Q&As

Where a creditor has the right to change the interest rate on a CCA regulated mortgage/secured personal loan, do they have to notify each party to the loan separately or can a joint letter be sent?

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Produced in partnership with Thomas Samuels of Gough Square Chambers
Published on LexisPSL on 26/02/2019

The following Financial Services Q&A produced in partnership with Thomas Samuels of Gough Square Chambers provides comprehensive and up to date legal information covering:

  • Where a creditor has the right to change the interest rate on a CCA regulated mortgage/secured personal loan, do they have to notify each party to the loan separately or can a joint letter be sent?

Where a creditor has the right to change the interest rate on a CCA regulated mortgage/secured personal loan, do they have to notify each party to the loan separately or can a joint letter be sent?

The issue is one which remains open to interpretation since the relevant provisions have only ever been considered once by the County Court and, even then, in a different context (see HFC Bank Ltd v Grossbard, Leeds CC, 17 November 2000 (not reported by LexisNexis®)).

The question refers to a ‘CCA regulated mortgage’. Any agreement which comes within the definition of a ‘regulated mortgage contract’ cannot be regulated by the CCA, we have therefore assumed your query deals only with other secured lending under the CCA.

The starting point is section 78A of the Consumer Credit Act 1974 (CCA 1974). Subject to certain exceptions, it provides that a creditor must ‘inform the debtor in writing’ of interest changes under regulated agreements ‘before the variation can take effect’. No further guidance is provided as to the timescale or mechanism for doing so.

However, the CCA 1974 includes a general provision at CCA 1974, s 185 in relation to agreements ‘with more than one debtor’. Save in the case of partnerships and unincorporated

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