The Consumer Credit Act 1974 (CCA) requires lenders to include Information Sheets to accompany a Notice of Sums in Arrears (NOSIA) or a Default Notice when sent to borrowers who are in arrears or in default of a consumer credit regulated agreement. These Information Sheets are published and updated by the FCA. They are designed to inform borrowers about their statutory rights and about which organisations can help them to manage their outstanding debts.
On 18 October 2016, the FCA announced that it had updated a number of its Information Sheets, including those for arrears and default. The changes mainly related to new information about some of the debt agencies able to offer advice and assistance. The updates were due to take effect on 18 January 2017, three months after they were announced on the FCA webpage.
However, on 22 December 2016, the FCA updated its webpage with the following paragraph:
We have withdrawn the versions of these information sheets that were intended to become current on 18 January 2017. This is due to an error in the production of the information sheets for publication. We apologise for any inconvenience that this may cause, and will shortly publish corrected versions with a new effective date.
This update may have been missed by lenders due to the Christmas and New Year period. The FCA stated that lenders should continue to use the current versions and not use the updated versions until further notice by the FCA.
Whilst the differences in the Information Sheets might be thought to be minor, it is important to remember that provision of this information is a statutory requirement. In particular, in respect of NOSIAs, section 86(B)(6) CCA provides that “A notice under this section shall include a copy of the current arrears information sheet under section 86A”. Section 86D then sets out a number of severe sanctions for failing to provide a NOSIA, including unenforceability of the agreement and restrictions on the recoverability of interest and charges during the period of non-compliance. If a NOSIA is sent but is not compliant this is likely to have the same effect as if one had not been the sent with the consequential ramification. In the case of an incorrect version of the Information Sheet included with the Notice it remains a moot point as to whether this has the same consequences.
Whilst regulation 41 of the Consumer Credit (Information Requirements) Regulations 2007 contains some limited protection from an error or omission “which does not affect the substance of the information or forms of wording” the scope of this provision has yet to be tested in the courts. It would be advisable for lenders to ensure compliance.
For further information, please contact:
Oona Cassidy, Associate, Corporate Recovery
T: 0161 836 7820