Yes. If there were to be no compensation for broken funding, it could result in the provision of fixed interest rates being discouraged, which would not be in the interests of consumers. In consideration of consumers’ best interests, consumers have the right to discharge on their obligations early, but this may result in break costs i.e., compensation paid by the consumer to the creditor for early settlement of the credit agreement. Compensation does not exceed the actual cost of early repayment, to ensure consumers are not disadvantaged
It is important to note also that existing rights in this regard must be preserved in relation to the operation of Hire Purchase (HP) agreements, which are being brought within scope of CCD2. Specifically, the flexibility provided under S. 52-53 of the Consumer Credit Act 1995 should be preserved or in some way captured within the national transposing legislation in relation to HP agreements.