Mon 16 Nov 2020

CCA default notice amendment regulations now published

HM Treasury has followed up its announcement from October on changes to CCA default notices by publishing the Consumer Credit (Enforcement, Default and Termination Notices) (Coronavirus) (Amendment) Regulations 2020.  

It is not immediately clear what coronavirus has to do with any of the amendments made by the new regulations, but they are welcome nonetheless.  The regulations will come into force on 2 December 2020 and firms will have six months from then to make the changes to their notice templates.

As set out in the explanatory note to the regulations, they amend the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (the 1983 Regulations) which prescribe the form of the notices which have to be given under sections 76, 87 and 98 of the Consumer Credit Act 1974 (CCA) by a creditor or owner before taking certain action to enforce or terminate an agreement regulated by the Act.

As promised, HMT has toned down the prominence requirements in the 1983 Regulations by cutting down on the amount of text which requires to be prominent, and restricting the way in which you can give prominence to bold print or underlining.  Block capital letters are banned where the text of a required statement of words is shown in the new regulations in lower case.  There are also some specific provisions relating to replacing the word "surety" where it would otherwise appear in a notice, for example using the word "guarantor" instead, in circumstances where the surety is a guarantor.

The Schedule to the new regulations amends the requirements relating to the form of enforcement, default and termination notices found in Schedules 1, 2 and 3 of the 1983 Regulations.  This is mostly tinkering about with the prominence of wording, and softening some warnings.  The previous references to Trading Standards and the Citizens Advice Bureau have all gone, and have been replaced with references to the Government's Money Advice Service.  Note that there is a completely new Schedule 2 for default notices, though it was probably just simpler to do it that way than to describe the individual changes one by one as they've done for the changes to Schedules 1 and 3. 

Firms should look to make the changes to their notice templates from 2 December 2020 onwards.  Please contact John Lunn in our Banking and Finance team if this is something that we can help you with. 

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