Reason why MBNA cannot 'legally' assign a debt

[celebrity debtor]

Reason why MBNA cannot 'legally' assign a debt

 

mbna current terms and conditions state

 

8d Unless you have a legal right to do so, you must not hold back a payment or refuse to pay anything you owe us because of a dispute between you (or your additional cardholder) and another person.

Moreover 13d defines the term person to include interpretation as below

13d We may reveal your personal information to:

· any person working for us (including any member of the MBNA Group);

· if you arrange insurance through us, that insurer;

· credit reference and fraud prevention agencies;

· any organisation which backs any of our products which you hold;

· any guarantor of any agreement between you and us;

· any payment system under which we issue your card;

· any person we transfer any of our rights or duties to under any agreement we may have with you; and

· anyone you authorise us to give personal information to.

 

15 General

15a We will monitor or record some phone calls.

15b You must send any written notice to us at the address shown in paragraph 5b. We will send any written notice or demand to you at your last-known address. We will always treat you as having received the notice or demand at that address.

15c We may transfer our rights or duties under this agreement or arrange for any other person to carry out our rights or duties under this agreement. You may not transfer any of your rights or duties under this agreement.

16 definitions

MBNA Group – MBNA Europe Bank Limited, its subsidiary and parent companies, any subsidiary of any of its parent companies and any person we transfer any of our rights or duties to in this agreement.

Conclusion

MBNA are accepting the legal validity of section 78 of the consumer credit act 1974 !!! as per condition 8d of their own terms and conditions

 

m

[celebrity debtor]

the following is taken from

Between :

ESSAR STEEL LIMITED

Appellant

 

- and -

 

THE ARGO FUND LIMITED

Respondent

 

Court of Appeal Judgment

paragraphs 27 & 28 are very interesting

however

paragraph 19 says :---

 

Clause 27 provided, so far as material:

"27.1 This Agreement shall be binding upon, and inure to the benefit of each party hereto and their respective successors, Transferees and assignees. ... Any Bank may, subject to the execution and completion of such documents as the [syndicate members'] Agent may specify and with notice to the Borrower, assign all or any of its rights and benefits hereunder or, subject to the payment to the Agent of a transfer fee of $250, transfer in accordance with Clause 27.2 all or any of its rights, benefits and obligations hereunder.

 

 

27.2 If any Bank wishes to transfer all or any of its rights, benefits and/or obligations hereunder, then such transfer may be effected by the delivery to the Agent of a duly completed and duly executed Transfer Certificate in which event ...:

(i) to the extent that in such Transfer Certificate the Bank party thereto seeks to transfer its rights and obligations hereunder, the Borrower and such Bank shall be released from further obligations towards one another hereunder and their respective rights against one another shall be cancelled (such rights and obligations being referred to in this Clause 27.2 as 'discharged rights and obligations');

(ii) the Borrower and the Transferee party thereto shall assume obligations towards one another and/or acquire rights against one another which differ from the discharged rights and obligations only insofar as the Borrower and the Transferee have assumed and/or acquired the same in place of the Borrower and such Bank; and

(iii) ... the Transferee and the other Banks shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the Transferee been an original party hereto as a Bank with the rights and/or obligations acquired or assumed by it as a result of such transfer"

 

 

note the following words are used

 

 

If any Bank wishes to transfer all or any of its rights, benefits and/or obligations

meaning benefits and obligations can be transferred

 

however in the case of mbna terms and conditions

 

15 General

15a We will monitor or record some phone calls made between us and any cardholder or other person.

15b You must send any written notice to us at the address shown in paragraph 5b. We will send any written notice or demand to you at your last-known address. We will always treat you as having received the notice or demand at that address.

15c We may transfer our rights or duties under this agreement or arrange for any other person to carry out our rights or duties under this agreement. You may not transfer any of your rights or duties under this agreement

note the absence of the word 'and' in conclusion it is suggested that it is reasonable that any assignment cannot be absolute due to the absence of the word 'and' so in conclusion must be 'equitable'

 

 

May it be suggested that any 'absolute assignment' as opposed to 'equitable 'gives the other party the ability to sue for breach of contract if such an assignment is made'.

[B3rty]

I can't see how the case law is linked here as it was not based on the specific missing word and so would be difficult to use in court....?

[celebrity debtor]

in the consumer credit act 1974

 

creditor is defined as :-

 

“ creditor “ means the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law, and in relation to a prospective consumer credit agreement, includes the prospective creditor;

 

just as debtor is defined as :-

 

debtor” means the individual receiving credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law, and in relation to a prospective consumer credit agreement includes the prospective debtor;

 

[celebrity debtor]

Moreover

173 Contracting-out forbidden

(1) A term contained in a regulated agreement or linked transaction, or in any other agreement relating to an actual or prospective regulated agreement or linked transaction, is void (rights or duties) if, and to the extent that, it is inconsistent (rights and duties) with a provision for the protection of the debtor or hirer or his relative or any surety contained in this Act or in any regulation made under this Act.

