Multiple agreements within section 18 consumer credit Act 1974

This is just a view and interpretation of s18 CCA and therefore we would advise anyone reading this bear that in mind

Section 18 can be very useful concerning agreements where there is a main loan and payment protection insurance.

Firstly lets look at what section 18 says

18.Multiple agreements.

—(1) This section applies to an agreement (a “multiple agreement ”) if its terms are such as—

(a)To place a part of it within one category of agreement mentioned in this Act, and another part of it within a different category of agreement so mentioned, or within a category of agreement not so mentioned, or

(b)To place it, or a part of it, within two or more categories of agreement so mentioned.

(2) Where a part of an agreement falls within subsection (1), that part shall be treated for the purposes of this Act as a separate agreement.

Ok so what does this mean, well, lets say you borrow £6000 from Nasty Banking Corp, the loan is for you to use as you like and therefore you would have fixed sum credit See s10 (1)(B) CCA, unrestricted use credit See s11 (2) CCA and finally it would be a debtor-creditor agreement as defined within s13 CCA

Now if you add PPI to the loan, this changes things slightly, why? If you borrow £6000 from Nasty Banking Corp and then you add a PPI policy for example adding another £1500 of credit you are turning it into a multiple agreement

The PPI is fixed sum credit as set out in section 10 CCA but it is not unrestricted use, instead its restricted use credit ( See s11 CCA) as you do not have any say over its use, it is in effect only credit for the purchase of the PPI policy and additionally it is a debtor-creditor-supplier agreement as it would be undoubtedly underwritten by another specialist insurer and not the creditor and therefore it falls within the definition given in section 12 CCA

So in effect what we have with the £6000 loan and the £1500 PPI is a multiple agreement with “part of it within one category of agreement mentioned in this Act, and another part of it within a different category of agreement so mentioned, or within a category of agreement not so mentioned”

This is because the £6000 is fixed sum, unrestricted use debtor creditor and the £1500 is fixed sum, restricted use Debtor-creditor-supplier

Therefore since this type of agreement falls within s18, it means that as defined in s18 (2) CCA that the document is to be treated as 2 separate agreements and each agreement must have its own prescribed terms for each part

Therefore each piece of credit must have its own term stating the amount of credit, repayments and all other statutory info, in addition the PPI policy would need to have a term stating the Cash Price of the policy, due to it being a restricted use debtor creditor supplier agreement.

In essence there should be the following

Loan

Amount of Credit £6000

Repayments 60 payments of £XXXXXX

Total amount payable £XXXXXXXX

APR 16.9%

PPI

Amount of credit £1500

Repayments 60 payments of £XXXXXXX

Total amount payable £ XXXXXXXXX

Apr 16.9%

Cash price of policy £1500

the agreement may not be set out exactly as above but that is to give you an idea of what it must contain

If the agreement fails to correctly set matters out in accordance with s18 then the lender risks falling foul of the form and content requirements of section 60 CCA and could be improperly executed as set out within section 61(1) (a) CCA 1974 thus becoming unenforceable

the main thing to remember is that you have two agreement within one document, so there must be a set of prescribed terms for each piece of credit, it is permissible to add the prescribed terms together and then state them as total amounts BUT they must be also stated in their separate parts.

Multiple agreements falling within section 18 CCA 1974.pdf

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