Q&As

Section 86B(5)(b) of the Consumer Credit Act 1974 defines arrears as including when any 'default sum, which has ever become payable under the agreement in connection with (the customer’s) failure to pay any sum under the agreement when required, is still owing'. This seems to suggest that if a default sum has been added to the account and the customer has not paid this, then the lender should keep sending notices of arrears. Is this the case even if a time has not been set for payment (ie the customer is able to pay the default sum as part of their last payment)? Is it also the case if the monthly payment is recalculated so that part of the monthly payment is going towards repaying the default sum?

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Published on LexisPSL on 12/05/2021

The following Financial Services Q&A provides comprehensive and up to date legal information covering:

  • Section 86B(5)(b) of the Consumer Credit Act 1974 defines arrears as including when any 'default sum, which has ever become payable under the agreement in connection with (the customer’s) failure to pay any sum under the agreement when required, is still owing'. This seems to suggest that if a default sum has been added to the account and the customer has not paid this, then the lender should keep sending notices of arrears. Is this the case even if a time has not been set for payment (ie the customer is able to pay the default sum as part of their last payment)? Is it also the case if the monthly payment is recalculated so that part of the monthly payment is going towards repaying the default sum?

Section 86B(5)(b) of the Consumer Credit Act 1974 defines arrears as including when any 'default sum, which has ever become payable under the agreement in connection with (the customer’s) failure to pay any sum under the agreement when required, is still owing'. This seems to suggest that if a default sum has been added to the account and the customer has not paid this, then the lender should keep sending notices of arrears. Is this the case even if a time has not been set for payment (ie the customer is able to pay the default sum as part of their last payment)? Is it also the case if the monthly payment is recalculated so that part of the monthly payment is going towards repaying the default sum?

The provisions relating to notices of sums in arrear (NOSIAs) are set out in sections 86B–86D of the Consumer Credit Act 1974 (CCA 1974). CCA 1974, s 86B covers NOSIAs under fixed-sum credit agreements and CCA 1974, s 86C covers NOSIAs under running-account credit agreements. CCA 1974 requires a NOSIA to be sent to customers where one is triggered. The triggers rely on the word

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