Asset Finance: Changes to default notices
HM Treasury (HMT) has just published The Consumer Credit (Enforcement, Default and Termination Notices) (Coronavirus) (Amendment) Regulations 2020 which make changes to the content and form of Default Notices set out in the 1983 Regulations.
These come into effect on 2 December 2020. Firms will have 6 months thereafter to implement them.
The changes relate largely to font and updating references to where consumers can get advice. Other changes include:
- In Schedule 2(3(c)) the period under which a creditor can take action when a breach occurs has been doubled to 14 days
- In Schedule 2(7) reference is made to contacting the lender in respect of the one-third rule
- New sections about ‘ending the agreement’ (Schedule 2(9)) and ‘interest payable after a judgment’ (Schedule 2(12)) are introduced
Although these amendments may seem insignificant, it is very important that, before taking any steps to enforce an agreement regulated by the Consumer Credit Act 1974, you have served a Default Notice complying with the strict requirements as to form and content prescribed by the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983, as now amended . Failure to do so (and to allow at least 14 days from the date of service to enable the debtor to remedy the breach) results in the relevant agreement being unenforceable until a valid and compliant Default Notice has been served.