New Rules Prescribing The Form And Content Of Default Notices Expected In December 2020

• Published date: 14 October 2020
• Subject Matter: Consumer Protection, Consumer Law, Consumer Credit
• Law Firm: Walker Morris
• Author: Ms Jeanette Burgess, Richard Sandford and Mark Booth

The Government has announced that new rules have been proposed by the Treasury for Default Notices required under section 87 Consumer Credit Act 1974 (CCA).

Default Notices must be served by lenders on borrowers that have breached their CCA regulated agreement (e.g. by not paying amounts when they fall due) before the lender can terminate the agreement, demand early repayment of any sum, or recover possession of any goods or land.

The content of a Default Notice is heavily prescribed by regulations. The current requirements for Default Notices are contained in the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 which are now almost 40 years old. As well as prescribing specific wording that must be included in the Default Notice the regulations also specify how some of the information must be presented, including requiring some sections to be in capital letters. Research has shown that this capitalised text, and use of legal terms can make the information harder for borrowers in debt to understand.

Many lenders have tried to present the information in their Default Notices in a more consumer...