Consumer Credit Act 1974
The changes do not stop coming either, with the Government agreeing to end the practice of threatening letters from lenders. The changes relate to “default notices” which are sent to people struggling with consumer credit debts, including overdrafts, credit cards and loans.
The changes to the Consumer Credit Act 1974 will come into force by the end of the year.
The Government have agreed to changes including;
- The letters which are sent to debtors will need to utilise simple language that’s easier to understand and less threatening in nature,
- Creditors will be required to explain complex legal terms and jargon in plain English, rather than confusing debtors with these terms which can sometimes be misconstrued as aggressive and antagonistic.
- Creditors will also be required to explain the term “surety” where this is used. This where someone else other than the account holder takes responsibility for the debts incurred, such as a guarantor of a loan.
- There must be no use of intimidating capital letters, instead letters must use bold or underlined text.
- There will need to be signposts for the addressee which direct them to sources of free debt advice as part of the letters.
Some of these changes are most likely already in use and most are common sense, however once the Government legislate on this creditors must be incredibly careful to follow the guidance and ensure their letters adhere to them.