The Consumer Credit (Enforcement, Default and Termination Notices) (Coronavirus) (Amendment) Regulations 2020 (the Regulations) has made changes to the form and content of a “default notice” sent to customers who default under a regulated agreement.
These changes come into force on 2 December 2020 and firms have 6 months to implement the changes.
For over 40 years a default notice has followed a prescribed form, as set out in the Consumer Credit Act 1974 (the Act). This is now changing due to the negative impact it has on a customer’s mental health.
What are the changes?
The changes are predominantly in relation to font (i.e. using bold and underline as opposed to SHOUTY CAPITALS) and to where a customer can get advice (this directs them to the Government’s Money Advice Service where historically it suggested a solicitor or the Citizens Advice Bureau) but some other noteworthy changes in Schedule 2 are:
- The period before which a creditor can take action has been doubled to 14 days;
- A new section on “ending the agreement” is introduced; and
- The customer is advised to contact the creditor where the 1/3 rule may apply (where the customer has paid to the creditor one third or more of the total price of the goods, requiring the creditor to obtain a Court order before repossessing them).
What does this mean for you?
Creditors have until 1 June to amend their default notices. Early amendment is recommended.