Office of Public Sector Information
(1) This section applies where at any time the following conditions are satisfied—
(a) that the debtor or hirer under an applicable agreement is required to have made at least two payments under the agreement before that time;
(b) that the total sum paid under the agreement by him is less than the total sum which he is required to have paid before that time;
(c) that the amount of the shortfall is no less than the sum of the last two payments which he is required to have made before that time;
(d) that the creditor or owner is not already under a duty to give him notices under this section in relation to the agreement; and
(e) if a judgment has been given in relation to the agreement before that time, that there is no sum still to be paid under the judgment by the debtor or hirer.
(2) The creditor or owner—
(a) shall, within the period of 14 days beginning with the day on which the conditions mentioned in subsection (1) are satisfied, give the debtor or hirer a notice under this section; and
(b) after the giving of that notice, shall give him further notices under this section at intervals of not more than six months.
(3) The duty of the creditor or owner to give the debtor or hirer notices under this section shall cease when either of the conditions mentioned in subsection (4) is satisfied; but if either of those conditions is satisfied before the notice required by subsection (2)(a) is given, the duty shall not cease until that notice is given.
(4) The conditions referred to in subsection (3) are—
(a) that the debtor or hirer ceases to be in arrears;
(b) that a judgment is given in relation to the agreement under which a sum is required to be paid by the debtor or hirer.
(5) For the purposes of subsection (4)(a) the debtor or hirer ceases to be in arrears when—
(a) no sum, which he has ever failed to pay under the agreement when required, is still owing;
(b) no default sum, which has ever become payable under the agreement in connection with his failure to pay any sum under the agreement when required, is still owing;
(c) no sum of interest, which has ever become payable under the agreement in connection with such a default sum, is still owing; and
(d) no other sum of interest, which has ever become payable under the agreement in connection with his failure to pay any sum under the agreement when required, is still owing.
(6) A notice under this section shall include a copy of the current arrears information sheet under section 86A.
(7) The debtor or hirer shall have no liability to pay any sum in connection with the preparation or the giving to him of a notice under this section.
(8) Regulations may make provision about the form and content of notices under this section.
(9) In the case of an applicable agreement under which the debtor or hirer must make all payments he is required to make at intervals of one week or less, this section shall have effect as if in subsection (1)(a) and (c) for ‘two’ there were substituted ‘four’.
(10) If an agreement mentioned in subsection (9) was made before the beginning of the relevant period, only amounts resulting from failures by the debtor or hirer to make payments he is required to have made during that period shall be taken into account in determining any shortfall for the purposes of subsection (1)(c).
(11) In subsection (10) ‘relevant period’ means the period of 20 weeks ending with the day on which the debtor or hirer is required to have made the most recent payment under the agreement.
(12) In this section ‘applicable agreement’ means an agreement which—
(a) is a regulated agreement for fixed-sum credit or a regulated consumer hire agreement; and
(b) is neither a non-commercial agreement nor a small agreement.”
After section 86B of the 1974 Act (inserted by section 9 of this Act) insert—
(1) This section applies where at any time the following conditions are satisfied—
(a) that the debtor under an applicable agreement is required to have made at least two payments under the agreement before that time;
(b) that the last two payments which he is required to have made before that time have not been made;
(c) that the creditor has not already been required to give a notice under this section in relation to either of those payments; and
(d) if a judgment has been given in relation to the agreement before that time, that there is no sum still to be paid under the judgment by the debtor.
(2) The creditor shall, no later than the end of the period within which he is next required to give a statement under section 78(4) in relation to the agreement, give the debtor a notice under this section.
(3) The notice shall include a copy of the current arrears information sheet under section 86A.
(4) The notice may be incorporated in a statement or other notice which the creditor gives the debtor in relation to the agreement by virtue of another provision of this Act.
(5) The debtor shall have no liability to pay any sum in connection with the preparation or the giving to him of the notice.
(6) Regulations may make provision about the form and content of notices under this section.
(7) In this section ‘applicable agreement’ means an agreement which—
(a) is a regulated agreement for running-account credit; and
(b) is neither a non-commercial agreement nor a small agreement.”
After section 86C of the 1974 Act (inserted by section 10 of this Act) insert—
(1) This section applies where the creditor or owner under an agreement is under a duty to give the debtor or hirer notices under section 86B but fails to give him such a notice—
(a) within the period mentioned in subsection (2)(a) of that section; or
(b) within the period of six months beginning with the day after the day on which such a notice was last given to him.
(2) This section also applies where the creditor under an agreement is under a duty to give the debtor a notice under section 86C but fails to do so before the end of the period mentioned in subsection (2) of that section.
(3) The creditor or owner shall not be entitled to enforce the agreement during the period of non-compliance.
