Anyone who has ever come into contact with a financial product like a short-term loan, credit card, or a buy now pay later facility, would have heard, seen, or read the phrase “14 day cooling off period” at some point.

Did you know that this is a significant consumer protection offered with financial products?

The cooling off period is an opportunity for the consumer to take stock of their financial decision and this period offers tan easy way out of the commitment for no specific reason and with no penalty to follow. You literally have 14 days to change your mind!

In England and Wales, this right is provided by law and the cooling off period starts to run from the point when the consumer signs that all important contract or from the point when the relevant product is received. The cooling off period is triggered in most cases when an agreement is signed online or over the phone.

Benefits of the Cooling-Off Period

  • Time to reflect: The cooling-off period empowers consumers by providing them with the time to fully assess the implications of their financial decisions. It ensures that they are not bound by decisions made under pressure or without adequate information. It also acts as a protective buffer against impulsive purchases, especially those conducted on the internet or over the phone, where the immediacy of the transaction or the ease of the device used can lead to rushed decisions.
  • Flexible freedom to reconsider: Financial products can be complex and may have long-term implications. The 14-day window grants consumers the space to reconsider their options and, if necessary, withdraw from agreements that no longer seem beneficial, especially in situations where circumstances change without notice.
  • Risk Mitigation & Perception: By allowing consumers to opt-out of financial agreements within the cooling-off period, the risk of being locked into unsuitable or unaffordable products is significantly reduced allowing for consumers to feel free to consider financial products that they would otherwise overlook, which can enhance trust between financial service providers, institutions and consumers.

What financial products are included?

The cooling-off period applies to a variety of financial products, including loans, credit cards, car finance, mobile phones, and insurance policies.

It is important to note that the right to cancel does not apply universally; certain financial products may be exempt, and providers may offer different terms.

Need advice?

For those considering financial products, it is always advisable to review the terms of the cooling-off period and understand your rights before entering into any contract, however, if you are unaware of your rights or find yourself stuck in a contract with unfavourable terms and want advice, please do not hesitate to contact the dispute resolution team at Fisher Jones Greenwood LLP – contact us, telephone number 01245 584520.