Credit Agreements over 25k Pre April 2008

[toto003]

Until 6 April 2008, agreements were excluded from regulation if the amount of credit or hire exceeded £25,000. However, this financial limit was removed for all new credit and hire agreements by the Consumer Credit Act 2006. Pre-existing agreements above £25,000 remain outside CCA regulation.

Can someone please offer an opinion on agreements that are over the 25k limit and made before April 2008. Specifically credit card agreements. My understanding is that these fall outside of being regulated by the CCA 1974 (and amendments,). Does this make the agreement automatically unenforceable ? There are no specific threads on this subject so I wanted to open one up. Words added to make finding the post easier: 25,000 , 25k+ , 25000

[rory32]

Does this make the agreement automatically unenforceable ?

No.

 

When the card was initially taken out was the credit limit below or above 25K?

[toto003]

No.

 

When the card was initially taken out was the credit limit below or above 25K?

 

initial limit was above 25k and initial agreement (if it exists) states limit above 25k

[Josie8]

Can someone please offer an opinion on agreements that are over the 25k limit and made before April 2008. Specifically credit card agreements. My understanding is that these fall outside of being regulated by the CCA 1974 (and amendments,). Does this make the agreement automatically unenforceable ? There are no specific threads on this subject so I wanted to open one up. Words added to make finding the post easier: 25,000 , 25k+ , 25000

 

 

 

Its before 6th April 2007 - not 2008

 

If an agreement was overt 25,000 pre 6th April 2007 then it would be an unregulated agreement subject to normal contract law.

[toto003]

Its before 6th April 2007 - not 2008

 

If an agreement was overt 25,000 pre 6th April 2007 then it would be an unregulated agreement subject to normal contract law.

 

 

 

Hi Josie B,

thanks for your reply.

 

But I think you are mistaken about the limit removal taking effect in 2007.

The changes that come to apply from April 6 2007 related to;

1) New definition of “individual”

2)Abolition of automatic unenforceability

3)Financial Ombudsman Service (“FOS”)

4)Unfair relationships

 

see here: Update on Consumer Credit Act

 

The next key implementation date is due to be 6 April 2008, when the following provisions are likely to come into effect:

Removal of £25,000 limit

I was hoping to make this a general thread for easy reference, but if you like, please take a look at the thread I recentLY started. It has a copy of just such an agreement

 

here:http://www.consumeractiongroup.co.uk/forum/mbna/178525-toto-mbna.html

Edited January 18, 2009 by toto003

[Josie8]

check again & removal of s.127(3-5) implementation date 6th April 2007 & the removal of £25,000 limit in April 2008 does not apply with regard to the unenforceability of agreements pre 6th April 2007 - maximum is £25k.

 

Different issue if its unfair relationship etc...............

[toto003]

check again & removal of s.127(3-5) implementation date 6th April 2007 & the removal of £25,000 limit in April 2008 does not apply with regard to the unenforceability of agreements pre 6th April 2007 - maximum is £25k.

 

Different issue if its unfair relationship etc...............

 

 

 

I have checked again Josie, and read thoroughly.

 

I am not sure I understand what your are saying.

 

is it your opinion that agreements that are stated to be regulated by the Consumer Credit Act 1974, but over the 25k limit [Pre April 2008 of course] are enforceable ? or the limit has no bearing?

[toto003]

[bump]

 

I know there are more urgent cases. But if someone could please give me their opinion on the agreement I have on file (see link at the bottom of post#5.

 

 

 

Even though the agreement states that it is regulated by the CCA 1974, because the amount is over £25,000 - does that automatically make it an unregulated agreement ?

 

My circumstances are pretty dire, I would be extremely grateful for any thoughts on this matter, as I haven't been able to find any threads covering this specific issue.

 

thanks

 

toto

[toto003]

[Another Bump]

 

Hi Again Everyone.

 

I am really desperate to clear this matter up, as it might help avoid a personal bankruptcy.

