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Default Notices must be amended by 1 June 2021

Gateley Legal

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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.

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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