Q&As

What happens if a default notice is not served on a borrower?

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Published on LexisPSL on 29/08/2014

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

  • What happens if a default notice is not served on a borrower?
  • What is a default notice?
  • When is a notice of default required?
  • What are the requirements for a valid notice?
  • What are the consequences of failing to serve a notice of default?
  • What action can be taken without serving a notice of default?

What happens if a default notice is not served on a borrower?

What is a default notice?

A default notice is a notice that must be served on a borrower under a regulated agreement, where that borrower is in breach of the agreement (for example by missing repayments), before the lender is entitled to take certain action against the borrower.

When is a notice of default required?

A notice is required whenever (as a result of breach of agreement by the borrower) the lender wishes to terminate the agreement, accelerate payment, recover possession of goods or land, enforce any security or to treat any of the borrower's rights under the agreement as terminated, restricted or deferred.

What are the requirements for a valid notice?

The full requirements are set out in the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983, SI 1983/1561 reg 88. In short, the notice must be in the form prescribed by those regulations and must include details of the alleged breach, together with details of

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