Egg credit card agreement terminated

[Peterbard]

I'm reposting this because it was deleted by the consumer forum after Bard complained (obviously without the comments that got me into trouble!)

 

I note that after he complained, he effectively left the thread, which is amusing. He's said some similarly mean things about other people, which I could report him about, but I have neither the time or the inclination. I will repeat one important fact, however - he isn't a lawyer. He has no legal qualifications. Therefore take everything he says with a pinch of salt. I say nothing further on that point.

 

Anyway, here's the deleted post...

 

"I read through this thread a while ago, but i've since had a chance to sit down and have a think about my situation. Egg have now given me a default notice and I'm thinking about my next step.

 

The problem here is the statute is unclear. It didn't anticipate a situation where all of the banks would en masse start trying to get rid of their clients [like egg] or raise the rates to a silly degree [like capital one and others].

 

This is my legal opinion for what it's worth - the reason why Egg aren't suing people in their hundreds yet is because(a) it isn't financially practical for them to do so, and (b) they terminated their agreements with their customers but continued to charge interest rates. Ignore the CCA. I believe they had no right on their own terms to cancel the contract other than in the way specified in their contract - which is to demand the sum of money back owed. My guess is that Egg are a bit worried that if you cancel a contract but continue to take interest without the protection [to both parties], you are in fact acting like a loan shark. The CCA was set up to avoid dodgy companies acting outside the protection of statute, which I think is what's happened here.

 

I think that Egg don't want the bad publicity involved in this and of course a verdict that might say "you can't charge these people interest anymore", becuse a lot of people are still - like sheep - paying off the interest.

 

I've now written to egg and told them "I continued to pay back the amount following their termination for 2 years, which is the majority of the alleged 4.5k debt. I calculate I owe about 2k. I offer you 2k under pt36 of the CPR in settlement of this debt on the condition that you confirm in writing that once the 2k is paid you mark my credit file debt paid in full. If you choose to sue, the matter will fall in the small claims track and you will not get your costs. I therefore suggest you accept."

 

My guess is that they won't accept initially but once they understand that they'll need a trial to get a single penny of interest out of me, I believe they will back down. I think you can approach it the way that you're doing, by just guessing they won't have the balls to take your cases to Court, but it's a relatively dangerous game since Carey, where it was made clear that the Courts are there to support the status quo, and in particular against debtors who mount technical challenges."

 

My position is that Egg botched their cancellations, but a Defendant friendly judge might say to Egg "you didn't go through the motions of default notice in 2008, then termination, therefore the contract stands as if it wasn't properly cancelled." That's my main worry.

 

HI

NO I have just had better things to do, you get fed up banging your head against a brick wall eventually.

There are however a couple of interesting points in your post (unusual for this thread).

There is of course a contractual termination clause in most if not all credit agreements for reasons I have gone into many times earlier in this thread.

You so have the vestige of a point however regarding interest on a contractually terminated account.

The fact is that when the account is terminated in this way the balance becomes due. However there is no way that the creditor can enforce this demand without first complying with statute(section 87)

In common law a contractual termination would not allow a creditor to sue for pre estimated costs, so for instance if this was a hire agreement they would not be able to claim lost future rentals( these would be classed as a penalty and not recoverable without the breach of contract of the other party).

Unfortunately the liabilities under a credit agreement are actual costs and the interest is the actual cost of the loan, so as long as the money is not repayed the interest is due.

Peter

[toymaker1]

Originally Posted by chelsealove

I'm reposting this because it was deleted by the consumer forum after Bard complained (obviously without the comments that got me into trouble!)

 

I note that after he complained, he effectively left the thread, which is amusing. He's said some similarly mean things about other people, which I could report him about, but I have neither the time or the inclination. I will repeat one important fact, however - he isn't a lawyer. He has no legal qualifications. Therefore take everything he says with a pinch of salt. I say nothing further on that point.

 

Anyway, here's the deleted post...

 

"I read through this thread a while ago, but i've since had a chance to sit down and have a think about my situation. Egg have now given me a default notice and I'm thinking about my next step.

