Victory over lenders | Unenforceable Credit Agreements | Judge Waksman
Credit Issues recently presented a series of unenforceable credit agreement cases in the Manchester Courts. The ruling, which extends to over 70 pages is indeed complex, however an article in the Financial Times these week just about sums it all up!
You can no doubt see the smiles on the faces of the legal team at Credit Issues from where you are!
Article from Financial Times – 13 Jan 2010 11:38pm
Banks face loans write-off after ruling
By Andrew Bounds, North of England Correspondent
Lenders could have to write off millions of pounds in loans to customers who have not been provided with proper terms and conditions after a High Court ruling clarified when such debts are unenforceable.
New draft guidance is to be circulated to lenders by the Office of Fair Trading this month along the lines of Judge David Waksman’s December ruling after a slew of consumer claims.
The judge found that lenders could not enforce debts unless they could provide a “true copy” of an original agreement, according to the 1974 Consumer Credit Act.
The issue is at the heart of thousands of pending cases and should lead to many being settled out of court now the principle is established.
Under sections 77-79 of the act, lenders must supply a “true copy” of the original signed loan agreement within 12 days of the borrower asking for it. If they do not then the debt is unenforceable until the copy can be provided.
The draft OFT guidance says that during that time, a lender cannot write to a debtor demanding payment or threatening legal action.
“The creditor or owner should make it clear in communications to the debtor that the debt is in fact unenforceable,” it says.
The OFT and Judge Waksman have backed lenders’ right to provide an accurate copy, rather than the original agreement, and to change the terms of a loan provided they keep customers informed.
The British Bankers’ Association welcomed the judge’s ruling, but would not comment on the OFT guidance until it saw it.
Do you have a potentially unenforceable credit agreement?
Visit www.CreditIssuesUK.co.uk take the 60 second test and find out instantly if you qualify.
Significant numbers of consumers are fairly or very dependent on high-cost credit according to a summary of research by the Office of Fair Trading (OFT).
The OFT is reviewing the high cost credit sector, looking at industries such as pay day lending, pawnbroking, rent to buy, hire purchase, home credit and other short-term loans. In its initial research it found that 27 per cent of home credit users have more than one loan outstanding at any one time, and 26 per cent use home credit on a continuous basis. For rent-to buy agreements, 17 per cent have more than one loan outstanding at any one time, and 10 per cent use such agreements on a continuous basis.
Banks who offer credit cards and loans to their customers must abide by the Consumer Credit Act.
It has been shown that many companies do not stick to the rules and regulations outlined in this act, and so are providing unenforceable credit agreements to their customers.
Here’s what you should to know about the Consumer credit Act.
1. The Consumer Credit Act was introduced in 1974 to protect the rights of consumers. Before this, companies could offer credit without their customers being properly aware of the implications of what they were agreeing to.
2. Because of this, some sort of regulation became necessary, due to consumers wanting more information about the credit agreements they were signing, and how much they would be paying on a monthly basis, the total they would pay, and the interst rates involved.
3. The Consumer Credit Act states says that a credit agreement should not include unfair terms and conditions, unclear or misleading APR rates, or missing or misleading information.
4. Credit Agreements that don’t meet these requirements are said to be unfair credit agreements, and are unenforceable. If proven in a court of law that the agreement is unenforceable then it will not need to be paid back.
5. People are keen to check whether they have any unenforceable credit agreements, as there is often a lot of money, or a long repayment time involved.
6. There are different types of credit that are covered, so whether you have a credit card, loan or store card you still might not have to pay off the balance.
7. The claims company you choose will be able to advise you on the processes, and what to expect.
8. The audit of your credit agreement will bring to light whether the agreement is legal or not, and whether there is a case for your creditor to answer.
9. If there is a case, then the claims company and their solicitor will either settle out of court with your lender, or have a hearing in court.
10. If the court hearing is successful, and it is found that your credit agreement is unenforceable, then you won’t have to pay off the rest of the balance.
Now you know more about the Consumer Credit Act, is it time for you to find out whether your credit agreements are unfair?
If you think that you might have an Unenforceable Credit Agreement, and you want it to be checked out, why not speak to an experienced Claims Company, and find out how the Consumer Credit Act, can help you, at www.CreditIssuesUK.co.uk today.
Make this your first step to becoming debt free.
At least 5000 UK bankers will earn more than £1m this year, according to City Minister Lord Myners.
Speaking to the House of Lords yesterday, Myners agreed that more had to be done in forcing banks to stop the excess remuneration of its top bankers.