 

I have read very carefully through the excellent thread by Steven4064 here:

http://www.consumeractiongroup.co.uk/forum/general-debt-issues/162851-consumer-credit-agreements.html?highlight=toto

 

It seems the only thing not covered and explained is where the "credit limit" stated on the original agreement falls outside the limit specified by the CCA 1974 [This has changed over time, and the limit was removed in April 2008]

 

Josie8 (Although I am sure was trying to be helpful) has given conflicting answers in previous posts in this thread.

 

But in the only other thread I can find (a loan that went over the amount) here: http://www.consumeractiongroup.co.uk/forum/natwest-bank/178148-natwest-loan-cca-whats.html?highlight=nowt

 

The consensus was that the agreement is unenforceable. (@ Josie8 - I would be grateful if you could take a look at my thread in the MBNA section and clarify. - I was hoping the results of this thread in the Legal Issues section could be used as a general guide for agreements over 25k)

 

I recently sent a CCA Request, and received a copy of the original agreement. - it is in post #3 of my MBNA thread.

 

See Here:

http://www.consumeractiongroup.co.uk/forum/mbna/178525-toto-mbna.html

 

It would be really extremely helpful to me (and I hope others) if someone experienced (PT? Steve? BRW? x20 ? anyone?) could also offer an opinion.

 

Thanks.

 

Toto

[barclayhunter]

Could someone please clarify my understanding that agreements over 25k post April 2007 are unenforceable but the 25K limit for individuals was removed after April 2008?

 

Or does the CCA 2006 mean that only agreements over 25K after April 2008 are regulated?

 

Regards,

 

BH.

[Josie8]

Could someone please clarify my understanding that agreements over 25k post April 2007 are unenforceable but the 25K limit for individuals was removed after April 2008?

 

Or does the CCA 2006 mean that only agreements over 25K after April 2008 are regulated?

 

Regards,

 

BH.

 

 

Agreements pre 6th April 2007 max limit £25,000 UNLESS creditor entered into a regulated agreement with you for a higher amount or limit was increased to a higher amount in which case it is still regulated by CCA 1974.

 

£25,000 limit removed for all agreements post 7th April 2007 but no more irredemaibly unenforceable only unenforceable at the discretion of the court.

[creditcardmug]

My understanding is and always has been that contracts above 25k, are outside the scope of the CCA, i have not so far seen or heard anything to the contrary

[toto003]

My understanding is and always has been that contracts above 25k, are outside the scope of the CCA, i have not so far seen or heard anything to the contrary

 

My initial feeling is to agree with you creditcardmug.

 

But what does one do when a credit arrangement is made that the creditor "claims" is regulated by CCA 1974 - yet is over the limit. - clearly there is something amiss.

 

There are 2 examples on this site, one of which is mine (I have posted links to them above)

[toto003]

Agreements pre 6th April 2007 max limit £25,000 UNLESS creditor entered into a regulated agreement with you for a higher amount or limit was increased to a higher amount in which case it is still regulated by CCA 1974.

 

£25,000 limit removed for all agreements post 7th April 2007 but no more irredemaibly unenforceable only unenforceable at the discretion of the court.

 

 

The initial Limit of the Consumer Credit Act 1974 was £5,000

 

"...as from 20th May 1985 the limits will be £15,000"

Ref: http://hansard.millbanksystems.com/lords/1983/dec/16/consumer-credit-increase-of-monetary

On the 1st of May 1998 it was raised from £15,000 to £25,000.

Ref: Statutory Instrument 1998 No. 996

 

In April 2008, The 25,000 limit [ and I stress NOT April 2007 as Josie8 asserts ] was removed for personal lending. “However, business lending up to £25,000 will continue to be regulated to protect the most vulnerable business borrowers who do not have access to main stream lenders.”

Ref: Consumer Credit Act 2006 - BERR

 

 

I believe Josie8 is getting confused with the repeal of parts of the CCA that came into effect in April 2007 amendment(s) regarding issues of automatic unenforceability.