 

The problem here is the statute is unclear. It didn't anticipate a situation where all of the banks would en masse start trying to get rid of their clients [like egg] or raise the rates to a silly degree [like capital one and others].

 

This is my legal opinion for what it's worth - the reason why Egg aren't suing people in their hundreds yet is because(a) it isn't financially practical for them to do so, and (b) they terminated their agreements with their customers but continued to charge interestrates. Ignore the CCA. I believe they had no right on their own terms to cancel the contract other than in the way specified in their contract - which is to demand the sum of money back owed. My guess is that Egg are a bit worried that if you cancel a contract but continue to take interest without the protection [to both parties], you are in fact acting like a loan shark. The CCA was set up to avoid dodgy companies acting outside the protection of statute, which I think is what's happened here.

 

I think that Egg don't want the bad publicity involved in this and of course a verdict that might say "you can't charge these people interest anymore", becuse a lot of people are still - like sheep - paying off the interest.

 

I've now written to egg and told them "I continued to pay back the amount following their termination for 2 years, which is the majority of the alleged 4.5k debt. I calculate I owe about 2k. I offer you 2k under pt36 of the CPR in settlement of this debt on the condition that you confirm in writing that once the 2k is paid you mark my credit file debt paid in full. If you choose to sue, the matter will fall in the small claims track and you will not get your costs. I therefore suggest you accept."

 

My guess is that they won't accept initially but once they understand that they'll need a trial to get a single penny of interest out of me, I believe they will back down. I think you can approach it the way that you're doing, by just guessing they won't have the balls to take your cases to Court, but it's a relatively dangerous game since Carey, where it was made clear that the Courts are there to support the status quo, and in particular against debtors who mount technical challenges."

 

My position is that Egg botched their cancellations, but a Defendant friendly judge might say to Egg "you didn't go through the motions of default notice in 2008, then termination, therefore the contract stands as if it wasn't properly cancelled." That's my main worry.

HI

NO I have just had better things to do, you get fed up banging your head against a brick wall eventually.

There are however a couple of interesting points in your post (unusual for this thread).

There is of course a contractual termination clause in most if not all credit agreements for reasons I have gone into many times earlier in this thread.

You so have the vestige of a point however regarding interest on a contractually terminated account.

The fact is that when the account is terminated in this way the balance becomes due. However there is no way that the creditor can enforce this demand without first complying with statute(section 87)

In common law a contractual termination would not allow a creditor to sue for pre estimated costs, so for instance if this was a hire agreement they would not be able to claim lost future rentals( these would be classed as a penalty and not recoverable without the breach of contract of the other party).

Unfortunately the liabilities under a credit agreement are actual costs and the interest is the actual cost of the loan, so as long as the money is not repayed the interest is due.

Peter

 

Unfortunately, I find the posts by Chelsealove and Peterbard very unclear. I cannot see a clear point being made.

Can anyone explain what those two posts mean? I would like to kinow, as they might be saying something very useful, but I just cant decipher their meaning.

[Hopster]

I agree.

[Hopster]

yes, I agree - let's have the basic facts . I think that I will offer Egg 20% of the balance, payable over five years or 10% of the balance payable now. What about that ?

[basa48]

The problem with the Egg termination is that it explores uncharted waters.

 

The questions IMO are:

 

Did Egg have the right to 'end the agreement' whilst maintain entitlement to repayments? Is use of the word 'ending' fatal to the agreement and will it hold up to the debtors advantage in court?

 

Do Egg have the right to charge interest on outstanding balances while denying access to further credit having ended the agreement? How many clauses were 'ended' and which do Egg claim weren't.

 

Should Egg have restricted or deferred credit instead of ending the agreement? (As allowed in CCA1974).

 

Without the benefit of s87 (there being no debtor default) can Egg demand repayment of full balances? The debtor assuming the agreement is ended may stop paying thus 'defaulting' after the agreement was ended.

 

Is their action a repudiation?

 

There will be as many different answers as there are questions, which is why there are conflicting and differing opinions. Maybe Egg are looking into all the questions before risking litigation and are as unsure of the answers as we are.