He said: “There is precious little evidence that those at the top of our banks do really appreciate the concerns about the extraordinary levels of income they receive.
“At least 5000 people working in the banking sector in the UK will receive, if nothing is done, in excess of £1m in remuneration.”
Myners was speaking to the Lords to announce implementation of proposals set out by the Walker review that will allow the Government to force banks to cut bonuses. This comes as reports suggest that directors of RBS are preparing to quit if they are denied bonuses.
Myners argued that recipients of large remuneration should not be ‘named and shamed’, rather shareholders should be questioning the pay packets of its firm’s top earners.
He said: “I think the real responsibility here must lie with the shareholders. Accordingly I have written to the National Association of Pension Funds, the Confederation of British Industries and the TUC urging them to use their influence to persuade trustees to ask their fund mangers: ‘What are you doing to stop these quite unreasonable and unjustified levels of remuneration?”’
Unfair Bank Charges
The Supreme Court case which last week disappointed millions of UK bank customers hoping to be refunded overdraft charges does not spell doom and gloom for the consumer.
The verdict, which overturned earlier court rulings allowing the Office of Fair Trading to investigate the fairness of charges for unauthorised overdrafts, will not leave the reclaim of unfair charges dead in the water and millions of customers are still eligible to claim back unwarranted charges from financial institutions.
Specialist claims management companies are making it their mission to bring justice to the consumer on unfair credit card and loan charges. Despite the Supreme Court ruling there are still valid legal reasons to pursue new and existing claims.
Consumers should be aware that claims against unfair credit card charges, Payment Protection Insurance (PPI) and unenforceable credit agreements remain unaffected by the ruling and customers that have had over limit, late payment, default or other admin fees charged to their credit cards are still fully eligible to claim. Most importantly, people can make claims on cards they no longer have.
The legal issues involved are of much greater complexity than have been presented in the media and one of the problems with the judgment is the court have stuck rigidly to the terms of what was being appealed. In April 2008 the High Court Judge found that what is known as the excluded assessment construction of the Regulations should be adopted, as opposed to that argued by the bank which was what is known as the excluded term construction of the Regulations. Such finding was not part of the Appeal in the Court of Appeal or the House of Lords. Consequently the issue of fairness is still very much alive.
Do you have unfair credit card or loan charges or could your agreement be unenforceable and legally wiped out?
Take the 60 second test and find out instantly if you qualify >>
The long awaited financial claims test cases began this week in the High Court Of Justice, Manchester.
Unenforceable credit agreements or loans taken before April 2007 are being reviewed for their compliance with the Consumer Credit Act 1974.
The preliminary hearings being heard this week should determine once and for all the areas of financial claim disputed by banks and credit card companies. Financial claims relating to regulated consumer credit agreements have increased massively during the last two years, with some industry experts suggesting that financial claims, which include PPI mis-selling and unenforceable credit agreement, have now become the leading area of claim amongst UK consumers.
During previous case management hearings, barristers representing the banks confirmed before HHJ Holman that the banks would accept the judgments arising from this week’s test cases as precedents for the purposes of dealing with future financial claims without requiring the Courts’ intervention.
It is hoped that the Judgment to be provided following preliminary hearings this week will, once and for all, put an end to delays caused by banks and credit card companies when consumers seek redress in circumstances where banks and credit card companies have breached the Consumer Credit Act.
Last week many consumers were greatly disappointed by the verdict handed down by the Supreme Court in respect of bank charges. This week’s preliminary hearings are seen by many consumers as an opportunity for the Courts to confirm the provisions and protection laid down by Parliament within the Consumer Credit Act 1974. This is an opportunity for the spirit of the Act to be reinforced by the High Court.
Do you have an credit card or loan taken out before April 2007?
Take the 60 second test and find out instantly if you can have the debt legally cleared.
Credit Issues wipes out MBNA Credit Agreements
An MBNA credit card balance of more than £11,000 has been completely written off due to the lender failing in its obligations under the Consumer Credit Act.
Leading claims management company, Credit Issues and their nominated solicitors, BPS, broke the news to their client earlier this week, confirming that the balance of £11,038 had been totally written off. The case, which was bought against the lender MBNA, had been scheduled for a full trial in the Manchester Mercantile Court starting on Monday of this week. However MBNA capitulated just hours before the commencement of the trial.
Despite several request by Credit Issues MBNA failed to provide a true copy of the signed credit agreement, leaving BPS no choice but to issue proceedings against the lender. MBNA also caved in on a second case due for hearing this week, enabling Credit Issues to confirm to another client that their £6,217 credit card balance had been written off.
