Voluntary Termination

Consumers are able to choose to terminate finance agreements at any point if the agreement is regulated under the Consumer Credit Act 1974 (as amended in 2006). The term is often abbreviated to ‘VT’.

The VT provisions were originally introduced to protect vulnerable consumers from financial hardship.  

Changes introduced in April 2008 removed the old £25,000 financial protection limit, so that the vast majority of consumer credit agreements are now regulated under the Act, further increasing industry losses and potentially increasing the cost of credit for consumers.

FLA statistics show that industry VT losses grew by 10.1% in 2009 compared with 2008 to £52.6 million. The number of VT cases recorded by FLA members in 2009 was almost 40,000, which was 28.3% higher than in 2008. 

The FLA’s view

The FLA supports consumer protection, especially for the most vulnerable members of society. Nevertheless, we have called for Government action to mitigate the disproportionate cost that VTs represent to finance providers.

Following FLA lobbying on the issue, the Government's call for evidence on the Consumer Credit and Personal Insolvency review specifically mentions the need to review the case for sections 99 and 100 of the Consumer Credit Act concerning voluntary terminations.

We have stated our case once again for the repeal of these sections of the CCA in our response to the call for evidence. We will continue discussions with Ministers and officials regarding VTs.