[toymaker1]

The problem with the Egg termination is that it explores uncharted waters.

 

Maybe Egg are looking into all the questions before risking litigation and are as unsure of the answers as we are.

 

Do you seriously think that Egg might, - after three years have elapsed - still be "looking into all the questions" - I think not!

[toymaker1]

yes, I agree - let's have the basic facts . I think that I will offer Egg 20% of the balance, payable over five years or 10% of the balance payable now. What about that ?

 

I wont offer them anything. - except a day in court.

[toymaker1]

The problem with the Egg termination is that it explores uncharted waters.

 

The problem with the Egg termination is that it was outside the provisions of CCA 1974, therefore it was unlawful.

[basa48]

Do you seriously think that Egg might, - after three years have elapsed - still be "looking into all the questions" - I think not!

 

How long did it take them to address the 'approved limit' gambit? That was more straightforward than this scenario.

[basa48]

The problem with the Egg termination is that it was outside the provisions of CCA 1974, therefore it was unlawful.

 

[Devil's advocate mode] If it is 'outside' CCA1974 as opposed to 'contrary' to the CCA1974, I wonder what legislation it does come under?[/end Devil's advocate mode]

 

I know it is a regulated agreement, but where the Act is silent on a matter where do the courts look for an answer? The law says what you can't do not what you can do (not yet anyway!!).

[toymaker1]

I know it is a regulated agreement, but where the Act is silent on a matter where do the courts look for an answer?

 

which matter do you believe the Act is silent on?

[basa48]

which matter do you believe the Act is silent on?

Terminating non defaulted running account credit agreements.

[toymaker1]

Terminating non defaulted running account credit agreements.

 

That's fully covered in the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983. Schedule 3 of those Regulations sets out the prescribed form for non-default termination notices.

[basa48]

That's fully covered in the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983. Schedule 3 of those Regulations sets out the prescribed form for non-default termination notices.

 

Schedule 3 relates to notices given under s98(1) which applies only where—

 

(a) a period for the duration of the agreement is specified in the agreement, and

 

(b) that period has not ended when the creditor or owner does an act mentioned in subsection (1),

 

i.e. fixed term loans where the loan period has not yet expired.

[toymaker1]

Schedule 3 relates to notices given under s98(1) which applies only where—

 

(a) a period for the duration of the agreement is specified in the agreement, and

 

(b) that period has not ended when the creditor or owner does an act mentioned in subsection (1),

 

i.e. fixed term loans where the loan period has not yet expired.

 

You are absolutely correct, Schedule 3 relates to fixed term agreements - therefore cannot be used to terminate running account credit agreements. But Schedule 3 is also the prescribed form of notice for terminating non-default regulated agreements. i.e. it is the compulsory, and only, form of termination notice for non default regulated agreements. Therefore it is very clear that there is no form for termination by the creditor of a non-default regulated agreement. non default termination by the debtor is covered by S103 of CCA 1974.

 

The first words on any credit card agreement are "this agreement is regulated by the consumer credit Act 1974" - that means every transaction - including termination - is regulated by the Act. There is no grey area.

[basa48]

You are absolutely correct, Schedule 3 relates to fixed term agreements - therefore cannot be used to terminate running account credit agreements. But Schedule 3 is also the prescribed form of notice for terminating non-default regulated agreements. i.e. it is the compulsory, and only, form of termination notice for non default regulated agreements. Therefore it is very clear that there is no form for termination by the creditor of a non-default regulated agreement. non default termination by the debtor is covered by S103 of CCA 1974.

 

The first words on any credit card agreement are "this agreement is regulated by the consumer credit Act 1974" - that means every transaction - including termination - is regulated by the Act. There is no grey area.

 

I am confused!

 

You say "Schedule 3 relates to fixed term agreements - therefore cannot be used to terminate running account credit agreements" then say "it is the compulsory, and only, form of termination notice for non default regulated agreements". Then you say "there is no form [in the Act] for termination by the creditor of a non-default regulated agreement" but observe "every transaction - including termination - is regulated by the Act" ???

 

There is something wrong here. Either the Act and Regs apply or something else must apply. If the Act doesn't include for it does not mean it can't be done - it has been done!!

