Changes to Default Notices under the Consumer Credit Act 1974 (the Act)

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HM Treasury has announced changes to the prescribed format of default notices expected to come into force at the end of the year!


For over 40 years “default notices”, sent out when a customer defaults under a regulated credit or hire agreement, have followed a prescribed form, which is set out in the Act.  The Act sets out specific words that should be put in CAPITAL LETTERS such as “IMPORTANT – YOU SHOULD READ THIS CAREFULLY” and details various statutory procedures that must be followed when issuing.  

Why the Change?

Research from the Money and Mental Health Policy Institute and various debt charities suggests that large capitalised words and legal terms can make the letter hard to understand and can distress the recipient.  Capital letters are considered to be “shouty” to today’s generation and research has shown that they may have a negative impact on people’s mental health and a knock-on effect on their ability to manage their debt.  This type of communication is thought to be intimidating and distressing rather than “clear” and direct.  

Secondary legislation is required to change the language and presentation of the current notice.  This will mean using a bold and underlined typeface, rather than shouty capitals and “legalese” terms will be changed to more widely understood words. There will also be a signposting to customers of where to access free debt advice. 

What this means for you?

The legislation is expected to come into force in December 2020.  All lenders will be required to amend their default notices within 6 months of this date.

How can Gateley help you?

Further advice will be given as the changes take place and are implemented, so watch this space. However, if you have started to think about timelines for re-drafting your current default notices please contact us for further information.

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