Consumer Credit Act 1974—early settlement
Produced in partnership with George Mallet, Barrister of Henderson Chambers
Consumer Credit Act 1974—early settlement

The following Financial Services guidance note Produced in partnership with George Mallet, Barrister of Henderson Chambers provides comprehensive and up to date legal information covering:

  • Consumer Credit Act 1974—early settlement
  • Introduction to early settlement
  • When can borrowers settle early?
  • When is the settlement sum due?
  • The borrower’s rebate
  • Settlement date
  • Deferment of the settlement date
  • Variation of rates and amounts
  • Compensatory amount
  • Termination statements

Introduction to early settlement

Borrowers are entitled, at any time, to bring regulated agreements to an end. If they elect to do so they must notify the debtor by way of statutory notice and pay all amounts due (less any rebate due, considered below)—Consumer Credit Act 1974, s 96 (CCA 1974). Unless the regulated agreement is secured on land, borrowers are permitted to discharge either all or part of their indebtedness as of right. Contracting out of that right is forbidden; lenders cannot deprive borrowers of their right to early settlement or subject early settlement to conditions.CCA 1974, ss 96, 173

When can borrowers settle early?

Borrowers under a regulated consumer credit agreement are entitled to settle either part or all of their regulated agreement at any time, provided that they: (i) provide notice to the creditor, and (ii) pay all amounts due under the agreement.

Notice

The CCA 1974 does not stipulate any requirements as to form or content of the early settlement notice. The notice does not need to be given in writing (except where the agreement is secured on land). The notice can be given at any time, and may be expressed so as to take effect immediately, or at a later date. That said, lenders will, in the credit agreement, often stipulate rules with respect to form and content of notices.CCA 1974, s 94(6)

Pay all sums due

The sums due to the creditor include sums due under CCA 1974, s 95A(2), less any sum due by way of statutory rebate (considered below) (as amended).CCA 1974, s 94(1)

In order to assist with