Default notices- why do creditors find it so difficult

The recent case of Brandon v American express showed that there is still a problem with creditors understanding and interpreting the Consumer Credit Act 1974.

It seems to be the case though that it is not just American Express that have fallen foul of these problem. My colleague Gwyn Jones recently litigated a case against Santander. The case in question was Santander v Mayhew and the Judgment can be found here


The Judge in Mayhew said in respect of the Default notice

Was the default notice valid? Under section 87 of the Consumer Credit Act
a default notice must be served before any termination or demand for earlier
payment. Section 88 of the Act provides that a default notice must be in the
prescribed form. The Claimant served a default notice by post of 12th October
2012. The Defendant says that the notice was defective because it gave the
wrong figure for the amount due and no OFT fact sheet was included. The
Claimant explains that the difference is the amount by which the Defendant’s
credit limit had been exceeded and that error was detrimental to the Claimant
rather than to the Defendant. It was the Claimant’s case that the OFT fact sheet
would have been included with the default notice and in the event that it was not
there was a clear statement at the end of the notice that the Defendant should
contact the Claimant so that the sheet could be sent. The Defendant denied
that the OFT fact sheet was sent with the default notice, stated that she did not
request the sheet and candidly admitted that she might not have read the whole
letter. No evidence was adduced before me actively saying the fact sheet had
been enclosed. The Claimant invited me to conclude that that the defects in the
default notice were de minimis but I do not agree. The whole point of a default
notice is that the debtor should know exactly what is owed and it is irrelevant
that any defect would be to the detriment of the creditor. I accept the evidence
of the Defendant that no OFT fact sheet was enclosed and words inviting her to
send for the missing sheet are not sufficient to remedy the defect of its absence.
It is unfortunately the case that many debtors in the position of the Defendant
in this case do not read to the end of letters thus the importance of documents
being enclosed.


There was also the case on Lloyds TSB Bank Plc v Simpson which Lloyds seem to have lost as  their default notice did not contain the required wording about the Office of Fair Trading debt help sheet. The Lloyds error is an interesting one as it seems that it was the template that was defective and therefore it would be my guess that any notices issued using that template also suffered the same fate.

There was also the Harrison v Link Financial Limited High Court ruling which held the MBNA default was bad.


But the point is that this legislation has been around since circa 1974 so the creditors have surely had enough time to read, digest and work out what exactly is required to make a default notice compliant but alas it seems not. Only today it came to my attention that Vanquis also had the same error as Lloyds TSB have with their default notices too.