posted 30th October 2025
Hidden Finance Agreements.
Thousands of UK businesses may be trapped in long-term finance contracts, often hidden inside everyday telecoms or equipment deals. Furthermore, this industry practice is sometimes known as a "universal credit agreement". Consequently, it leaves business owners locked into costly arrangements they never intended to enter.
This process often begins when a sales representative offers an upgrade for phones, broadband, or office technology. Moreover, the proposal sounds legitimate, offering new equipment for one simple monthly payment. A business owner is then shown an "order form" or "service agreement", told it is routine, and signs to get things started.
Accordingly, weeks later, they discover they have not simply paid for a service. They have entered a binding finance or lease agreement with an entirely separate company. The original supplier has already been paid in full by a finance house, leaving the business with years of payments for equipment it does not own.
Agreement Structure.
In UK credit law, this "universal credit agreement" is a contract signed before the finance provider is even disclosed. Therefore, the supplier acts as an intermediary, gathering signatures and later assigning the deal to whichever lender approves the funding.
This structure allows sales teams to close deals immediately. However, for the business customer, the outcome can be catastrophic, as what looks like a service contract is, in reality, a binding finance arrangement.
Affected Sectors.
This practice has become standard across several industries. Frequently, it is seen in business telecoms and VoIP systems, where resellers use leasing firms to fund installations and handsets. Similarly, photocopier and printer leases frequently hide third-party finance providers.
It is also common with EPOS and card terminal bundles, where retailers and hospitality operators unknowingly lease their tills or card readers. Additionally, IT hardware packages and even some vehicle fleet leasing deals can use these "undisclosed lender" structures. In each case, the business signs with one company but owes money to another.
Obscure Paperwork.
The contractual paperwork is often deliberately dense and confusing. Consequently, phrases like "rental," "service plan," or "monthly bundle" conceal the true nature of the financial commitment. Key information about ownership, term length, and cancellation rights is buried in small print. By the time the customer understands the arrangement, the contract is active and difficult to unwind.
The Buy-Out Trap.
Another issue arises when a business becomes unhappy with its existing provider. A new company may appear offering a "buy-out deal", promising to take over the contract without penalty. In reality, this is not a true buy-out. The new provider simply arranges a fresh finance agreement to pay off the remaining balance of the old one.
Therefore, the original debt is settled using the proceeds of a new loan, and the customer is now tied into yet another multi-year lease. What looks like freedom is merely refinancing the same liability under a new name. Many businesses have gone through this cycle multiple times, escalating their costs and extending their payment terms.
Legal Questions.
These agreements sit awkwardly between consumer protection law and commercial finance regulation. Under the Consumer Credit Act 1974, a regulated agreement must clearly identify the creditor and key terms when signed. Furthermore, the Financial Conduct Authority requires full transparency and disclosure of broker relationships. When these standards are not met, the fairness and enforceability of the agreement can be questioned.
Specifically, did the business know who it was contracting with, and were the terms accurately represented? These are the very questions now appearing in disputes before the Financial Ombudsman Service and UK courts.
Our Expertise.
At Meridian Legal Services, we specialise in helping UK businesses that have fallen victim to hidden finance or unfair leasing agreements. Our team analyses contract documentation to uncover the relationships behind the deals. Accordingly, we help clients recover money lost through these deceptive arrangements.
If your business is tied into a long-term contract you do not recognise, or if another provider has offered to "buy you out", it is time to have the paperwork reviewed. We understand exactly how these agreements are structured and how to challenge them.