MBNA credit agreements
MBNA are not alone as Credit Issues have many thousands of clients across a variety of lenders, many in a similar position. The trial at Manchester this week that includes cases against a number of lenders other than MBNA continues and will, if successful, lead to a successful resolution for thousands of clients.
Lee Lipson, Legal Services Director at Credit Issues, said:
“The Consumer Credit Act makes it clear that lenders must provide a true copy of the original credit agreement when requested, in this instance the lender failed to do so and as a result was in breach of its’ statutory obligations. MBNA’s capitulation hours before the start of the trial is a real indication of the seriousness of this issue. Having brought proceedings against a number of lenders we are in court this week to seek guidance and a successful outcome for many thousands of our other clients who find themselves in a similar position.”
Do you have a credit card or loan which could be wiped out? Take the 60 second test and find out instantly if you have a claim
Success against MBNA! Unenforceable credit cards
Success over MBNA
MBNA capitulates just hours before the trial begins!
Two clients, two credit cards with balances totalling £17,256 and one claims management company determined to champion for the consumer.
Credit Issues had brought legal proceedings against major credit card lender MBNA for what they believed to be significant failings in their obligations under the Consumer Credit Act. However just hours before the trial was due to commence at the Manchester Mercantile Court Credit Issues’ nominated solicitors for the case, BPS, were contacted by a representative from MBNA asking what it would take for these cases to ‘go away’.
The answer was simple, ‘what is right for the client’ and in this instance that resulted in a full write off of the outstanding balances, a total of £17,256.
Credit Issues are at the leading edge of the claims management industry with what is believed to be the most advanced legal argument of any CMC. Legal Services Director, Lee Lipson, comments ‘Today’s result is a signification move towards forcing lenders to accept responsibility for what we believe to be serious failings. In this instance it was clear that the lender, MBNA, had failed to comply with the regulations and has resulted in the clients having a substantial sum written off. We would have liked to have met them in court today however the right outcome for our clients has been achieved and we are celebrating.’
Fears that the banking system is facing a credit card timebomb were underlined as official figures showed that the amount of card debt banks have written off has unexpectedly doubled.
In a sign that Britons are facing increasing difficulties keeping their finances under control, bad debts from credit cards leapt from £812m to £1.6bn in the third quarter, said the Bank of England.
The rise meant that the total amount written off by UK banks in that quarter was, at £4.3bn, a record. In the first nine months of the year, banks have already written off more than they did in the whole of 2008 – itself a record year for write-downs.
The news came as a surprise to banking experts, since most of the UK banks have reported that the outlook improved marginally in the third quarter. Although banks have already provisioned for significant losses, some will view the statistics as a sign of a potential second wave of difficulties for the banking sector. While most of the losses faced in the financial crisis were associated with US sub-prime lending and the closure of securitisation markets, some suspect there may follow major “home-grown” losses as UK households face higher unemployment and falling real wages.
The International Monetary Fund warned earlier this year of a potential credit card crisis in Europe as families default on their debts, predicting that up to 7pc of Europe’s £1.49 trillion consumer debt could be written off, with the UK hardest hit.
The Bank also reported that households repaid a record amount of unsecured credit in October as they faced up to unprecedented credit card bills. It said net unsecured debt contracted by £579m. Its statistics also showed that its key measure of underlying money growth dropped by 0.7pc in October. The fall is a concern, since the Bank has repeatedly said that this measure will help show the success or otherwise of quantitative easing. However, a household-focused measure of money growth is still rising.
Legal test cases at the end of this month will affect the enforceability of hundreds of millions of pounds worth of credit card debts and other loans.
Five days have been set aside at the High Court in Manchester to hear 12 separate cases that will help to determine a variety of legal issues under the Consumer Credit Act (CCA).
Several are being brought on behalf of clients of a prominent claims management company. They hope that favourable decisions will lay down some legal ground rules that will force banks and card companies to settle thousands of similar cases on his books.
They want the judges to rule on these claims, providing precedents which will prevent the banks and credit card companies delaying on paying out on consumer claims any longer.
Compliance
The past year or so has seen a largely unreported explosion of litigation in the county courts between lenders and their customers.
There are now thought to be tens of thousands of similar cases in the legal pipeline.
Typically, borrowers argue that their debts cannot be enforced because the lenders have failed to abide by the CCA.
The law says a lender cannot ask a court to enforce a debt if the lender’s original agreement failed to comply with certain requirements.
“Once you have established the agreement is defective, in at least one of a number of specific ways, the court has no discretion to grant an enforcement order in favour of the creditor,” says barrister Oliver Mishcon.