 

(xi) Enforcing Credit Agreements (Implementation date: 6 April 2007)

Section 127 of the 1974 Act restricts the court's discretion to enforce an agreement that does not contain all the prescribed terms or has not been signed by the borrower or where the appropriate cancellation statements and notices have not been given. As a result relatively minor technical breaches of the rules can result in unenforceability. However, by virtue of the Act, the court will have the power to determine in its discretion whether agreements are enforceable regardless of the breach.

Ref: http://www.mcgrigors.com/pdfdocs/Consumer%20Credit%20Act%202006.pdf

 

However, this still leaves my original question(s) unanswered.

 

Let it be assumed for all of the following questions - that the lender claims the agreement is regulated by CCA 1974

 

1. For a business loan above £25,000 at any time.

2. For any personal Credit Agreement Earlier than May 2008 for over £25,000

3. For any personal Credit Agreement Earlier than May 1998 for over £15,000

 

In my opinion these questions are not just matter of an agreement being improperly executed. Those limits were/are in place to define what falls inside the law for a credit agreement.

 

It is my contention (I still have to find case law and/or evidence to back this up) that any agreement that falls outside of those limits isn't unenforceable, but wholly invalid.

 

Unforunately, not having read law in this area, my opinion is just that. An opinion, one which I have no concrete basis to back it up.

Edited February 8, 2009 by toto003

[toto003]

173.—(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 if, and to the extent that, it is inconsistent 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.

Ok Legal Eagles, how about this for a question.

 

If the paper-work of an agreement "claims" to be regulated by the CCA 1974 yet contains a term that is inconsistent with the act. [For example states a limit that takes it outside of the Act]

 

If it is not a regulated agreement - then this makes it a "prospective regulated agreement" - (why else would it state that it is regulated ???!!)

 

As the amount [over 25k there making it unregulated] is inconsistent with a provision for the protection of the debtor. That term is void.

 

ipso facto : the term stating the limit is void - therefore does not constitute a prescribed term.

 

FURTHER.

 

If this is confirmed using a S.77-79 request; (i.e. in response the creditor states that it is a regulated agreement.

 

172.—(1) A statement by a creditor or owner is binding on him if given under—

section 77(1),

section 78(1),

section 79(1),

section 97(1),

The statement by the creditor that it is a regulated agreement is binding on him.

 

Comments please.

[creditcardmug]

Think this is one for pt...keep bumping till he sees it

[petebeds]

subscribing as i'm fighting one of these atm!

[Bodecia]

Hi can anyone help with this question

I signed on the 27/02/2008 for a secured loan (a top up) which took the loan over £25,000.At the time I was not informed on signing that it would be unregulated.The paperwork clearly states in the heading it is regulated by the Consumer Credit Act 2007.

I have been looking into the implications of this as I was not given the cooling off period and told by the loan company they didn't have to as its unregulated.I feel :

1. They should have made me aware at the time ...Its a large company and i'm sure they would have been aware of the change in law that took place in

April....2008

2 They should have given me different paperwork to sign.

I feel very misled on this.I'm waiting for a reply from the companies legal department.

Does anyone know if its regulated because the previous two loans had been below £25,000.Each one was re written.

Any help or advice would be very much appreciated

[toto003]

Hi can anyone help with this question

I signed on the 27/02/2008 for a secured loan (a top up) which took the loan over £25,000.At the time I was not informed on signing that it would be unregulated.The paperwork clearly states in the heading it is regulated by the Consumer Credit Act 2007.

I have been looking into the implications of this as I was not given the cooling off period and told by the loan company they didn't have to as its unregulated.I feel :

1. They should have made me aware at the time ...Its a large company and i'm sure they would have been aware of the change in law that took place in

April....2008

2 They should have given me different paperwork to sign.

I feel very misled on this.I'm waiting for a reply from the companies legal department.

Does anyone know if its regulated because the previous two loans had been below £25,000.Each one was re written.

Any help or advice would be very much appreciated

 

Sorry I havent updated this thread. I have collected a lot of paperwork on this, but was holding off until some cases have gone through to confirm this.

 

My conclusion is that if your agreement is for an unregulated amount, but is executed on regulated paperwork - then the agreement is probably unregulated.

