Banking Category Banking: the easy, simple banking guide

Default Notice & Consumer Credit Act

The U.K. 1974 Consumer Credit Act provides protections to consumers with credit agreements of less than £25,000.

A default notice must be given to demand payment when a consumer is late. The law sets out the requirement of the notice.

Default Notice

The default notice to demand payment or end the credit agreement must be sent to the consumer. The notice must include when the payments should be made, what will happen if a payment is not made, how to maintain the agreement by making payments and how much should be paid.

2006 Changes

In 2006 the default notice requirement was changed from seven days' notice to 14 days. The Consumer Credit Act provides that if a third of the amount has been paid then the creditor cannot take goods back until they have obtained a court order.

Terminating the Agreement

The default notice must also include a statement that the consumer can cancel the credit agreement at any time before the final payment is due. The notice must also include a statement that if the consumer is unable to make payments, the consumer can apply to the court to request more time to pay.