However, due to a new Consumer Credit Act in 2006, this lack of discretion for judges only applies to regulated consumer credit agreements entered into before April 7 2007.
Specifically, loan agreements for fixed sums or credit cards must contain three “prescribed terms”:
- the amount of credit; or the limit of the credit, or the manner in which the limit will be decided
- the rate of interest
- how the borrower is to repay the debt.
Bob Imrie, who trains trading standards officers and also claims management firms in the operation of the CCA, is doubtful that the courts will let people escape their debts.
“Courts are not very sympathetic to claims that terms and conditions were not provided to customers,” he says.
“You’ve got a real problem trying to undo an agreement on a technicality; you’ve got to provide evidence the banks behaved wrongly,” he adds.
‘Unenforceable’ debt
However, the potential use of the law to favour debtors was highlighted by a case in October this year at Stockport 
County Court.
Deputy district judge Howarth issued a decision in favour of a Mr Yates, so that his credit card debt of £6,585 can never be collected.
Mr Yates had run up the debt after taking out the MBNA card in 2003.
In January 2009, the debt was sold, or “assigned”, to a debt collection firm called CL Finance and it swiftly took Mr Yates to court to get the money back.
He argued that the copy of the original agreement supplied by MBNA to the court was incomplete and illegible, and so it was unclear that the prescribed terms had in fact been included.
CL Finance did not turn up for the hearing and lost by default, but at the request of Mr Yates’ lawyers the judge went on to declare that the debt was unenforceable.
Difficulties for banks
What has become apparent is that of the millions of credit cards, store cards and personal loans issued since the CCA came into force, some seem to have used incorrectly drafted agreements.
“The proportion of improperly executed credit cards is very high; the further back in time you go, the more sloppy many of the lenders seem to have been,” says Mr Mishcon.
What has also emerged is that lenders sometimes have great difficulty:
- presenting debtors and courts with a copy of the original signed agreement
- presenting one that is legible enough to show that it contained the prescribed terms
- showing that the terms were supplied at the time the agreement was struck, or were embodied in the same document.
One bank is even thought to have destroyed all its old loan and credit card agreements as a matter of policy.
“I have spoken to many ex-members of staff who told me their agreements were carted off by couriers at the end of each week with no proper filing,” says Bob Imrie.
Supreme court will rule on Wednesday whether account-holders charged for going into the red can seek compensation
More than one million banking customers will come a step closer this week to learning whether they will be able to claim back charges they paid for unauthorised overdrafts.
On Wednesday, the supreme court will hand down the appeal ruling on a case between the Office of Fair Trading and seven banks and one building society to determine whether the fees charged for unauthorised borrowing can be tested under the Unfair Terms in Consumer Contracts Regulations 1999.
You may have heard the term ‘unenforceable agreements’ or ‘unenforceable credit card agreements’ quite a lot recently.
You may know that it is possible to claim that you agreement is an unenforceable agreement and have the balance written off. But what are unenforceable agreements exactly? It is all based on the 1974 Consumer Credit Act. (CCA) This act states that in law certain terms and conditions must be contained within the agreement. If they are not or the agreement is not signed, then the agreement is unenforceable.
The process is quite simple but somewhat time consuming. You will need the backing of a solicitor who is proactive and this can be found by using a claims management company. First a true copy of your agreement will need to be obtained from your lender. They have 12 working days to reply. If they fail to do so or send a copy of terms and conditions (which is not the agreement) then they are ‘defaulted’. The case is passed to a solicitor who issues proceedings against the lender. If your agreement is sent back it is then audited to check for any breaches in the 1974 CCA. Once these are identified it is then passed to a solicitor who prepares the case for court. You will be given free ‘after the event’ insurance to cover any costs which you case my need.
The term unenforceable means that the agreement cannot be enforced and therefore no further repayments need be made once the agreement has be declared unenforceable. You may be wondering why only agreements taken out before 2007 can be claimed. This is because after that time there is discretion allowed by the judge as to whether or not the agreement is enforceable whereas before 2007 there is no such allowance and even a court cannot enforce the agreement. Credit card, loans and store card can be checked or audited to see if any breaches of the 1974 Consumer Credit Act can be found in the agreement.
The first stage takes about two months. The second stage which aims to have the balance written off take longer and very much depends on the response of the lender in question. No cases have gone to court because if the lender loses a precedent will be have been set. So they won’t risk this. But many have been settled out of court or written off before court proceedings have been issued.
There is no need to consider IVA or Bankruptcy before you have had your agreements audited for unenforceability. It is the first step to a debt free life. Solicitors work on a no-win-no-fee basis so you have nothing to lose, and financial freedom to gain.
