previous request under that subsection relating to the same agreement was complied with.

(4) If the creditor under an agreement fails to comply with subsection (1)—

(a) he is not entitled, while the default continues, to enforce the security, so far as provided in relation to the agreement; F4 . . .

(b) F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) This section does not apply to a non-commercial agreement.

Textual Amendments

F3 "£1" substituted (1.5.1998) in s. 108(1) by S.I. 1998/997, art. 3, Sch.

F4 S. 108(4)(b) and preceding word repealed (26.5.2008) by The Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277), regs. 30(1)(3), Sch. 2 para. 26, Sch. 4 Pt. 1 (with savings in reg. 28(2)(3))

109 Duty to give information to surety under consumer hire agreement. U.K.

(1) The owner under a regulated consumer hire agreement in relation to which security is provided, within the prescribed period after receiving a request in writing to that effect from the surety and payment of a fee of [F5 £1], shall give to the surety (if a different person from the hirer)—

(a) a copy of the executed agreement and of any other document referred to in it;

(b) a copy of the security instrument (if any); and

(c) a statement signed by or on behalf of the owner showing, according to the information to which it is practicable for him to refer, the total sum which has become payable under the agreement by the hirer but remains unpaid and the various amounts comprised in that total sum, with the date when each became due.

(2) Subsection (1) does not apply to—

(a) an agreement under which no sum is, or will or may become, payable by the hirer, or

(b) a request made less than one month after a previous request under that subsection relating to the same agreement was complied with.

(3) If the owner under an agreement fails to comply with subsection (1)—

(a) he is not entitled, while the default continues, to enforce the security, so far as provided in relation to the agreement; F6 . . .

(b) F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) This section does not apply to a non-commercial agreement.

Textual Amendments

F5 "£1" substituted (1.5.1998) in s. 109(1) by S.I. 1998/997, art. 3, Sch.

F6 S. 109(3)(b) and preceding word repealed (26.5.2008) by The Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277), regs. 30(1)(3), Sch. 2 para. 27, Sch. 4 Pt. 1 (with savings in reg. 28(2)(3))

110 Duty to give information to debtor or hirer. U.K.

(1) The creditor or owner under a regulated agreement, within the prescribed period after receiving a request in writing to that effect from the debtor or hirer and payment of a fee of [F7 £1], shall give the debtor or hirer a copy of any security instrument executed in relation to the agreement after the making of the agreement.

(2) Subsection (1) does not apply to—

(a) a non-commercial agreement, or

(b) an agreement under which no sum is, or will or may become, payable by the debtor or hirer, or

(c) a request made less than one month after a previous request under subsection (1) relating to the same agreement was complied with.

(3) If the creditor or owner under an agreement fails to comply with subsection (1)—

(a) he is not entitled, while the default continues, to enforce the security (so far as provided in relation to the agreement); F8 . . .

(b) F8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7 "£1" substituted (1.5.1998) in s. 110(1) by S.I. 1998/997, art. 3, Sch.

F8 S. 110(3)(b) and preceding word repealed (26.5.2008) by The Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277), regs. 30(1)(3), Sch. 2 para. 28, Sch. 4 Pt. 1 (with savings in reg. 28(2)(3))

Modifications etc. (not altering text)

C2 S. 110 excluded (E.W.S.) (15.7.2014) by The Financial Services and Markets Act 2000 (Regulated Activities) (Green Deal) (Amendment) Order 2014 (S.I. 2014/1850), arts. 1(2), 12(4) (with art. 1(3))

111 Duty to give surety copy of default etc. notice. U.K.

(1) When a default notice or a notice under section 76(1) or 98(1) is served on a debtor or hirer, a copy of the notice shall be served by the creditor or owner on any surety (if a different person from the debtor or hirer).

(2) If the creditor or owner fails to comply with subsection (1) in the case of any surety, the security is enforceable against the surety (in respect of the breach or other matter to which the notice relates) on an order of the court only.