(2) Where a provision specifies the duty or liability of the debtor or hirer or his relative or any surety in certain circumstances, a term is inconsistent with that provision if it purports to impose, directly or indirectly, an additional duty or liability on him in those circumstances.

(3) Notwithstanding subsection (1), a provision of this Act under which a thing may be done in relation to any person on an order of the court or the Director only shall not be taken to prevent its being done at any time with that person’s consent given at that time, but the refusal of such consent shall not give rise to any liability

[alfwithhair]

Very interesting reading.

But I am a little confused.

If MBNA cannot legally assign a debt why do I receive letters containing the line;

 

MBNA Europe bank Ltd have passed your unpaid account to us for collection. We are collection agents and the debt is now owned by us Debt Clear Recoveries & Investigations Ltd.

 

 

 

[celebrity debtor]

it is believed nobody has as yet has questioned the validity or invalidity of the and/or

 

mbna will not be aware of the discrepency until now

[B3rty]

I can see & understand the term but surely with out the case law its can't be used on the small claims court ?

[Edz11]

I can see where you're coming from but wearing my legal hat (I haven't got one by the way) I would say you're wrong.

 

The use of the word "or" can indicate restrictive or unrestricted outcomes. If I own a dining table and chairs I can sell you my dining table or chairs. I could sell you both if I chose.

 

You can turn "left or right" at a T junction. It would be difficult to do both at the same time but either outcome is open to you.

 

Arguing this before the Court would be difficult - in fact I'd say doomed to failure as with any legislation the Judge(s) will look at the wording in its context.

 

Your argument about s173 is faultless though. Cabot saying "we've been cute and ditched the "duties" and got the debt on its own" is equally doomed - not least 'cos of S173.

[celebrity debtor]

now looking at a set of goldfish credit card terms and conditions it says

 

12(a) in so far as is permitted by law you agree that we may at any time transfer :-

(i) our rights and benefits under the agreement and your liability on the account.

(ii)our duties and obligations (including without limitation any obligation on our part arising from your rights under condition 2(a)) under this agreement:

to any other person without having to give you prior notice. Any such transfer will not affect your obligations under this agreement or your statuatory rights including your rights under the consumer credit act 1974.

(b) we may fom time to time vary this agreement to such extent..........

 

now this set of terms and conditions introduces the word obligations into the equation. Which by its very existence weakens the mbna case.

 

Out of interst goldfish go on to score an own goal "without having to give you prior notice" ( this invalidates any legal assignment) however they do cover themselves with section (b) by being able to vary the terms . However of couse the original terms and coditions are a must.

 

Be it suggested that everyone needs to check the above and by showing other companies terms and conditions the variations and errors become obvious

[B3rty]

Dictionary

 

or

conj. 1. a. Used to indicate an alternative, usually only before the last term of a series: hot or cold; this, that, or the other.

b. Used to indicate the second of two alternatives, the first being preceded by either or whether: Your answer is either ingenious or wrong. I didn't know whether to laugh or cry.

c. Archaic Used to indicate the first of two alternatives, with the force of either or whether.

 

2. Used to indicate a synonymous or equivalent expression: acrophobia, or fear of great heights.

3. Used to indicate uncertainty or indefiniteness: two or three.

[tomterm8]

Out of interst goldfish go on to score an own goal "without having to give you prior notice" ( this invalidates any legal assignment) however they do cover themselves with section (b) by being able to vary the terms . However of couse the original terms and coditions are a must.

 

Be it suggested that everyone needs to check the above and by showing other companies terms and conditions the variations and errors become obvious

 

From a purely technical legal standpoint, a legal assignment is effected at the very moment when the debtor recieved a valid notice of assignment. There is no need to send a prior notice; the notice occurs at the same time as the assignment.

 

so I don't see the problem with the wording.

 

BTW, I agree with edz.

[celebrity debtor]

From a purely technical legal standpoint, a legal assignment is effected at the very moment when the debtor recieved a valid notice of assignment. There is no need to send a prior notice; the notice occurs at the same time as the assignment.

 

so I don't see the problem with the wording.

 

BTW, I agree with edz.

 

sorry TOM

 

thanks for spotting my error

 

i was thinking of the legendary "cohens" & CL Finance who are always too quick off the mark (getting an assignment and issueing a court order before the notification of legal assignment arrives in the post) ,(thus rendering the legal assignment invalid) -- they were operating their 'techniques' in the early 1990's but have only recently been rumbled.

