Repossession restrictions (the Thirds Rule)

The legislation gives the customer protection against the lender in the case of default.

If a vehicle is let to a customer under a regulated hire purchase or conditional sale agreement, there are provisions in the CCA stopping the vehicle being recovered without a Court order in certain circumstances. These are specified in the finance agreement.  Once a customer has paid more than one third of the total amount payable (this comprises everything the customer would have paid if the agreement had run its full course, including the deposit, amount borrowed, interest and all fees and charges). The goods are classed as protected and cannot be repossessed by the lender without a Return of Goods Order obtained from the Courts. 

However, there is no need for a Court order to recover goods which are protected if either; the lender has the customer's informed consent or; where the goods are to be repossessed from someone other than the debtor (or someone the debtor has authorised to have the goods).

If the finance company takes the goods back without the customer's consent or a Court order, the customer has the right to get back all the money he/she has paid under the agreement.

If the goods were repossessed without a Court order, the finance company would be in '"breach of contract".  The agreement would be terminated and the consumer released from all liability as well as being able to reclaim all the monies paid under the agreement.