Unenforceable Credit Card Agreements, visit www.CreditIssuesUK.co.uk and take the 60 second test.
The Consumer Credit Act 1974 – Unfair Relationships | Unfair Credit Agreements | Unfair Loans
The Consumer Credit Act 1974 enables borrowers to challenge unfair credit card and loan agreements in court and obtain redress, if the overall relationship is unfair to the borrower.
This is in addition to an enhanced ability for consumers to take disputes to the Financial Ombudsman Service (FOS).
The provisions were introduced by the Consumer Credit Act 2006. They applied to new agreements from 6 April 2007, and to pre-existing agreements from 6 April 2008. Agreements completed before the new provisions took effect remain subject to the previous extortionate credit bargains provisions.
The 2006 Act also enhanced the right to apply for a time order, which is a court procedure that can give borrowers more time to repay a debt.
If you were self employed when you took out PPI then you may be due compensation. Many banks and lenders were keen to sell payment protection insurance to those who took out loans, mortgages and credit cards. Many who took out PPI were self employed. If you check the fine print, you may find that under certain circumstances, your policy doesn’t actually cover you.
Mis-Sold Payment Protection Insurance – How to Reclaim PPI When Mis-Sold on a Loan Or Credit Card
Loan insurance also known as Payment Protection Insurance is designed to make your monthly loan repayments in case you are unable, due to accident sickness or redundancy. But customers mis-sold their PPI could have debts written off and the insurance refunded.
It is estimated 85% of customers take out loan protection insurance when purchasing a loan, credit card or a mortgage for redundancy insurance or critical illness cover.
However, many customers have purchased loans without realising that payment protection is attached, or have been mis-sold credit cover with their loans, resulting in paying unnecessary insurance.
Unenforceable Credit Agreements and Claims Management Companies – Guide to Making a Claim
A Guide to Making a Claim on Unenforceable Credit Loan Agreements
If you have ever had a credit card or loan, the chances are your agreement is regulated by the Consumer Credit Act 1974. Some very important straight-forward information about unenforceable credit agreements and how to make a claim to clear your debt.
If you have any unenforceable credit agreements you could reclaim thousand of pounds. You can use a Claims Management Company to help you write off your loan or credit card. But be careful to choose the right company
Some Claims Management companies charge fees on conclusion of your claim of 30%, some offer a free audit , which is not an audit but a simple preliminary review, made by any company to assess if you may have a claim.
_1.jpg)
Last week, a debtor secured a five-year block on his home repossession in a claims management case against his lender Blemain Finance, after consumer credit law was used to challenge his loan agreement.
The Claims Management Company acting for Cardiff-based Peter Bentley, used the meaning of unfair relationships under Section 140A of the Consumer Credit Act (CCA) 1974 to claim that his contract with Blemain Finance was an unfair loan.
Have you been the victim of unfair loan agreements? Take the 60 second test >
More than £21bn of the UK’s credit card debt could be cleared due to unenforceable credit card agreements and could be written off, according to financial claims management companies.
They have based their projection partly on an estimate from money education charity CreditAction that total credit card debt in the UK now stands at around £53bn. It is estimated that 40 per cent of all financial products bought by consumers can be claimed against.
Claims management firms say that an average client has 10 financial products, of which four can be claimed against.
Do you have an unenforceable credit card? Take the 60 second test >
Previous estimates around the amount of unenforceable credit agreements put the figure at 25 per cent, but this does not tally with many observations. On average, they say their customers can claim against as much as 40 per cent of their credit agreements.
There are specific rules that lenders must adhere to when they sell a financial product to a consumer. If these have been breached, lenders should admit their mistakes and stop dragging their heels through the legal system. This only results in unnecessary additional legal costs for all involved.
Figures also show that the UK collective credit limit on credit cards is £158bn, which is an average credit card limit of £5,129 per person. The average interest rate on credit card lending is currently 17.6 per cent – 17.1 per cent above base rate (0.5 per cent).
The Bank of England announced earlier this month, however, that personal borrowing fell by £600m in July, taking the total owed by individuals down to £1.457 trillion.
Do you have an unenforceable credit card? Take the 60 second test >
Companies which sold payment protection insurance (PPI) will have to reopen 185,000 rejected complaints in light of new guidance over how the scheme should be sold. Make a PPI Claim now >
The Financial Services Authority has ordered firms to redress the complaints under new guidance that will come into force at the end of 2009. It also means that companies representing more than 40 per cent of face-to-face sales in the single premium unsecured personal loan PPI market will review sales and redress those consumers identified as mis-sold.
