7. Arrears notices
Creditors must inform clients when their arrears reach a certain level, and that interest or charges may be accruing. This applies to most new and existing credit agreements. There are different provisions for fixed-sum and running-account agreements.
•Fixed Sum agreements – within 14 days of a client missing two scheduled payments under a fixed notice credit agreement the creditor must issue an arrears notice.1s86B CCA 1974 This ’notice of arrears’ should be a specified form. •Running account agreements – if the client has missed two scheduled payments or is in arrears by the equivalent of two scheduled payments before the next payment is due, the creditor must issue an arrears notice.2s86C CCA 1974 This ‘notice of arrears’ should be a specified form.
All arrears notices must be sent with an FCA information sheet.3 s86A CCA 1974; When a client receives an arrears notice, they can apply for a time order through the courts. There is no requirement to wait for a default notice. See here for more information on time orders.