[celebrity debtor]

the following is appendix 7.9 from

 

 

 

Store Card Credit Services

 

Inquiry type: Market

Status: Completed

Date: 18.03.04 - 07.03.06

 

for speed reading certain words are highlighted

link

 

 

http://www.mmc.gov.uk/inquiries/completed/2006/storecard/pdf/prov_find_app_7-9.pdf

 

 

see also

Competition Commission - Inquiries - Store Card Credit Services

 

whist strictly this relates to storecards many trade secrets regarding assignment are revealed

 

APPENDIX 7.9

Switching provider of a store card programme:

providers’ approach and customers’ rights

 

1. This appendix presents the conclusions of the CC’s scrutiny of the legal requirements and the industrial practices relating to the transfer of a store card programme to a new provider. The CC drew these conclusions from the responses to questionnaires it sent to store card providers and the Consumer and Competition Policy Directorate of the DTI relating to the assignment of customers’ contractual rights and providers’ contractual obligations when a portfolio of store card receivables is transferred to a new provider. Store card providers were also asked about the different ways in which the switch of a store card programme from one provider to another can take place.

 

Assignment of customers’ contractual rights and providers’ (including in-house providers’) contractual obligations when a portfolio of store card receivables is transferred to a new provider

 

2. The questions were based on the premise that the identity of the person/corporate entity with whom the customer contracts changes as a result of the transfer (and not a situation where a customer has a contractual relationship with a corporate entity and it is only the ultimate ownership of that entity which changes).

 

Question 1: Is each customer required to sign a new credit agreement with the new provider or is this unnecessary in certain circumstances (eg, if the original credit agreement includes clauses on the right of the incumbent provider to transfer the rights to a third party)?

 

A7(9)-1

 

Summary of responses, with CC comment

• The Consumer Credit Act (CCA) does not prohibit assignments of regulated consumer credit agreements. However, uncertainty exists on whether a customer is required to sign a new credit agreement with the new provider.

 

 

• The uncertainty stems from the law of contracts and revolves around the effectiveness of consent to assignment, in fact, at common law, rights under a contract can be assigned, but duties under the contract can only be assigned with consent. Generally, consent can be given via a clause in the original contract or at a later date in which case a signature is usually required.

 

 

• Two schools of thought exist on whether, in the case of Regulated CCA agreements, consent for the transfer of obligations to a third party can be given via a clause in the original contract or must be given in writing (ie, by signing a new agreement), failing which the agreements may become unenforceable against the borrower.

 

 

• All providers have included in the terms and conditions of their credit agreements with customers’ clauses on their ability to transfer rights and obligations. Therefore, according to the view that consent can be given via a clause in the original contract, by signing the credit agreement, a customer gives his or her consent to the transfer of his/her duties to the new provider and there should be no need to sign a new agreement.

 

 

• However, if a provider agrees with the opinion that consent for the transfer of obligations to a third party for Regulated CCA agreements can only be given in writing, to avoid the risk that the agreements with the customers become unenforceable, the contract between providers may be structured so that the new provider acts as an agent for the incumbent.

 

 

• Furthermore, ’clauses in agreements permitting the assignment of rights and obligations (like those in providers’ terms and conditions) may also be subject to challenge as falling within the ‘grey list’ of the Unfair Terms in Consumer Contracts Regulations 1999 (Schedule 2, paragraph 2(1)(p)) which states that a term which has the object or effect of ‘giving the seller or supplier the possibility of transferring his rights and obligations under the contract, where this may serve to reduce the guarantees for the consumer, without the latter’s agreement’ is deemed unfair and will therefore not be binding on the consumer’.

 

 

• This risk, however, can be mitigated by wording such clauses in a way that clearly indicates that the transfer would not have a detrimental effect on the customer’s rights.

 

Question 2: Is there any legal requirement for the customer to receive any notification of the transfer of their contract to a third party? If so, please specify.

 

Summary of responses

• Industry practice is to send customers notification of the transfer of a portfolio.

 

Question 3: Are there any constraints/limitations imposed by the Data Protection Act or the Consumer Credit Act on the ability of the incumbent provider to transfer the portfolio to a new provider? If so, please give details.

 

Question 4: Does either of the statutes in © affect the way in which the transfer is carried out? If so, please explain.

 

Summary of responses, with CC comment

• Neither the Data Protection Act nor the Credit Consumer Act impact on the ability to transfer portfolios of receivables between providers. However, providers must ensure that their data protection notifications permit the transfer and receipt of the cardholder’s personal data.1

 

Different ways in which the switch of a store card programme from one provider to another can take place

 

Question 5: How does the process differ when the existing portfolio at the termination of the contract is not transferred to the new provider, who instead launches a new store card programme?

