Termination of Egg credit card agreement

[toymaker1]

Regarding the matter of Egg terminating accounts.

The central point in all this, beyond any legal dispute as to how to interprete particular terms in an Egg agreement, or what a particular word means, is that Egg has terminated credit card agreements without first sending a default notice to the alleged defaulter.

The law regulating termination of credit card agreements is CCA 1974. Under that law, and any associated regulations, Egg has no legal entitlement to terminate a credit card agreement without first giving the alleged defaulter a default notice, and complying with the neccessary subsequent procedures, such as under S88 and S89 of CCA 1974.

It is difficult to see what law would be quoted by Egg when trying to get their money back after having terminated, of their own volition, a credit card agreement where there was no default.

Regards


It seems to me that in that situation Egg would be saying, we hereby terminate this agreement, and we thereby terminate - that is, we choose to forfeit - any liabilities of the other party to the agreement.

[Mistermind]

There is a difference between what Egg did or purports to do as interpreted by the wording in their letter, and what the law will permit Egg to do. Similarly the unlawful penalty charges levied by Egg would, we believe, not be recognised by the law based on the precedent of Dunlop-v-Garage, regardless of what Egg says or what cardholders previously signed in agreement.

If this technical dispute over "agreement termination" went to court, I suspect the verdict would be that lending agreement termination is acceptable, but repayment agreement termination in the absence of default is not acceptable, ie no repayment agreement termination. Which is the exact position Egg wants, although their letter did not clarify the two different parts of the agreement, on which Egg take two different positions, one agreement to be terminated, the other not so. If Egg in a dense fog of communication appeared to say what might be interpreted as "we hereby terminate repayment agreement", it will not stand merely because they said so, in the same way as unlawful penalty charges will not stand when taken to court. The law will not allow repayment agreement to be terminated. The law will allow lending agreement to be terminated -- I believe.

I cannot see how Egg can be discomforted by an expensive court action resulting in a verdict exactly as Egg wanted but was unable to articulate in plain English. Egg is guilty as charged for being inarticulate, penalty -- to go back to school.

[toymaker1]

Originally Posted by Mistermind

If this technical dispute over "agreement termination" went to court, I suspect the verdict would be that lending agreement termination is acceptable, but repayment agreement termination in the absence of default is not acceptable, The law will allow lending agreement to be terminated -- I believe.

Hello Mistermind
I completely disagree with your analysis of the situation regarding Egg's termination of credit card agreements.
What you seem to be suggesting is that a court would let Egg have their cake and eat it.
S87(1)(a) of CCA 1974 and also the CCA 2006 Explanatory Notes make it absolutely clear, without any ambiguity, that if a credit card company wishes to terminate an agreement it must first give a default notice to the card holder alleged to be in default.
CCA 1974 does not provide for Egg to "terminate" a part of an agreement but retain intact another part (the part in Egg's favour!)
If Egg wishes to limit the available credit to zero it is allowed to do that within CCA 1974 - but that is not the same as "terminating".

You are quite right to point out that what Egg has done is both to terminate and not terminate at the same time. i.e. it is trying to do what CCA 1974 will not permit Egg to do.
I cant see a court (particularly in these times of counsumer protection) allowing Egg to get away with such dodgy practices.
These days, any interpretion of the law is generally in the consumer's favour if it is open to doubt.

regards

[Decanus]

I agree with Toymaker1. In court, I think the Judge would view it as Egg, being the instigator of the action, should have darned well crossed all the t's and dotted all the i's. They tend to take a dim view of large organisations in court against consumers, especially when they cant even get basic paperwork right.

I think there is a significant grey area between what Egg wants and what should be allowed, and that would be enough to challenge.......you simply cannot terminate an agreement, but retain part of the agreement you want to keep!! this would become a new agreement, would it not?

[Mistermind]

Originally Posted by Decanus

....you simply cannot terminate an agreement, but retain part of the agreement you want to keep!! this would become a new agreement, would it not?

A fair point.

Lets say you have Lloyds TSB in the high street offering a fixed-sum loan at 1% interest per month.

Lets say next door something like a Money Shop offers a rolling credit account with new borrowings allowed up to the credit limit, with no questions asked. For this privilege you need to pay interest at 2% per month. Customer X could well sign up for borrowing at the expensive 2% rather than 1%, so as to avail himself of future flexible loans with no questions asked.

If after incurring only £1,000 spending on a £3,000 limit account, fresh borrowing was suddenly stopped in February 2008, then Customer X and 161,000 like him are entitled to ask himself -- why am I being charged interest at double the Lloyds TSB rate, whilst I am denied the extra privileges which lured me into the bargain in the first place?

