Section 87 — Need for default notice.

(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default notice ”) is necessary before the creditor or owner can become entitled, by reason of any breach by the debtor or hirer of a regulated agreement,—

(a) to terminate the agreement, or

(b) to demand earlier payment of any sum, or

(c) to recover possession of any goods or land, or

(d) to treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred, or

(e) to enforce any security.

(2) Subsection (1) does not prevent the creditor from treating the right to draw upon any credit as restricted or deferred, and taking such steps as may be necessary to make the restriction or deferment effective.

(3) The doing of an act by which a floating charge becomes fixed is not enforcement of a security.

(4) Regulations may provide that subsection (1) is not to apply to agreements described by the regulations.

(5) [F1 Subsection (1)(d) does not apply in a case referred to in section 98A(4) (termination or suspension of debtor's right to draw on credit under open-end agreement).]

(6) [F2 This section does not apply to a regulated deferred payment credit agreement.]

Amendment notes

1. F1 S. 87(5) inserted (1.2.2011) by The Consumer Credit (EU Directive) Regulations 2010 (S.I. 2010/1010), regs. 37, 99(1) (with regs. 100, 101)
2. F2 S. 87(6) inserted (15.7.2025 for specified purposes, 15.7.2026 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025 (S.I. 2025/859), arts. 1(2)(3), 2(15)