[toymaker1]

I am confused!

 

You say "Schedule 3 relates to fixed term agreements - therefore cannot be used to terminate running account credit agreements" then say "it is the compulsory, and only, form of termination notice for non default regulated agreements". Then you say "there is no form [in the Act] for termination by the creditor of a non-default regulated agreement" but observe "every transaction - including termination - is regulated by the Act" ???

 

There is something wrong here. Either the Act and Regs apply or something else must apply. If the Act doesn't include for it does not mean it can't be done - it has been done!!

If you put together the following facts:

1. Schedule 3 relates only to fixed term agreements as specified in S98 of CCA 1974.

2. Schedule 3 prescribes the only form that can be used to terminate non-default consumer credit agreements.

3. Every notice sent by a creditor to a debtor must be in a form prescribed by Regulations, whose authority is derived from CCA 1974.

4. Every transaction, including termination, is regulated by CCA or it's associated Regulations.

Then it becomes very clear that the only permitted forms of non-default terminations of credit agreements by a creditor are those described in S98 (schedule 3) or S76(schedule 1).

Why do you believe that something else must apply?

 

The Consumer Credit (Enforcement, Fefault and Termination Notices) Regulations 1983, cover every permitted form of termination by a creditor.

Whenever termination is mentioned in CCA 1974, it says that the termination notice is not effective if it is not in the prescribed form. That prescribed form, tailored to fit each permitted circumstance in which it is permitted to terminate an agreement, is precisely specified in the schedules to the regulations.

The creditor cannot just make up a form of termination which is not specified in the Regulations, and claim that somehow he is acting under contract law, or common law, or it isn't specifically mentioned so I can do it.

If it is not as prescribed in the regulations, it is not permitted. I think it is very very clear.

[basa48]

Whilst I sort of agree with what you say, I would comment as follows:

 

1. Schedule 3 relates only to fixed term agreements as specified in S98 of CCA 1974.

Correct

2. Schedule 3 prescribes the only form that can be used to terminate non-default consumer credit agreements.

Agreed I know of no other form.

3. Every notice sent by a creditor to a debtor must be in a form prescribed by Regulations, whose authority is derived from CCA 1974.

Not sure that every form must be in a form prescribed by the Act/Regs. Surely they can communicate in any reasonable manner?

4. Every transaction, including termination, is regulated by CCA or it's associated Regulations.

Not sure. Cannot the common laws of contract come into play in a situation not covered in the CCA ? (this is a rhetorical question - not necessarily me stating fact).

Why do you believe that something else must apply?

I don't necessarily - just posing a question.

 

The Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983, cover every permitted form of termination by a creditor.

Obviously not every form as Egg's termination highlights!

Whenever termination is mentioned in CCA 1974, it says that the termination notice is not effective if it is not in the prescribed form. That prescribed form, tailored to fit each permitted circumstance in which it is permitted to terminate an agreement, is precisely specified in the schedules to the regulations.

But apparently not this circumstance?

The creditor cannot just make up a form of termination which is not specified in the Regulations, and claim that somehow he is acting under contract law, or common law, or it isn't specifically mentioned so I can do it.

Why not if it is the T&Cs you agreed to?

If it is not as prescribed in the regulations, it is not permitted. I think it is very very clear.

But the Act doesn't prohibit Egg's action. It just doesn't mention it.

 

I stress I am not disagreeing with you. I am just exploring every argument a creditor could use. This is IMO a very gray area which I think everyone even Egg is unsure of. If this ever gets into court I feel it will go to the top. My fear is a stitch up with someone deliberately posing this in court with a very poor argument in order to win a favourable result for Egg.

[toymaker1]

Not sure that every form must be in a form prescribed by the Act/Regs. Surely they can communicate in any reasonable manner?

 

That's right. The creditor can communicate in any reasonable manner such as writing a letter to you, or phoning you, or having a meeting with you or whatever.

However, if the creditor wishes to take a specific action which falls within the provisions of CCA, - for example termination of the agreement - then he must notify the debtor of by giving the debtor a notice in a form prescribed by regulations.

