Saturday 14 January 2012

UK consumers should use statutory rights to reduce interest on credit agreements

Financially vulnerable consumers across the UK taken to court for defaulting on high interest credit - including 'second charge' mortgages - are unaware of powerful statutory rights which can help, according to Glasgow's Govan Law Centre. 

Section 136 of the Consumer Credit Act 1974 (CCA) permits the court to amend 'any agreement or security' in making a time order under section 129 of the Act as it considers just, having regard to the means of the debtor.  That includes the right to ask the court to reduce the rate of interest within a consumer credit agreement.

Most consumers are completely unaware of these statutory rights, which are seldom used, which have the scope to help make unmanageable, spiralling debts, manageable and affordable. Govan Law Centre's Mike Dailly said:

"The reason we believe section 136 of the Consumer Credit Act is so important right now is because of the disparity between interest rates in inter-bank lending and the wholesale market, and what UK consumers are being charged in many credit agreements. The Bank of England's base interest rate is 0.5% and the standard variable rates of most UK banks are around 2.5% at present. Yet many consumers will have second mortgages (regulated under the CCA) with interest running at 11 or 12%, or unsecured loan and credit agreements running at 18 to 30% APR".

"To give a typical example, a client facing repossession through default of a second charge mortgage borrowed £96k at 11.2% APR, resulting in monthly interest payments of £873. The client is eligble for some DWP help with housing costs while in receipt of benefits, but there is a major shortfall. If her rate of interest was 2.5% the differential in monthly payments would be a whopping £674 per month. Accordingly, consumers in financial difficulty should be asking the court to reduce or freeze the rate of interest on credit agreements to a fairer level so they can meet their financial obligations".

Consumers can make an application under sections 129 and 136 on the 'time to pay' form that comes with court papers, or as part of any legal defence to proceedings raised by a creditor. Always obtain independent legal advice from a community law centre or other local advice agency or firm of solicitors.



  1. W e cant afford a solicitor and have asked the judge to look at our case and the fairness of it, he shouted at me yesterday said the case had gone on long enough and said we would be evicted, i have some moeny and made offer to pay but he hated me, the other side laughed at me in court i felt like nothing enough to make me want to go and kill myself i have never been made to feel so low

    1. Don't do it , go back to citizens advice and show them the Article re section 136 stay strong , you will smile again one fay

    2. Please please go to the CAB and ask for help, they will always try and advise you on the best course of action and may be able to put you in touch with their own legal advisers. The judge should have been more lenient with you given you were not helped by a solicitor, so to shout at a litigant in person is just so wrong.

      Also, go to and post your problem there. They are a fantastic group of people, and along with very knowledgeable individuals who may be able to help you with your specific problem, you will find people willing (and wanting) to give you any moral support you need.

      You're not alone, and don't let them make you feel like that. Honestly, you wouldn't believe how much it helps just knowing that people are on your side.

      Please go and check it out, and get down to the CAB.

      I hope things pick up for you very soon x

  2. Disgraceful way to be treated.

  3. S&P report on Acenden/Capstone;

    why Shelter described the loans of SPML/PML/SPPL/LMC as 'designed to fail'.

  4. would this law apply to a loan of 20k taken out 10 years ago with swift advances. I have paid 24k plus back still owe 24k plus. Every month I pay £305 and they take just £5 off the loan the rest is interest. I still have 10 years left to pay and am looking for help to get this interest addressed.