Consumers will receive refunds totalling £60m under plans to help borrowers adversely affected by mortgage payment protection insurance (MPPI), PPI Claim.
The refund will be made as part of a package of measures for consumers agreed between the Financial Services Authority and MPPI providers, after concerns were raised about premium increases and reductions what was covered in the policies.
The FSA’s concerns centred on the terms permitting these changes and how clearly they were disclosed to customers. After talks between MPPI providers, trade bodies and the FSA, the industry has agreed to proactively refund increases in premiums, and reverse any reductions in cover, for customers who have experienced these changes to their policy in 2009.
Are you entitled to make a PPI cliam? Take the 60 second test >
Free Yourself of Credit Card Debt
In the current times of economic crisis, credit card debt has become widespread. If you are paying just the minimum monthly dues on your credit cards it is perhaps a futile attempt to get rid of the debt. In reality, this approach of clearing your credit card debt may take years as you are probably only paying off the interest portion of the credit, judging by the high interest rates that most credit card companies charge.
Now a solution presents in the form of making credit card claims to clear your credit card debt. So how can this happen? Well, most credit card users are unaware of one basic fact about lending companies, which is that in all probability your credit cards company cannot enforce the loan or credit agreement because of legal hassles. In fact, this is slowly gaining recognition, and many users are becoming aware that clearing their credit card debt is not so hard after all.
So, now you know that clearing the huge credit card debt is not so complicated, here is how you approach the problem. The first step is to get in touch with a mediator to approach the lender with the request to make a claim. This is best done by hiring a professional solicitor or company that specialises in making credit debt claims. This is because the right way to approach the lender is crucial to ensure that your loan agreements are unenforceable thus contributing to the success of your claim.
The next step is to identify the actual loans and credit debt that you wish to make a claim against. This can include your credit cards, loans, financial agreements. Once you have listed out your individual claims, you will need to provide the account and credit cards details to the company your hired to take care of the claims. The final claim will depend on the actual credit loan amount due, and it is best to let the same company handle all your credit card claims if you hold multiple accounts. The company then handles the necessary paperwork to arrange an audit at the lender location that will analyse any breaches on the lender’s part which then qualify you to a claim. Once the grounds for dispute are ascertained it is only a matter of time before the solicitor helps you to clear your credit card dues so you really are debt free!
Take the 60 second test at www.CreditIssuesUK.co.uk and see if you qualify to wipe out unenforceable credit card debts
The number of consumers complaining to financial providers about the level of service received has increased by two per cent to 1.51m since 2008.
Complaints about general insurance and pure protection topped the table with an increase of 19 per cent to 334,443 over six months. This is an overall increase of 72 per cent since the first half results reported in 2006 and is likely to reflect the rocketing numbers of complaints about payment protection insurance on loans, as well as payment protection insurance on credit cards and mortgages.
Start your Payment Protection Insurance Claim »
Complaints about mortgage and loan arrears handling increased 41 per cent to 39,181 and complaints about misleading advice increased 19 per cent to 207,967.
Meanwhile complaints about the time providers took to deal with complaints fell by 23 per cent to 117,774. The proportion of complaints which took providers more than eight weeks to deal with dealt with increased from 10 per cent to 11 per cent. City watchdog the Financial Services Authority (FSA) said this was largely attributable to complaints to banks and general insurance intermediaries.
The proportion of complaints upheld by FSA regulated firms fell from 40 per cent to 38 per cent. This was largely attributable to a fall in the number of complaints upheld by banks, said the watchdog.
Firms are required to report to the FSA every six months on the number of complaints they receive and how they handle them.
FSA orders sub-prime lender GMAC-RFC to pay £7.7m in compensation for mistreating customers who fell into arrears
Sub-prime mortgage lender GMAC-RFC has been fined £2.8m for mistreating mortgage customers who fell into arrears and ordered to pay them up to £7.7m in compensation.
The Financial Services Authority (FSA) has issued one of its biggest ever fines to the US-owned company for its treatment of customers who had fallen behind on mortgage repayments or were going through repossession.
Are you paying back much more than you owe?
A credit agreement is an agreement where credit has been given to you. It includes credit cards, personal loans, secured loans, store cards and vehicle finance.
Did you know?
The Consumer Credit Act 1974 was introduced to protect consumers from banks and lending institutions. It sets out guidelines that must be followed by banks when providing documentation for loans and credit agreements.