In the case of termination, the relevant regulations are the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983.

The very title of the Regulations tells the story. i.e. they are the definitive, and only, regulations which prescribe the form for Enforcement, Default and Terminations notices. - there is'nt anything else.

The form of notice to be given in non-default cases before a creditor can become entitled to terminate a regulated agreement is very precisely prescribed in schedule 3 of the Regulations. That means any regulated agreement, it does not say "some" regulated agreements - it says "a" regulated agreement. - that means it coverts all regulated agreements. The fact that the only one covered by schedule 3 is a fixed term agreement does not mean that other forms of agreement can be terminated without the need to give a notice in a prescribed form, it means that the only form of non default agreement which can be terminated by the creditor is a fixed term agreement - as provided for in S98.

What I have said is confirmed by the fact that every credit card agreement starts with the words 'This a a credit agreement regulated by the Consumer Credit Ac 1984, sign it only if you want to be legally bound by it's terms"

That means that 100% of the agreement is regulated by CCA 1974 - there is no get out clause by means of which the the creditor can evade the strict requirements of CCA and the Regs, if he wishes to terminate, he must do it in accordance with the Act and the Regs.

[toymaker1]

Originally Posted by toymaker1

The creditor cannot just make up a form of termination which is not specified in the Regulations, and claim that somehow he is acting under contract law, or common law, or it isn't specifically mentioned so I can do it.

 

Why not if it is the T&Cs you agreed to?

/QUOTE]

 

Because the T&C's you agreed to were not individually negotiated between you and the creditor.

If individual terms covering, for example, termination, were agreed between the creditor and the debtor, then of course the creditor could enforce them.

But the terms in credit card agreements are standard terms which have not been personally negotiated, and they therefore fall within the provisions of CCA, which totally regulates the terms and the agreement.

S173 of CCA makes it clear that a creditor cannot opt out of the requirements of CCA.

For example, he would not be able to terminate an agreement in a manner which is not prescribed by the Regulations.

[basa48]

Originally Posted by toymaker1

The creditor cannot just make up a form of termination which is not specified in the Regulations, and claim that somehow he is acting under contract law, or common law, or it isn't specifically mentioned so I can do it.

 

Why not if it is the T&Cs you agreed to?

 

Because the T&C's you agreed to were not individually negotiated between you and the creditor.

If individual terms covering, for example, termination, were agreed between the creditor and the debtor, then of course the creditor could enforce them.

But the terms in credit card agreements are standard terms which have not been personally negotiated, and they therefore fall within the provisions of CCA, which totally regulates the terms and the agreement.

S173 of CCA makes it clear that a creditor cannot opt out of the requirements of CCA.

For example, he would not be able to terminate an agreement in a manner which is not prescribed by the Regulations.

 

I do agree with this !!

[basa48]

That's right. The creditor can communicate in any reasonable manner such as writing a letter to you, or phoning you, or having a meeting with you or whatever.

However, if the creditor wishes to take a specific action which falls within the provisions of CCA, - for example termination of the agreement - then he must notify the debtor of by giving the debtor a notice in a form prescribed by regulations.

In the case of termination, the relevant regulations are the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983.

The very title of the Regulations tells the story. i.e. they are the definitive, and only, regulations which prescribe the form for Enforcement, Default and Terminations notices. - there is'nt anything else.

The form of notice to be given in non-default cases before a creditor can become entitled to terminate a regulated agreement is very precisely prescribed in schedule 3 of the Regulations. That means any regulated agreement, it does not say "some" regulated agreements - it says "a" regulated agreement. - that means it coverts all regulated agreements. The fact that the only one covered by schedule 3 is a fixed term agreement does not mean that other forms of agreement can be terminated without the need to give a notice in a prescribed form, it means that the only form of non default agreement which can be terminated by the creditor is a fixed term agreement - as provided for in S98.

What I have said is confirmed by the fact that every credit card agreement starts with the words 'This a a credit agreement regulated by the Consumer Credit Ac 1984, sign it only if you want to be legally bound by it's terms"

That means that 100% of the agreement is regulated by CCA 1974 - there is no get out clause by means of which the the creditor can evade the strict requirements of CCA and the Regs, if he wishes to terminate, he must do it in accordance with the Act and the Regs.