(4) The debtor or hirer shall have no liability to pay—
(a) any sum of interest to the extent calculated by reference to the period of non-compliance or to any part of it; or
(b) any default sum which (apart from this paragraph)—
(i) would have become payable during the period of non-compliance; or
(ii) would have become payable after the end of that period in connection with a breach of the agreement which occurs during that period (whether or not the breach continues after the end of that period).
(5) In this section ‘the period of non-compliance’ means, in relation to a failure to give a notice under section 86B or 86C to the debtor or hirer, the period which—
(a) begins immediately after the end of the period mentioned in (as the case may be) subsection (1)(a) or (b) or (2); and
(b) ends at the end of the day mentioned in subsection (6).
(6) That day is—
(a) in the case of a failure to give a notice under section 86B as mentioned in subsection (1)(a) of this section, the day on which the notice is given to the debtor or hirer;
(b) in the case of a failure to give a notice under that section as mentioned in subsection (1)(b) of this section, the earlier of the following—
(i) the day on which the notice is given to the debtor or hirer;
(ii) the day on which the condition mentioned in subsection (4)(a) of that section is satisfied;
(c) in the case of a failure to give a notice under section 86C, the day on which the notice is given to the debtor.”
After section 86D of the 1974 Act (inserted by section 11 of this Act) insert—
(1) This section applies where a default sum becomes payable under a regulated agreement by the debtor or hirer.
(2) The creditor or owner shall, within the prescribed period after the default sum becomes payable, give the debtor or hirer a notice under this section.
(3) The notice under this section may be incorporated in a statement or other notice which the creditor or owner gives the debtor or hirer in relation to the agreement by virtue of another provision of this Act.
(4) The debtor or hirer shall have no liability to pay interest in connection with the default sum to the extent that the interest is calculated by reference to a period occurring before the 29th day after the day on which the debtor or hirer is given the notice under this section.
(5) If the creditor or owner fails to give the debtor or hirer the notice under this section within the period mentioned in subsection (2), he shall not be entitled to enforce the agreement until the notice is given to the debtor or hirer.
(6) The debtor or hirer shall have no liability to pay any sum in connection with the preparation or the giving to him of the notice under this section.
(7) Regulations may—
(a) provide that this section does not apply in relation to a default sum which is less than a prescribed amount;
(b) make provision about the form and content of notices under this section.
(8) This section does not apply in relation to a non-commercial agreement or to a small agreement.”
After section 86E of the 1974 Act (inserted by section 12 of this Act) insert—
(1) This section applies where a default sum becomes payable under a regulated agreement by the debtor or hirer.
(2) The debtor or hirer shall only be liable to pay interest in connection with the default sum if the interest is simple interest.”
(1) In subsections (2) and (3) of section 88 of the 1974 Act (contents and effect of default notice) for “seven” wherever occurring substitute “14”.
(2) In subsection (4) of that section after “it” insert “and any other prescribed matters relating to the agreement”.
(3) After that subsection insert—
“(4A) The default notice must also include a copy of the current default information sheet under section 86A.”
In section 127 of the 1974 Act (enforcement orders in cases of infringement) subsections (3) to (5) shall cease to have effect.
(1) In subsection (1) of section 129 of the 1974 Act (time orders) before paragraph (c) insert—
“(ba) on an application made by a debtor or hirer under this paragraph after he has been given a notice under section 86B or 86C; or”.
(2) After that section insert—
(1) A debtor or hirer may make an application under section 129(1)(ba) in relation to a regulated agreement only if—
(a) following his being given the notice under section 86B or 86C, he gave a notice within subsection (2) to the creditor or owner; and
(b) a period of at least 14 days has elapsed after the day on which he gave that notice to the creditor or owner.
(2) A notice is within this subsection if it—
(a) indicates that the debtor or hirer intends to make the application;
(b) indicates that he wants to make a proposal to the creditor or owner in relation to his making of payments under the agreement; and
(c) gives details of that proposal.”
(3) In section 143(b) of that Act (provision which may be made by rules of court in Northern Ireland) after “129(1)(b)” insert “or (ba)”.
(4) In section 32(1) of the Sheriff Courts (Scotland) Act 1971 (c. 58) (regulation of civil procedure in sheriff court) after paragraph (l) insert—
“(m) permitting the debtor or hirer in proceedings for—
(i) a time order under section 129 of the Consumer Credit Act 1974 (time orders), or
(ii) variation or revocation, under section 130(6) of that Act (variation and revocation of time orders), of a time order made under section 129,
to be represented by a person who is neither an advocate nor a solicitor.”
(5) In section 32(2B) of the Solicitors (Scotland) Act 1980 (c. 46) (offence for unqualified persons to prepare certain documents)—
(a) after “represent” insert “—(a)”;
(b) after “cause” insert—
“(b) a debtor or hirer in proceedings for—
(i) a time order under section 129 of the Consumer Credit Act 1974 (time orders); or
(ii) variation or revocation, under section 130(6) of that Act (variation and revocation of time orders), of a time order made under section 129”.
