Logbook loans have a long history, and the rules around them have changed a great deal. Today, protection for borrowers comes from several layers that work together: a regulator, two sets of legislation, an overarching duty on firms and an independent service for settling disputes.
V5 Solutions is a trading name of Logbook Money Limited, an FCA-authorised lender. Below we explain each layer in turn, what it requires and what it means for you as a borrower.
The Regulator: Financial Conduct Authority
The FCA took over consumer credit regulation on 1 April 2014, replacing the Office of Fair Trading. Since then, every firm offering logbook loans has needed FCA authorisation. The regulator sets detailed conduct rules in its Consumer Credit sourcebook, known as CONC, and can fine firms, require them to pay redress or stop them trading.
Key requirements under CONC include:
- a proper assessment of whether you can afford the loan, based on your income and outgoings
- advertising that is clear, fair and not misleading
- fair treatment if you get into arrears, with repossession only as a last resort
To check any lender, search the FCA Register by firm name or trading name.
The Main Legislation: Consumer Credit Act 1974
The Consumer Credit Act sets out many of the rights attached to regulated loans. Among the most useful are:
- Pre-contract information. Before you sign, you receive a standard summary of the loan so you can compare it with others.
- A withdrawal period. You normally have 14 days after the agreement is made to withdraw, repaying the money borrowed plus interest for the time you held it.
- Early settlement. You can repay the loan in full at any time and receive a rebate of future interest.
- Statements and notices. Lenders must send regular statements, and notices if you fall into arrears.
- Default notices. A lender must serve a formal default notice and give you time to put matters right before it can enforce the agreement.
The Security: Bills of Sale Acts 1878 and 1882
A logbook loan in England and Wales is secured by a Bill of Sale. These Victorian Acts still govern how that document works. A Bill of Sale must use the form set out in the 1882 Act, be signed in front of a witness and be registered with the High Court within seven clear days. This is why, for most loans, a signing agent visits you to witness the document.
The Bill of Sale passes legal ownership of your vehicle to the lender until the loan is repaid, while you continue to keep and drive it. We never take your V5C logbook or spare key. One consequence of this structure is that a lender can repossess without going to court, which is why the FCA's conduct rules on arrears are so important. Our article on how logbook loans have changed covers the background to these Acts.
Scotland has a different legal system, so the Victorian Acts have no effect there. Customers there sign a Hire Purchase agreement online instead. Under the Consumer Credit Act, once you have paid at least a third of the total amount payable on a regulated hire purchase agreement, the lender generally needs a court order to take the goods back.
The Standard of Care: the Consumer Duty
The Consumer Duty came into force on 31 July 2023. It obliges firms to deliver good results for their retail customers, and it focuses on four areas: the products themselves, price and value, customer understanding and customer support.
For borrowers, that means a lender should explain costs and risks in plain terms, check that the loan suits your needs and make it easy to get help, change payment dates, settle early or complain. FCA rules strengthened in November 2024 also require lenders to consider a range of support options, such as reduced payments or freezing interest, for customers in financial difficulty.
The Independent Referee: Financial Ombudsman Service
If you have a problem, start by complaining to the lender, which has up to eight weeks to issue a final response. If you are not satisfied, or the deadline passes, you can refer the matter to the Financial Ombudsman Service. You generally have six months from the final response to do so. The service is free and independent, and its decisions are binding on the firm if you accept them. See our complaints procedure for how to contact us.
What These Protections Do Not Change
Regulation makes logbook lending fairer and more transparent, but it does not make it low risk. Secured borrowing is costly, and falling behind can still lead to losing your vehicle. This article is general information, not financial advice. If you are unsure whether borrowing suits your circumstances, free, impartial guidance is available from MoneyHelper. You can also read our guide on how to spot a good logbook loan company or learn more about V5 Solutions.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