F9 112 Realisation of securities. U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9 S. 112 omitted (26.7.2013 for specified purposes, 1.4.2014 in so far as not already in force) by virtue of The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 (S.I. 2013/1881), arts. 1(2)(6), 20(34)

113 Act not to be evaded by use of security. U.K.

(1) Where a security is provided in relation to an actual or prospective regulated agreement, the security shall not be enforced so as to benefit the creditor or owner, directly or indirectly, to an extent greater (whether as respects the amount of any payment or the time or manner of its being made) than would be the case if the security were not provided and any obligations of the debtor or hirer, or his relative, under or in relation to the agreement were carried out to the extent (if any) to which they would be enforced under this Act.

(2) In accordance with subsection (1), where a regulated agreement is enforceable on an order of the court or the [F10 FCA] only, any security provided in relation to the agreement is enforceable (so far as provided in relation to the agreement) where such an order has been made in relation to the agreement, but not otherwise.

(3) Where—

(a) a regulated agreement is cancelled under section 69(1) or becomes subject to section 69(2), or

(b) a regulated agreement is terminated under section 91, or

(c) in relation to any agreement an application for an order under section [F11 65(1) or 124(1) or a notice under section 28A of the Financial Services and Markets Act 2000] is dismissed (except on technical grounds only), or

(d) a declaration is made by the court under section 142(1) (refusal of enforcement order) as respects any regulated agreement,

section 106 shall apply to any security provided in relation to the agreement.

(4) Where subsection (3)(d) applies and the declaration relates to a part only of the regulated agreement, section 106 shall apply to the security only so far as it concerns that part.

(5) In the case of a cancelled agreement, the duty imposed on the debtor or hirer by section 71 or 72 shall not be enforceable before the creditor or owner has discharged any duty imposed on him by section 106 (as applied by subsection (3)(a)).

(6) If the security is provided in relation to a prospective agreement or transaction, the security shall be enforceable in relation to the agreement or transaction only after the time (if any) when the agreement is made; and until that time the person providing the security shall be entitled, by notice to the creditor or owner, to require that section 106 shall thereupon apply to the security.

(7) Where an indemnity [F12 or guarantee] is given in a case where the debtor or hirer is a minor, or [F13 an indemnity is given in a case where he] is otherwise not of full capacity, the reference in subsection (1) to the extent to which his obligations would be enforced shall be read in relation to the indemnity [F12 or guarantee] as a reference to the extent to which [F14 they][F14 those obligations] would be enforced if he were of full capacity.

(8) Subsections (1) to (3) also apply where a security is provided in relation to an actual or prospective linked transaction, and in that case—

(a) references to the agreement shall be read as references to the linked transaction, and

(b) references to the creditor or owner shall be read as references to any person (other than the debtor or hirer, or his relative) who is a party, or prospective party, to the linked transaction.

Textual Amendments

F10 Word in s. 113(2) substituted (26.7.2013 for specified purposes, 1.4.2014 in so far as not already in force) by The Financial Services Act 2012 (Consumer Credit) Order 2013 (S.I. 2013/1882), arts. 1(1), 7(9)

F11 Words in s. 113(3)(c) substituted (26.7.2013 for specified purposes, 1.4.2014 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 (S.I. 2013/1881), arts. 1(2)(6), 20(35)

F12 Words inserted (E.W.N.I.) by virtue of (E.W.) Minors' Contracts Act 1987 (c. 13, SIF 30), s. 4(1)(a) and (N.I.) S.I. 1988/930 (N.I. 9), art. 6(1)(a)

F13 Words inserted (E.W.N.I.) by virtue of (E.W.) Minors' Contracts Act 1987 (c. 13, SIF 30), s. 4(1)(b) and (N.I.) S.I. 1988/930 (N.I. 9), art. 6(1)(b)

F14 Words “those obligations ” substituted (E.W.N.I.) for “they ” by virtue of (E.W.) Minors' Contracts Act 1987 (c. 13, SIF 30), s. 4(1)(c) and (N.I.) S.I. 1988/930 (N.I. 9), art. 6(1)(c)