Substitute Egg Card for Money Shop, and the analogy is complete. Yes, I believe now that Egg has halted fresh lending, cardholders have a case for lower interest rates to match market rates for fixed loans.

[Decanus]

thats a very good analogy, and I agree with your conclusion. Can Egg justify credit card rates of interest, on what they have essentially transformed into a loan? Should they not have said'look, we are cancelling their borrowing facility, but are asking you to repay the amount at this competitive rate.....
its a real kick in the teeth to ask someone with say, £6000 owing on their card, to suddenly have to pay that back at 19.9% indefinitely, all the time racking up the interest....Egg just plain got greedy

[RubyRose]

Originally Posted by toymaker1

This is not about semantics. "termination" is a specific action, the taking of which is strictly governed, in my case, by the regulations contained in S87 and S98 of CCA 1974.


If Egg, as it is entitled to do under S87(2) and S98(4) of CCA 1974, lowered the credit limit every month, the regulator or a county court would not rule against Egg for "terminating the agreement".
However, that is not what Egg did in my case. Egg did not lower the credit limit, leaving the agreement intact, Egg terminated my account without giving me a default notice as required under S87(1)(a) and also in breach of S98(2)(a).

I hope that my postings on this matter might be of use to some of the other 161,000 Egg cardholders who, as you say, are in the same boat.
I suggest that cardholders in a similar position ask Egg to indicate which part of CCA 1974 provides Egg with the entitlement to terminate their Egg agreement when it is not in default. If you look at my second posting on this matter, you will note that even Egg did not seem to be able top provide me with a clear answer to that question!

Regards[/quote]

I am exactly in the same position and will be resisting their actions based on your arguments.Shortly after my credit card was terminated, I wrote to egg requesting my CCA - no response as yet and i have proof that my request was received. I will write to them once more reminding them of their obligations and that whilst this situation persists i do not intend making any payments on an account that was unilaterally terminated, and is not supported under consumer credit laws that you have referred to.

I would be appreciative of any support in this matter as i feel that Egg have embarked on bloody minded strategies which is not supported by British consumer rights laws.

Thanks for starting this thread. I will be posting and i hope the rest of the 161 000 join us in giving Egg a bloody nose.

regards
Ruby

[oggy1]

hi everybody,
i am with the toymaker on this one, i never missed any payments with egg as it was paid by direct debit and i had a few charges for going over my credit limit.
they terminated my agreement and as with everybody i never recieved a default notice.
i am going to do the same and write to egg for clarification .

[Decanus]

did anyone ever get any sort of satisfactory reply from EGG on this, or was it a waste of time?

[toymaker1]

Originally Posted by Decanus

did anyone ever get any sort of satisfactory reply from EGG on this, or was it a waste of time?

Hello Decanus

Unfortunately, my experience is that it is a waste of time expecting to get any sort of satisfactory reply from Egg.
The position as I see it, if Egg has terminated your credit card agreement when you are not in default, is that in effect Egg is saying to you (the debtor) that Egg (the creditor) has chosen, by it's own choice, to terminate the existing agreement with you. In so doing Egg is choosing, by it's own choice, to cancel or write off any outstanding debt owed by you to Egg. Put simply, Egg has voluntarily chosen to end the contract between Egg and you. Included in that contract was the money you owed at the time that Egg chose to end all contractual relationships with you - end of story.
If Egg then aproach you for the money you owed to Egg, they will have to rely on the law to enforce Egg's claim. The law which covers the money you owed to Egg is The CCA 1974. If Egg wants the money back they will find that there is nothing in the CCA 1974 to support their claim, in light of the fact that Egg chose, of it's own volition, to terminate the contract when you (the debtor) were not in breach of the contract. The contractual obligation either exists or it does not exist. In the example I have given, it no longer exists, as Egg has chosen to end it, when you were not in breach of the contract. - That is their right, but they cannot subsequently claim that you still owe them money under the contract they have just terminted! To make the point clear, ask Egg under which section of CCA 1974 it is claiming the money from you - you will find that there is no part of CCA 1974 which gives Egg an entitlement to claim the money from you.

Regards

[Decanus]

Hi toymaker,

I did actually query that exact point, as per the previous chatter in the thread, and Egg never addressed the point. I was given a standard 'its all covered by the terms and conditions, so there'. I have quibbled over this for several weeks, and now they have decided to issue a default against me.

I was wondering if I should challenge the right to issue a default as, if they have terminated our card agreement before issuing a default, then how can they issue a default on the agreement now?

is my position weaker now that they have issued a default, as they can say 'well, you now have a default', or is the fact they have issued it now, rather than then, more relevant because any action taken after ending our agreement is invalid.

