Default Notices must be amended by 1 June 2021

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:

1. The period before which a creditor can take action has been doubled to 14 days;
2. A new section on “ending the agreement” is introduced; and
3. 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.