43Prepayment fees

1. A prepayment fee payable—

2. on a part prepayment is unreasonable if, and only if, the fee exceeds a reasonable estimate of the creditor's loss arising from the part prepayment:
3. on a full prepayment is unreasonable if, and only if, it exceeds a reasonable estimate of the creditor's loss arising from the full prepayment as calculated in accordance with section 54.

4. For the purposes of this section and section 44, a prepayment fee is a fee or charge that relates only to—

5. a part prepayment or a full prepayment in respect of a fixed-rate contract; and
6. the portion of the unpaid balance for which the interest rate is fixed for an agreed period; and
7. the part of the creditor's loss—
   1. that arises from the part prepayment or full prepayment; and
   2. that is a result of differences in interest rates.

8. A creditor may also, in relation to a part prepayment or a full prepayment, impose a credit fee relating to administrative costs (and whether that fee is unreasonable must be determined in accordance with section 44(1)).

9. In this section, fixed-rate contract means a credit contract under which an interest rate is fixed for an agreed period for the whole or a part of the unpaid balance.