You can challenge a credit agreement by asking the lender to provide a true copy of the credit agreement. Once you have this, the agreement can be examined to decide whether or not there have been any breach of the law. This could entitle you to compensation. In some cases the creditor may be unable to provide a copy of the agreement and if this is the case you would not have to repay the money due on your loan.
Start your Unenforceable Credit Agreement Claim »
There are lots of ways in which lenders may have breached the law. Below are some examples:
Errors when calculating interest and incorrect APR rates
The law says that the agreement must contain a term which sets out the rate of interest that is being applied under the agreement and that the APR rate accords with the APR that has been calculated. If this has not been set out correctly, you have an entitlement to seek the write-off of the entire outstanding balance owing under your unenforceable credit agreement.
Failure to provide relevant documentation
If you request a copy of the executed agreement and the lender fails to provide a copy the lender cannot enforce the agreement until such time as a copy of the executed agreement has been provided to you. The lender commits an offence if the default continues for more than a month. Where the lender has lost the agreement the terms of the Consumer Credit Act have been breached. An application can be made to the court asking that the lender writes off the agreement.
Failure to disclose commissions and fees
Where a lender pays commission to a broker or other financial introducer the sums paid to the introducer should be disclosed on the loan agreement under the heading total charges for the credit. If the lender has failed to disclose the broker’s commission as part of the total charge to you for the credit then the agreement may be unenforceable.
What does is cost?
Specialist Claims management Companies can help you to check your Credit Agreements and see if there has been any breach in the law. Their claims experts have a great deal of success with Unenforceable Credit Agreements, prices start from £300 to review an unlimited number of credit agreements (make sure you choose a firm registered with the Ministry of Justice!).
Start your Unenforceable Credit Agreement Claim »
Possibly related posts:
- BBC Panorama write off debt | Loophole clears couple’s debts | Write off illegal unfair loans | Consumer Credit Act 1974
- Unenforceable Credit Card Agreements | Advice | Write off Debt Under the Consumer Credit Act 1974
- Clear your Credit Cards & Loans legally due to flawed Credit Agreements
Do you have a Loan with a lender which was signed before 6th April 2007 and which was for £25,000 or less?
If so it may be wholly unenforceable against you !!
The topic of finance mis-selling by lenders (including the high street banks) is certainly a very hot topic on consumer websites and consumer media programmes.
It is estimated that there are some 50 million loan agreements in existence which are unenforceable either because there are basic defects in the documentation or because the way in which the PPI/PPP/ASU insurance policies were sold impacted on those agreements making them unenforceable.
There are, essentially, two sorts of unenforceability (at least prior to April 2007 when the Consumer Credit Act 2006 took effect) and these can be conveniently referred to as “irredeemably” unenforceable agreements and “discretionally” unenforceable agreements.
The Technical Stuff
Section 65(1) of the Consumer Credit Act 1974, states that regulated agreements are enforceable only by order of the Court if they are improperly executed. By sections 61(1)(a) and 127(3) if they are improperly executed they are wholly unenforceable if the agreement does not contain all the terms prescribed by law and in the prescribed form. A breach of Section 65 creates “discretionally” unenforceable agreements and a breach of sections 61 and 127 create “irredeemably” unenforceable agreements. In the latter case the Court has no discretion whatsoever other than to declare the agreement unenforceable. The authority for this statement is both the Consumer Credit Act 1974 itself and the case of Wilson v First Counties both in the Court of Appeal ([2001] EWCACIV633) and in the House of Lords ([2003] UKHL40).
But this is for the Lawyers to get to grips with!
“Traffic Lights”
It may be convenient to consider such cases using a “traffic lights” approach. Some case will be “reds” others “ambers” and some “greens”.
A “red” is a loan agreement which is “irredeemably unenforceable” (ie the Court has no jurisdiction whatsoever to enforce such an agreement, even if they really want to or feel they ought to). This occurs where the breaches are breaches of what is described in the Act as “Prescribed Terms”.
An “Amber” is a loan agreement which contains breaches of the 1974 Act but the Court has a discretion as to whether to enforce or not (and on appropriate terms). This occurs where the breaches of a type known as “Other Terms”.
A “green” is a loan agreement which contains no breaches.
De Minimis (ie. tiny amounts)
It may come as something of a surprise to discover that even if a Prescribed Term is wrong by even a pound (or less) that the Court still may not enforce the Agreement. This point is made in the Wilson v First County case.
