§ 3-41. Right of withdrawal for financial agreements

The right of withdrawal gives the consumer the option of backing out of an agreement after it has been entered into. This section says when it exists. First, it applies to credit agreements and guarantee agreements, but not to agreements that have a reflection period under § 3-40. Second, it applies to all types of financial services sold by distance selling. Third, it applies to agreements entered into outside the service provider's fixed business premises.

For distance selling, there are two exceptions. The right of withdrawal does not apply to services where the price is governed by market movements the service provider has no control over, if the effects can occur before the withdrawal period runs out. Nor does it apply to agreements where both parties have already done everything they are required to, at the consumer's express request and before the right of withdrawal has been exercised. The Government may issue further rules in regulations, including on withdrawal forms and on services that are to be exempt.

If the consumer exercises the right of withdrawal, the obligation to perform the agreement ceases for both parties. If anything has already been delivered or paid, it must be returned under §§ 3-43 to 3-45. For credit, the consumer repays the credit amount with accrued interest within 30 days, see § 3-43. For distance selling, the consumer can only be charged for the service actually provided, see § 3-44. For agreements made outside business premises, the service provider must make repayment within 14 days, see § 3-45.

The deadline for exercising the right of withdrawal is set out in § 3-42: 14 calendar days, and 30 for an individual pension service. An example using the roles in the law: a consumer enters into an agreement on a financial service by distance selling and changes their mind. The consumer notifies the service provider within the deadline, and the agreement then ceases for both parties.