The MCOB protections that apply during the life of a loan, such as the rules on post-sale disclosure (eg for annual statements), contract variations, charges and payment shortfalls and repossessions will apply to second charge back book loans, as well as to new loans.
In addition, some existing Consumer Credit Act (CCA) protections will remain for existing loans. These are set out in Article 29 of the MCD Order 2015 and include:
- restrictions on early settlement fees
- the right to complete payments ahead of time
- a restriction on increasing interest on default.
These and other CCA provisions remain because the government decided it would be unfair to remove protection that the customer had expected on taking out the loan would apply throughout the term.
If the lender does not comply for a period with certain CCA provisions – for example, failure to give notice of the sum in arrears – then the lender cannot enforce the contract until it does comply. See Article 29 of the MCD Order 2015 for a complete list of the provisions where non-compliance makes the contract unenforceable.