After section 130 of the 1974 Act insert—
(1) If the creditor or owner under a regulated agreement wants to be able to recover from the debtor or hirer post-judgment interest in connection with a sum that is required to be paid under a judgment given in relation to the agreement (the ‘judgment sum’), he—
(a) after the giving of that judgment, shall give the debtor or hirer a notice under this section (the ‘first required notice’); and
(b) after the giving of the first required notice, shall give the debtor or hirer further notices under this section at intervals of not more than six months.
(2) The debtor or hirer shall have no liability to pay post-judgment interest in connection with the judgment sum to the extent that the interest is calculated by reference to a period occurring before the day on which he is given the first required notice.
(3) If the creditor or owner fails to give the debtor or hirer a notice under this section within the period of six months beginning with the day after the day on which such a notice was last given to the debtor or hirer, the debtor or hirer shall have no liability to pay post-judgment interest in connection with the judgment sum to the extent that the interest is calculated by reference to the whole or to a part of the period which—
(a) begins immediately after the end of that period of six months; and
(b) ends at the end of the day on which the notice is given to the debtor or hirer.
(4) The debtor or hirer shall have no liability to pay any sum in connection with the preparation or the giving to him of a notice under this section.
(5) A notice under this section may be incorporated in a statement or other notice which the creditor or owner gives the debtor or hirer in relation to the agreement by virtue of another provision of this Act.
(6) Regulations may make provision about the form and content of notices under this section.
(7) This section does not apply in relation to post-judgment interest which is required to be paid by virtue of any of the following—
(a) section 4 of the Administration of Justice (Scotland) Act 1972;
(b) Article 127 of the Judgments Enforcement (Northern Ireland) Order 1981;
(c) section 74 of the County Courts Act 1984.
(8) This section does not apply in relation to a non-commercial agreement or to a small agreement.
(9) In this section ‘post-judgment interest’ means interest to the extent calculated by reference to a period occurring after the giving of the judgment under which the judgment sum is required to be paid.”
(1) After section 187 of the 1974 Act insert—
(1) In this Act ‘default sum’ means, in relation to the debtor or hirer under a regulated agreement, a sum (other than a sum of interest) which is payable by him under the agreement in connection with a breach of the agreement by him.
(2) But a sum is not a default sum in relation to the debtor or hirer simply because, as a consequence of his breach of the agreement, he is required to pay it earlier than he would otherwise have had to.”
(2) In section 189(1) of that Act (definitions) after the definition of “default notice” insert—
“‘default sum’ has the meaning given by section 187A;”.
After section 140 of the 1974 Act insert—
(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—
(a) any of the terms of the agreement or of any related agreement;
(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
(c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).
(2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).
(3) For the purposes of this section the court shall (except to the extent that it is not appropriate to do so) treat anything done (or not done) by, or on behalf of, or in relation to, an associate or a former associate of the creditor as if done (or not done) by, or on behalf of, or in relation to, the creditor.
(4) A determination may be made under this section in relation to a relationship notwithstanding that the relationship may have ended.
(5) An order under section 140B shall not be made in connection with a credit agreement which is an exempt agreement by virtue of section 16(6C).”
After section 140A of the 1974 Act (inserted by section 19 of this Act) insert—
(1) An order under this section in connection with a credit agreement may do one or more of the following—
(a) require the creditor, or any associate or former associate of his, to repay (in whole or in part) any sum paid by the debtor or by a surety by virtue of the agreement or any related agreement (whether paid to the creditor, the associate or the former associate or to any other person);
(b) require the creditor, or any associate or former associate of his, to do or not to do (or to cease doing) anything specified in the order in connection with the agreement or any related agreement;
(c) reduce or discharge any sum payable by the debtor or by a surety by virtue of the agreement or any related agreement;
(d) direct the return to a surety of any property provided by him for the purposes of a security;
(e) otherwise set aside (in whole or in part) any duty imposed on the debtor or on a surety by virtue of the agreement or any related agreement;
(f) alter the terms of the agreement or of any related agreement;
(g) direct accounts to be taken, or (in Scotland) an accounting to be made, between any persons.
(2) An order under this section may be made in connection with a credit agreement only—
(a) on an application made by the debtor or by a surety;
(b) at the instance of the debtor or a surety in any proceedings in any court to which the debtor and the creditor are parties, being proceedings to enforce the agreement or any related agreement; or
(c) at the instance of the debtor or a surety in any other proceedings in any court where the amount paid or payable under the agreement or any related agreement is relevant.
