An ancillary contract is a contract related to the main contract but is subordinate to it.
Under the Consumer Contracts Regulations, if a customer cancels the main contract, the ancillary contract is automatically cancelled and it is the trader's responsibility to notify any relevant party. For example, if a customer decided to cancel their purchase of a new car then it is the dealer's responsibility to contact any finance company who has provided finance to help fund the purchase and advise them that the finance contract has also been cancelled. Any deposits paid by the customer must also be returned.
This would normally only apply to contracts where a finance provider has provided a loan and not where the finance is Hire Purchase, Conditional Sale or Contract Hire agreement.