 

HOWEVER. - By executing the agreement on that paper it becomes "contractually" regulated by the act - and therefore all of the consumer protections that are afforded to regulated agreements become part of the contract.

 

This is also the opinion of

Goode LAP

"Consumer sales law" (Author: Jon Keith Mcleod - he references a citation, but I have been able to find the case details - it may be unreported.)

Trading Standards.

 

It is the opinion of Trading Standards (but only a judge can really decide blah blah blah) - That should the company deny you any rights under the CCA 1974 and amendments - they would be in breach of contract, and you could pursue them for damages.

 

hope this helps

 

toto

Edited April 21, 2009 by toto003

[Bodecia]

Thanks for the quick reply.I spoke on phone briefly to a solicitor that specialises in contract law and she said could be a case of misrepresentation and i might be able to claim damages.

I am going to persue this as the implications of me being totally misled are that as im now having temporary payment difficulties and this was a secured loan they are threatening repossession of my home.

Therefore I should have been given the cooling off period.I have lots of other things im uhappy about with this company..data protection and wanting me to sign to rewrite a loan when i was unemployed! I pointed out this would be fraud.

Thanks again

[petebeds]

Thanks for the quick reply.I spoke on phone briefly to a solicitor that specialises in contract law and she said could be a case of misrepresentation and i might be able to claim damages.

I am going to persue this as the implications of me being totally misled are that as im now having temporary payment difficulties and this was a secured loan they are threatening repossession of my home.

Therefore I should have been given the cooling off period.I have lots of other things im uhappy about with this company..data protection and wanting me to sign to rewrite a loan when i was unemployed! I pointed out this would be fraud.

Thanks again

 

I am in Court on Thursday with a Loan Agreement over £25000 that was signed up on Regulated paperwork that Northern Rock are attempting to get a CCJ (and, according to what appears to be their MO, a Charging Order straight away) - I am fighting on the basis of fraudulent misrepresentation. See my thread at http://www.consumeractiongroup.co.uk/forum/legal-issues/153462-eversheds-nr-cc-claim-new-post.html

 

Can't say too much until we've been in front of the Judge on Thursday but will update that thread then.

Edited April 21, 2009 by petebeds
removed html code

[toto003]

Credit Agreements in Excess of £25,000

 

 

Firstly: It is the considered opinion of every expert I have spoken to that all credit card agreements (not charge cards), are regulated by the consumer credit act, irrespective of whether they have an initial limit above the £25,000 threshold or not.

 

Loan Agreements are a different matter.

 

**NB –

A) It is assumed that the agreement has been executed on Regulated paperwork - this means that it should have a heading saying something like "Credit Agreement Regulated by the Consumer Credit Act 1974" it will probably also have a a signature box with the following "This is a Credit Agreement Regulated by the Consumer Credit Act 1974, sign it only if you want to be legally bound by its terms"

 

B) To keep this post easy to follow, I have deliberately not taken in account multiple agreements or other circumstances that might bring the loan amount(s) under the threshold specified by the CCA.

All Credit Agreements entered into from the 6th April 2008 onwards are regulated by the Act unless they are exempt.

 

C)Certain types of Agreements are exempt from regulation by the Consumer Credit Act, but if they are executed on regulated documents, then points made below would apply.

 

 

 

1) Loan Agreements in excess of £25,000 that were entered into between the 1st of May 1998 and 5th of April. 2008.

 

2) Loan Agreements in excess of £25,000 that were entered into between the 7th of April 2007 and 5th of April 2008.

 

 

The important difference between loan agreements 1 and 2 are the repeal of s127 of the consumer credit act and relate to automatic unenforceability.

 

1) Loan Agreements in excess of £25,000 that were entered into between the 1st of May 1998 and 5th of April. 2008.

 

There are varying interpretations for the consequences of this scenario, here is one;

 

Opinion "(i)"

It is a regulated agreement becuase that is what they have entered into with you. The fact that it exceeds the £25,000 limit makes it unenforceable. It does not change to an unregulated agreement. They are stuck with having issued you with a Consumer regulated loan that doesn't comply. ...