Wilson v First County
The Wilson case is interesting in that it involved a loan of £5,000 from moneylenders who charged Mrs Wilson a fee of £250 for putting the loan together. Mrs Wilson did not have the money and therefore it was added to the loan. By virtue of regulation 4 of the Consumer Credit (Total Charge for Credit) Regulations 1980, the £250 should not have been added to the amount of credit (and therefore should not have had interest charged on it) and by so doing the agreement was rendered irredeemably unenforceable. That meant she got her car back, did not have to make any further monthly payments and no longer had to pay back the remainder of the £5000 borrowed !
Human Rights
The case went to the House of Lords on a Declaration of Incompatibility by the Court of Appeal That Court felt that the effect of such a Judgment was that Mrs Wilson could get her car back (securities taken on irredeemable loan agreements must be returned) and she would have to pay no further sums to the money lenders. This seemed too much of a windfall to the Court of Appeal. In common parlance: a “double whammy”! Interestingly neither Mrs Wilson nor First Counties appeared in the Lords.
The House of Lords, in essence, said that the purpose of the Act was to protect the unsophisticated borrower against the sophisticated lender and all the lender had to do to make his agreement enforceable was to comply with the requirements of the Act. If he failed to comply then it was entirely right that he suffered in the way provided by the Act. The House of Lords effectively said that there was no human rights point at issue.
What is the trigger for a claim?
Most claims come via Case Management Companies to solicitors because the prospective client believes he may have been mis-sold a PP/PPI/ASU policy. Oddly, even if this is the case, this is not, of itself, likely to be the trigger for a claim through the Courts. Firstly, there has, obviously to be a “cause of action” (that is “the legal hook” on which the claim is based). This may be “misrepresentation” or “negligence” etc but there are many cases when the client was not even aware that such an insurance policy had been sold to him and it is very difficult, in those circumstances, to allege misrepresentation or negligence or the like. The procedure for a claim through the Financial Ombudsman is relatively straightforward and in cases where such a claim is possible, this would seem to be the preferable route. There are however many cases where the Financial Ombudsman service is not able to help. For example, if the lender, at the time of the loan, was not regulated by the Financial Ombudsman then the Ombudsman has no jurisdiction. Since 2005 the Ombudsman scheme became compulsory for all Lenders.
From the perspective of the Loan Agreement, however, the Court’s jurisdiction is likely to be invoked because the lender who has added the premium for this policy to the amount of loan and treated this premium as “credit” will risk having made the loan agreement irredeemably unenforceable and therefore it has become a “legal” dispute as opposed to merely a “mis-selling” issue.
An example situation
Take a loan of say £10,000. It is quite likely that the lender will have sold to the borrower a PPI/PPP/ASU insurance policy and the premium can easily be as much as £4,000 or more. The premium is, invariably, a “single premium”, paid upfront and almost invariably added to the amount of the loan. It is difficult to justify such insurance policies in any circumstance whatsoever and the only reason that they are sold is because the commissions on such policies are always surprisingly high (and in some cases are as much as 80% of the premium!). There may be circumstances in which a PPP/PPI/ASU policy may be of benefit to the customer but, almost certainly, that customer ought to have bought a “monthly paid” policy. On the example used above the premium for such a policy would be likely to be in the order of £60 per annum. There are many further downsides to the single premium policy, for example, they are frequently sold to people who could never have made any claim on those policies (how can you have an unemployment insurance policy for someone who is self-employed?). Similarly those polices frequently will not pay out if at the time that they came into existence the insured was say under 18, not working, had an illness or was over 65. Yet huge numbers of such policies have been sold by lenders to such persons. It is hard to avoid the thought that these single premium policies are almost fraudulent and are on an industrial scale. (The “Breakfast” program on BBC1 said recently that of all the profits made by Banks that 10% came from the sale of these policies).
Citizen Advice Bureau
The Citizen Advice Bureau has found that PPI is overpriced, difficult to claim on and often sold to the wrong people. They say that it adds between 13% and 56% to the cost of the loan and that only 6% of people ever claim on a PPI and 85% of those claims are then rejected (ie. less than 1% actually successfully claim). A large number of lenders have already been fined large sums of money by the Financial Ombudsman (eg a division of HSBC was fined £1 million and the Alliance & Leicester more than £7 million in 2008). It seems likely that the sale of further such policies will be outlawed by the FSA in due course.
The 2006 Act
For completeness it should be remembered that the 2006 Act which affects loan agreements made after April 2007 does away with “irredeemably” unenforceable agreements and now all agreement are only “discretionary” unenforceable if there are breaches. ie we now only have “Ambers” and “Greens” with effect from 6th April 2007.
PS. Similar law applies to credit cards too !!
Do you have an unenforceable credit card or loan, take the 2 minute test and find out instantly.