 

Summary of responses, with CC comment

 

Transfer of a portfolio:

 

• The new programme needs to offer customers terms identical to, or more favourable than, the ones of the previous programme, otherwise customers must be issued with a new credit agreement and their written consent must be sought.

 

 

• New provider does not commence recruitment of customers from scratch but instead sends customers a ‘notice of assignment’ informing them that the company servicing the account has changed.

 

New programme without transfer of existing portfolio of receivables:

 

• The new provider can design the product from scratch without concern as to whether changes could be described as having an adverse impact on customers and can issue entirely new product types.

 

 

• New provider commences recruitment of customers from scratch either at point of sale or through mailing customers based on the previous use of a customer list, if available. This means that customers will be given/sent a new credit agreement to sign.

 

1All providers’ credit agreements with customers analysed by the CC include such clauses.

 

 

• Incumbent provider usually2 ceases actively promoting the old programme soon after the launch of the new store card programme but retains the rights to collect outstanding debt and continues to service accounts in the same manner until balances outstanding are paid.

 

 

• Incumbent provider gives adequate notice to customers that the facility to make further purchases using the card would be terminated from a given date.

The new provider issues new cards to customers whether it acquires the existing portfolio or not.

 

Question 6: On a change of provider, which is the more common occurrence, the acquisition of the existing portfolio or the launch of a new programme by the new provider? How would you account for this?

 

Summary of responses, with CC comment

• According to providers the more common occurrence is the acquisition of the existing portfolio. The advantages of this approach include:

 

— a more seamless transfer from the retailer’s and the customers’ perspective;

 

— enabling the incumbent to realize the value of the asset in advance; and

 

— providing the new provider with an income generating asset.

 

 

• Providers have submitted that restrictive clauses in contracts can make the transfer of portfolios difficult. The CC’s analysis of contracts shows that older contracts tend to be silent on what happens to the existing portfolio when the contract expires. Lack of contract clauses on retailers’ or third parties’ right to purchase the portfolio, together with confidentiality clauses on customers’ credit data, might create issues for the transfer of a portfolio to a new provider.

2This would not be the case if the retailer decides to continue accepting the cards issued by the incumbent provider as well as offering the cards of the new programme. This scenario, however, is unlikely to occur as current market practice is for providers to have exclusivity for the supply of a store card programme.

 

• More recent contracts, however, include clauses on the rights of retailers or third parties to purchase the portfolio of receivables.

Question 7: Are receivables transferred only when a new provider is brought in? Or do transfers of receivables occur in other circumstances (eg securitisations)? If so, please describe these circumstances and provide an indication of the frequency of such transfers.

 

Summary of responses, with CC comment

• According to all providers receivables3 are only transferred when a new provider is brought in (be it an external provider or the retailer). Only one provider seems to have direct experience of securitization, having securitized its debt in the past.

Overall conclusions

3. Switching between providers of store card programmes can take place in two ways:

 

 

• by transferring the portfolio of receivables from the incumbent to the new providers; and

 

 

• by launching a new programme without transferring the portfolio of receivables.

 

 

4. The first approach tends to be the

most common and presents the following advantages:

 

 

• it allows a more seamless transfer form the retailer’s and the customer’s’ perspective;

 

 

• it enables the incumbent to realise the value of the asset in advance; and

 

 

• it provides the new provider with an income generating asset.

 

3Excluding receivables sold to debt collection agencies because considered uncollectible.

A7(9)-6

 

5. Recent contracts between retailers and providers include clauses on transfer of portfolios that aim at facilitating the sale and purchase of the portfolio of receivables when a contract expires. Older contracts are often silent on this matter and that might have created problems in transferring portfolios.

 

 

6. Neither the Consumer Credit Act nor the Data Protection Act impact on the ability to transfer portfolios of receivables between providers.

 

 

7. Where a portfolio of receivables is transferred to a new provider, and the original credit agreement with the customers includes clauses allowing the incumbent provider to transfer/assign their rights and obligations under the contract, customers need to sign a new credit agreement only if the new store card programme reduces their guarantees and rights or they are offered a completely new product.

 

 

8. Where a new programme is launched and the portfolio of receivables is not transferred to the new provider, customers are notified that the old programme would be terminated at a certain date (after which it would not be possible to make purchases on the old card) and that only the accounts with outstanding balances would continue to be serviced by the incumbent provider until the balances are paid off. The new provider would start marketing the new store card to customers from scratch.

 

 

9. In all cases customers must be notified of the change in provider.