Does section 75 cover my car finance?

Why hire purchase and PCP fall outside section 75

Section 75 makes a creditor jointly and severally liable with a supplier for the borrower's claim for misrepresentation or breach of contract. It only bites on a debtor-creditor-supplier agreement falling within section 12(b) or (c) of the Consumer Credit Act 1974, and those paragraphs describe credit provided by a creditor under arrangements with a separate supplier — the classic case being a credit card used to buy goods from a shop.

Dealer-arranged hire purchase does not work that way. The finance company buys the car from the dealer and then supplies it to you under the hire-purchase agreement, so the creditor and the supplier are the same person. That is the section 12(a) case, which section 75 does not reach, and there is no separate supplier for the creditor to be jointly liable with. A PCP is legally a hire-purchase agreement with a large optional final payment, so it sits in exactly the same place.

The two routes that do work, and why they are stronger

Section 56(2) of the Consumer Credit Act 1974 deems the dealer's negotiations to be conducted as agent of the creditor, so what the salesperson told you about the car binds the finance company. The Consumer Rights Act 2015 does the rest: section 7 defines a hire-purchase agreement, section 3(1) and section 3(2)(c) bring one within the Act as a contract to supply goods, and section 9(1) then implies the satisfactory-quality term. It is the finance company that hires the car to you as the trader under section 7(2), so the satisfactory-quality, fit-for-purpose and as-described claim lies against it. A conditional sale is not a hire-purchase agreement — section 7(4) excludes it, and section 5(3) treats it as a sales contract instead — but the liable trader is the same.

These are wider than section 75, not narrower. Section 75 stops at a cash price of £30,000 and requires a qualifying credit purchase. Neither of the two routes above has a cash-price ceiling, neither depends on how you paid, and both point at a regulated firm rather than at a dealer who may no longer be trading. The practical consequence is that the complaint goes to the finance company named at the top of your agreement, not only to the dealer.

Where section 75 does help a car buyer: a deposit on a credit card

If you are buying the car outright from the dealer as supplier and you put part of the price on a credit card, the card issuer can be jointly liable for the whole claim. The section 75 limits attach to the cash price of the car — more than £100 and no more than £30,000 — and not to the amount you put on the card, so a modest deposit charged to a credit card can engage the issuer on the full claim.

It has to be credit rather than debit: section 75 is a provision about credit, so a debit card payment does not engage it.

Above £30,000: section 75A

Section 75 stops at a cash price of £30,000. Section 75A of the Consumer Credit Act 1974 starts where section 75 stops, and gives a narrower claim against the lender for a car priced above that. It is a claim for breach of contract (it does not mention misrepresentation), and it applies to a “linked credit agreement”: a regulated consumer credit agreement that serves exclusively to finance the supply of specific goods, where the lender used the supplier’s services in preparing or making the agreement or the goods are explicitly specified in it.

Under such an agreement you may pursue the claim against the lender if the supplier cannot be traced, has not responded after you contacted it, is insolvent, or you have taken reasonable steps to pursue the claim against the supplier without getting satisfaction. The steps need not include litigation, and accepting a replacement or other compensation from the supplier in settlement counts as satisfaction.

Section 75A does not apply where the cash value of the goods is £30,000 or less, where the credit exceeds £60,260, where the agreement is made wholly or predominantly for the debtor’s business, or where it is secured on land. Whether a particular agreement is a linked credit agreement turns on how it was arranged and what it says. On a dealer-arranged hire purchase or PCP the finance company is itself the supplier, so the two routes above are the ones that apply.

The Consumer Rights Act timeline on a car bought on finance

The short-term right to reject runs for 30 days from delivery. A fault that appears within six months of delivery is presumed to have been present at delivery, which reverses the burden of proof: it is for the trader to show the car was of satisfactory quality when it was supplied. On hire purchase or PCP that trader is the finance company. The presumption is narrower than it sounds: section 19(14) applies it “for the purposes of subsections (3)(b) and (c) and (4)” — repair or replacement, price reduction and the final right to reject. The 30-day short-term right to reject is subsection (3)(a) and is not included, so inside the 30 days the consumer still has to show the car did not conform.

The refund on a finance agreement is also limited. Section 20(14) provides that where the contract is a hire-purchase agreement or a conditional sales contract and it is treated as at an end before the whole of the price has been paid, the entitlement to a refund “extends only to the part of the price paid”. Rejecting a PCP car returns your deposit and the instalments you have made, and ends the agreement. It does not pay out the purchase price of the car.

One exception matters for cars. A refund on the final right to reject can normally not be reduced for use in the first six months, but section 24(10) of the Consumer Rights Act 2015 makes motor vehicles an exception, so a car can be docked for the use you had of it even inside that period. Cars are the carve-out, not the rule — with one exception of its own. Section 24(13) takes a vehicle constructed or adapted for the use of a person suffering from some physical defect or disability, usable by only one such person at a time, back out of the definition, so no deduction may be made on a final rejection of that vehicle inside the first six months.

Section 75 is not the motor finance redress scheme

Section 75 is about a supplier's breach of contract or misrepresentation. The FCA's motor finance redress scheme is a separate matter, about how motor finance was sold and the commission arrangements within it. For its latest position, see the FCA's car finance page or am I owed car finance compensation. If you think you are owed something, contact your lender directly; the FCA says there is no need to use a claims management company. Nothing on this page says whether any particular agreement is owed anything.

Where a complaint goes if the finance company says no

A complaint about a regulated credit agreement can be referred to the Financial Ombudsman Service after the firm has had its chance to answer. The Ombudsman says you have six months from the date on the firm’s final response, and it usually cannot help after that. For a dispute with an accredited dealer about the sale itself, The Motor Ombudsman is free to consumers and is a CTSI-approved alternative dispute resolution provider, its Vehicle Sales Code having received full CTSI approval in October 2016; an outcome binds the business if the consumer accepts it, and the consumer is not obliged to accept.

Does this differ in Northern Ireland?

No. The Consumer Credit Act 1974 and the Consumer Rights Act 2015 are both United Kingdom statutes, so section 75, section 75A, section 56(2), section 7 and the section 24(10) motor-vehicle carve-out reach the same result in Northern Ireland as in England, Wales and Scotland. One definition is drawn differently: section 24(12) takes “motor vehicle” from the Road Traffic Act 1988 in Great Britain and from the Road Traffic (Northern Ireland) Order 1995 in Northern Ireland. An ordinary car is a motor vehicle under both. That aside, the position is uniform — which is not true of everything a car buyer meets, since the roadworthiness test and its fees, for instance, are administered separately in Northern Ireland.