(3) An order under this section may be made notwithstanding that its effect is to place on the creditor, or any associate or former associate of his, a burden in respect of an advantage enjoyed by another person.
(4) An application under subsection (2)(a) may only be made—
(a) in England and Wales, to the county court;
(b) in Scotland, to the sheriff court;
(c) in Northern Ireland, to the High Court (subject to subsection (6)).
(5) In Scotland such an application may be made in the sheriff court for the district in which the debtor or surety resides or carries on business.
(6) In Northern Ireland such an application may be made to the county court if the credit agreement is an agreement under which the creditor provides the debtor with—
(a) fixed-sum credit not exceeding £15,000; or
(b) running-account credit on which the credit limit does not exceed £15,000.
(7) Without prejudice to any provision which may be made by rules of court made in relation to county courts in Northern Ireland, such rules may provide that an application made by virtue of subsection (6) may be made in the county court for the division in which the debtor or surety resides or carries on business.
(8) A party to any proceedings mentioned in subsection (2) shall be entitled, in accordance with rules of court, to have any person who might be the subject of an order under this section made a party to the proceedings.
(9) If, in any such proceedings, the debtor or a surety alleges that the relationship between the creditor and the debtor is unfair to the debtor, it is for the creditor to prove to the contrary.”
After section 140B of the 1974 Act (inserted by section 20 of this Act) insert—
(1) In this section and in sections 140A and 140B ‘credit agreement’ means any agreement between an individual (the ‘debtor’) and any other person (the ‘creditor’) by which the creditor provides the debtor with credit of any amount.
(2) References in this section and in sections 140A and 140B to the creditor or to the debtor under a credit agreement include—
(a) references to the person to whom his rights and duties under the agreement have passed by assignment or operation of law;
(b) where two or more persons are the creditor or the debtor, references to any one or more of those persons.
(3) The definition of ‘court’ in section 189(1) does not apply for the purposes of sections 140A and 140B.
(4) References in sections 140A and 140B to an agreement related to a credit agreement (the ‘main agreement’) are references to—
(a) a credit agreement consolidated by the main agreement;
(b) a linked transaction in relation to the main agreement or to a credit agreement within paragraph (a);
(c) a security provided in relation to the main agreement, to a credit agreement within paragraph (a) or to a linked transaction within paragraph (b).
(5) In the case of a credit agreement which is not a regulated consumer credit agreement, for the purposes of subsection (4) a transaction shall be treated as being a linked transaction in relation to that agreement if it would have been such a transaction had that agreement been a regulated consumer credit agreement.
(6) For the purposes of this section and section 140B the definitions of ‘security’ and ‘surety’ in section 189(1) apply (with any appropriate changes) in relation to—
(a) a credit agreement which is not a consumer credit agreement as if it were a consumer credit agreement; and
(b) a transaction which is a linked transaction by virtue of subsection (5).
(7) For the purposes of this section a credit agreement (the ‘earlier agreement’) is consolidated by another credit agreement (the ‘later agreement’) if—
(a) the later agreement is entered into by the debtor (in whole or in part) for purposes connected with debts owed by virtue of the earlier agreement; and
(b) at any time prior to the later agreement being entered into the parties to the earlier agreement included—
(i) the debtor under the later agreement; and
(ii) the creditor under the later agreement or an associate or a former associate of his.
(8) Further, if the later agreement is itself consolidated by another credit agreement (whether by virtue of this subsection or subsection (7)), then the earlier agreement is consolidated by that other agreement as well.”
(1) After section 140C of the 1974 Act (inserted by section 21 of this Act) insert—
The advice and information published by the OFT under section 229 of the Enterprise Act 2002 shall indicate how the OFT expects sections 140A to 140C of this Act to interact with Part 8 of that Act.”
(2) In section 16 of that Act (exempt agreements) before subsection (8) insert—
“(7A) Nothing in this section affects the application of sections 140A to 140C.”
(3) Sections 137 to 140 of that Act (extortionate credit bargains) shall cease to have effect.
(4) In section 181 of that Act (power to alter monetary limits etc.)—
(a) in subsection (1) before “155(1)” insert “140B(6),”;
(b) in subsection (2) before “shall” insert “or 140B(6)”.
In section 189(1) of the 1974 Act (definitions)—
(a) for the definition of “consumer credit business” substitute—
“‘consumer credit business’ means any business being carried on by a person so far as it comprises or relates to—
(a) the provision of credit by him, or
(b) otherwise his being a creditor,
under regulated consumer credit agreements;”
(b) for the definition of “consumer hire business” substitute—
“‘consumer hire business’ means any business being carried on by a person so far as it comprises or relates to—
(a) the bailment or (in Scotland) the hiring of goods by him, or
(b) otherwise his being an owner,
under regulated consumer hire agreements;”.
Consumer Credit Act 2006