Annex 6 – Cancellation Rights

Last Updated on 20/06/2024 by Sarah Sarsby

Consumer Credit Act 1974 – Consumers who enter into a credit agreement have a right to a 5-day cooling off period from the date the consumer receives a copy of the executed agreement regardless of whether the visit was pre-arranged.

Where cancellation rights apply or are offered, the customer must be informed under what circumstances they may cancel and these instructions should be plainly visible in the paperwork given to the customer, for example next to the signature box, and be in large bold type.  Where a customer has indicated they have poor eyesight or are confused by paperwork, the salesperson should go through the paperwork with them. 

In accordance with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 a cancellation form must be provided setting out:

• that a cancellation period applies and the date from which it starts
• the length of the cancellation period
• how to cancel

If a deposit will not be refundable, or will be only part-refundable, this must be made clear

when the customer places the order and the reasons for this must be described to them, in writing.  If the customer cancels the contract properly full repayment should occur (unless, for example, the goods have been damaged after delivery), and in any circumstance moneys withheld should not amount to more than the net costs or net loss of profit incurred by the Code member.

Where deposits or advance payments are taken, members must use a payment protection mechanism to ensure that consumers are returned their money without undue delay should the member be able to fulfil the contract to supply goods or a service.  Examples of this could include:

• Dedicated bank account[s] for customer deposits:  A member company holds customer deposits in a dedicated bank account in order to access funds in a timely manner in the event of deposit return
• Third-party custodial accounts:  A member company works with a 3^rd-party financial services company to hold deposits on behalf of customers, similar to a Tenancy Deposit Scheme Custodial Deposit Protection mechanism

If a member chooses to offer a cancellation period longer required by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (14 days) or to offer cancellation to customer other than consumers this should be clearly detailed by the member on their website and in their paperwork.