 

Personally, I like this interpretation, The consumer has signed an agreement that claims to be regulated, but by stating a prescribed term (in this case the amount of credit) that falls outside of the limits specified by the act. ipso facto an unenforceable agreement.

 

Should the issue get to court, you would of course require a Judge to agree with that contention.

 

Opinion "(ii)"

Trading Standards Surrey;

"... as the agreement was signed in November 2004 with a credit limit in excess of £30,000.

 

When the agreement was executed, the 1974 Act provided that only agreements for a maximum of £25,000 were regulated.

I have formed the opinion that the agreement is probably not regulated. However, in my view, if the agreement was erroneously executed using regulated paperwork then all the protection offered by the Consumer Credit Act would be imported into the agreement as part of the contract. This is

because you entered the agreement based on the contract, which stated that the agreement was regulated and that you would benefit from the Act’s protection. Therefore, failure to allow you to exercise rights afforded to you by the Act may well mean that your credit provider is in breach

of contract and so liable for damages.

This is similar to the opinion of John Macleod PhD, LLB in his book "Consumer Sales Law" (ISBN: 978-1-85941-700-3) - this interpretation is based on someone taking out a car loan or hire purchase agreement

"If a dealer mistakenly completes a non-Act form in respect of a regulated agreement, it would seem safer to start again with CCA documentation.6 But it is another matter where an Act form is completed in respect of an unregulated agreement, as it is usually thought that the effect is that the financier has contracted to give his customer all the CCA protections 7"

footnotes;

#6 - Explains that the agreement would be unenforceable.

#7 gives a case citation: (1991) 46 CC 4/30

EDITED: LATER I have found the citation and it refers to Goode and/or the encyclopedia of consumer credit law - I have uploaded the opinion of Goode in a later post.

 

** Please see next post for agreements #2 and my conclusions.

Edited May 12, 2009 by toto003

[toto003]

2) Loan Agreements in excess of £25,000 that were entered into between the 7th of April 2007 and 5th of April 2008.

 

As already stated. The repeal of s127 of the consumer credit act means that the scenario put forward by Josie8 would no longer apply. The agreement would, however appear to be contractually regulated.

 

 

My conclusion: It would be very helpful to be able to read the details of the case cited by J. Macleod in his book, especially now that there is no longer a limit to amount of regulated agreements. - It is unlikely that there will be a lot of future cases that fall into this category.

 

outside of the sources already quoted, I consulted with several practicing experts in consumer law, and all of those I could extract an opinion from agreed that an agreement executed on regulated paperwork effectively becomes a regulated agreement - "contractually regulated" if you like

 

as for the incorrectly stated amount of credit interpretation, all advised that argument should not be used in isolation.

 

If anyone can help with finding the citation listed above, I would be most grateful.

 

toto

Edited April 25, 2009 by toto003

[Bodecia]

Thank you for the above advice.Now I'm wondering if I should have been given the cooling off period before I signed the agreement.

I was told bY the company they didn't have to as it wasn't regulated.

I have now found out from Compliance and the information on here it was regulated contractually.Also signed off premises.

Also all my paperwork afterwards went to the wrong address.So If they say they sent it (they didn't) I can prove all my paperwork went somewhere else.

I'm not sure what to do next.The compliance department is investigating.

The branch said unregulated..The head of compliance said it would have been regulated! Very misleading.I will wait to see what they come back with.

[steven4064]

I like option (i) as well. However, as you point out, it twould depend on a court ruling. Without that, it is anyone's guess. I think option (ii) is more persuasive.

 

One further point - the repeal of s127(3) only makes unenforceability non-automatic. An agreement falling foul of s127(3) may still be unenforceable but it would have to be taken on a case-by-case basis.

 

If a lender used a regulated form for an unregulated loan, I am not convinced that a court would decalre it unenforceable whenever it was signed but I think the argument that the court would insist that the lender gave the borrower all the protection of the1974 Act is compelling. I think that would just be simple contract law.