The right of withdrawal under the CCA

The right of withdrawal under the CCA applies only to the credit agreement – it is not intended to end any linked contract for the supply of goods or services that the credit is paying for, such as a vehicle.  

By withdrawing from the credit agreement the consumer will still be required to pay for the goods (vehicle) some other way, unless that linked contract has a separate right of withdrawal or cancellation, so must find a source of alternative funding. In the case of finance agremeents like Hire Purchase or conditional sale by withdrawing and repaying using alternative credit the consumer is effectively paying for the goods in full (plus some interest), so title to the vehicle  passes to the customer from the original credit provider.

Where the CCA right of withdrawal does not apply the consumer may still have a right to withdraw or cancel the credit agreement or the linked supply agreement (which in effect cancels the credit agreement as well) some other way if:

  • the agreement comes within scope of the Distance Marketing Regulations, which allow  customers to withdraw within 14 days of entering into (signing) the agreement (see CONC 11 (here) of the FCA Handbook); 
  • the agreement comes under the scope of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations, which allow customers a 14-day cooling-off period to withdraw from an agreement to buy goods: where this right is exercised, any linked credit/Hire Purchase agreement is automatically cancelled;

Once a customer has exercised a right of withdrawal, this decision cannot be reversed.  The customer cannot re-enter into the original credit agreement, and so must find alternative funding for the vehicle.