 

I just can't get my head past that schedule 3 is related to s98(1) which includes the term:

 

Subsection (1) applies only where—

 

(a) a period for the duration of the agreement is specified in the agreement, and

 

(b) that period has not ended when the creditor or owner does an act mentioned in subsection (1),

 

But I see this is going nowhere and its no-ones fault.

[toymaker1]

I just can't get my head past that schedule 3 is related to s98(1) which includes the term:

 

Subsection (1) applies only where—

 

(a) a period for the duration of the agreement is specified in the agreement, and

 

(b) that period has not ended when the creditor or owner does an act mentioned in subsection (1),

 

But I see this is going nowhere and its no-ones fault.

 

All that means is that S98 only applies to fixed term agreements, not running account agreements.

 

Consider the matter from this point of view.

1. Every credit card agreement is regulated 100% by the CCA 1974. That can only mean that every transaction carried out during the course of operating the agreement, and even before the account is opened - right from advertising the account, to applying for the account, to opening the account, to operating the account, to varying the terms of the account, and to terminating the account, are covered 100% by the provisions of CCA.

2. There are regulations which prescribe the form that certain actions provided for in CCA are to have - The regulations in this particular case are the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983. They prescribe the form that termination notices must have. That is to say. they prescribe the form which all termination notices must take - not just some kinds of termination, but every kind.

There are in fact three kinds of termination which relate to credit card agreements.

They are mentioned as follows in the Regulations:

paragraph 2(1) termination under the provisions of S76(1)

paragraph 2(2) termination under the provisions of S87(1)

paragraph 2(3) termination under the provisions of S98(1)

In the case we are interested in, non default termination, Schedule 3 (which relates to paragraph 2(3)) prescribes the form of Notice to be given in non-default cases before a creditor or owner can become entitled to terminate a regulated agreement.

 

To me that is clear beyond any doubt. The fact that the only case in which such a termination notice can be given to a debtor is in non-default fixed term agreements simply makes it clear that no other non-default termination is permitted under the provisions of CCA.

Egg acted unlawfully. That's it.

[basa48]

To me that is clear beyond any doubt. The fact that the only case in which such a termination notice can be given to a debtor is in non-default fixed term agreements simply makes it clear that no other non-default termination is permitted under the provisions of CCA.

Egg acted unlawfully. That's it.

 

Ah now it becomes clear(er)!

 

You are saying that because it isn't specified in the Act & Regs, Egg can never terminate a non defaulted account. And because the whole agreement is bound under the CCA they cannot rely on the termination clause in the T&Cs.

 

I hope that is right.

[toymaker1]

Ah now it becomes clear(er)!

 

You are saying that because it isn't specified in the Act & Regs, Egg can never terminate a non defaulted account. And because the whole agreement is bound under the CCA they cannot rely on the termination clause in the T&Cs.

 

I hope that is right.

I am saying that they cannot rely on any termination clause in the T&C's if that T&C is inconsistent with anything in CCA or it's associated regulations.

For example, take Egg's term 20.2 "We can end this agreement at any time".

That term is breathtaking in it's audacity. You will not find anything in CCA that is remotely consistent with the concept that a creditor can simply end a running account/credit card agreement "at any time" merely by informing the debtor that is what the creditor is going to do!

Every action of a creditor in respect of the agreement, (including termination) must have some original authority. In the case of termination, the original authority of The Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983, as stated immediately after the title and date, is The Consumer Credit Act 1974, sections 76, 87, 88 98, 182, 189.

You can look up each of those sections of CCA and see the original texts which provide legal authority to the Regulations. - there is no other source of authority for the Regulations, and they are the only (termination notice) regulations.

There is of course a very simple test by which you can check this out yourself.

Write a letter to Egg, asking them which part of the Consumer Credit Act 1974 provides them with legal entitlement to have term 20.2 stating that Egg can end the agreement at any time.

Let us know on this forum what they say to you.

 

Regards.