Just out of interest, why has no-one challenged this in court? it does seem there is a case there...are you still in discussion with them?

Ta

[toymaker1]

Originally Posted by Decanus

Egg never addressed the point. I was given a standard 'its all covered by the terms and conditions, so there'. Ta

Hello Decanus
As I said, my own experience is that Egg will not address the point. The terms and conditions which Egg tell you cover everything are themselves covered by thAct if they terminate your account when you are not in default, and without Egg complying with Sections 86 and 87. As I said in my previous post, if Egg, by it's own choice, terminates the contract between you (which includes your liability to pay the money you owe to Egg) when you have not defaulted on the agreement, then that is Egg's free choice. - By that action Egg has chosen to cancel/write off your liability to Egg under the contract between Egg and you - which Egg has terminated. If Egg subsequently claims that you still owe them money, Egg would clearly have to use the law to recover that money. Ask Egg which law Egg would use. So far as I can see Egg would have no law available to it. If Egg tried to claim the money under CCA1974, Egg would find that Egg was in breach of that Act. As I said previously, you should ask Egg under which law does Egg intend to recover the money? I think the saying is, that Egg has been hoisted by it's own petard!

Originally Posted by Decanus

now they have decided to issue a default against me. if they have terminated our card agreement before issuing a default, then how can they issue a default on the agreement now? Ta

That is exactly the crux of the matter. Egg clearly cannot give you a default notice after Egg has terminated the agreement! If Egg thinks it can, ask them under which section of which law is Egg acting?

[quote=Decanus;1573381is my position weaker now that they have issued a default, or is the fact they have issued it now, rather than then, more relevant because any action taken after ending our agreement is invalid.

Just out of interest, why has no-one challenged this in court? it does seem there is a case there...are you still in discussion with them?

Ta[/QUOTE] Personally, I am not intending to take Egg to court, but I have informed Egg that if Egg takes me to court I will draw the Court's attention to all the relevant factors, and that I would also ask the court to make an order under S140 of CCA relating to unfair business relationships, quite apart from Egg's serious breaches of CCA1974.

[Decanus]

thanks again Toymaker. I especially like the last bit about unfair practices, may site that myself if you don't mind.....

will be drafting up a letter to them tonigh, so if you have any tasty nuggets of info you think I should throw in, let me have 'em....!!

[toymaker1]

Originally Posted by Decanus

if you have any tasty nuggets of info you think I should throw in, let me have 'em....!!

Hello Decanus
Using the Egg secure email facility on the Egg website you could send to Egg an email on the following lines. If you do, post Egg's reply on this site. - I am assuming that Egg terminated your agreement when you were not in default.
"Dear Sir/Madam

I would be grateful if Egg would indicate to me the relevant section of the Consumer Credit Act 1974 which provides Egg with the legal entitlement to terminate my Egg credit card agreement as from (insert date - it might have been 6 March 2008 for example)."

I would be interested to see what Egg has to say!

regards.

[Decanus]

Toymaked, I was indeed not in default before they terminated my agreement. Rather suspiciously, its been since.....

I have, though, fired off an email to Egg and we'll see if it boils or fries them....

[RubyRose]

Decanus,
How can they threaten to terminate an already terminated account as this is one of the things they say they are going to do in their default notice served on me. I basically wipe the floor with them.

I think we should all carry out a class action aginst them.
Ruby

[steven4064]

Originally Posted by RubyRose

I think we should all carry out a class action aginst them.

Something along the lines of St Trinians 5th form

[oggy1]

now citi own egg and here is an interesting point,
i claimed and won charges back from citi and then i had a notice like the egg one of termination of my card.
i used your information toymaker and sent it of to them .
2 days ago i recieved a reply , they are pleased to inform me my new citi card is on its way and sorry for any inconvenience caused.
the question now , do i want it anyway.

[steven4064]

Originally Posted by oggy1

the question now , do i want it anyway.

Perhaps read some citi threads before you decide

[Decanus]

Hi guys,

RubyRose, thats the problem I think we are all struggling with. Despite several attempts, Egg never respond to any direct questions about the vailidity of the agreement termination, and then my specific query on how they can serve a default notice on an account that they had already effectively terminated. They are serving a default on a termineted account, are they not?
As Toymaker has been saying, they fail to reveal under what specific part of the CCA they are entitled to terminate an account without serving a default first.

Does the fact they are keeping silent on all this reflect on their not wanting it to be taken to court for a test case? is it just typical Egg unhelpfulness?

My amateur guess is that they are not 100% certain of their position, because they would have thrown the relevant legislation at us. I think they terminated without default undersome 'implied' term, but not a definite one. If thats the case, its challengeable, and Egg do not want 161,000 people going to court, do they.....!!