New tack on supplying CCA-Discussion

[angry cat]

by Kraken:

 

It is - under s78 etc it is that the creditor should supply the debtor with the key terms of the agreement. it is not to prove that the debtor is the actual debtor or that Mr Borrower actually signed the agreement in question.

 

"Key Terms" did not come into force until circa 2004::

 

PLC - Consumer credit law reforms: Challenges for the industry

[haggis1984]

subbing

[Kraken1]

Sorry, AC, I don;t get what you mean with that post, unless you have misunderstood me and thought that I was referring to some defined meaning of 'key terms' or similar. For clarity, with this phrase I was using it in contract terms, for eg terms, warranties, conditions etc; I simply meant 'the most important bits of how the agreement was to work'.

[angry cat]

My apologies Kraken, I must have misunderstood your meaning with the following:

 

by Kraken:

"It is - under s78 etc it is that the creditor should supply the debtor with the key terms of the agreement."

 

"Key Terms" as you are no doubt are aware, did not come into force until circa 2004.

 

Thus, prior to that time consumers were left in "the woods", so to speak.

 

AC

[angry cat]

Consumer Protection from Unfair Trading Regulations | OUT-LAW.COM by Pinsent Masons LLP

[diddydicky]

Sorry, AC, I don;t get what you mean with that post, unless you have misunderstood me and thought that I was referring to some defined meaning of 'key terms' or similar. For clarity, with this phrase I was using it in contract terms, for eg terms, warranties, conditions etc; I simply meant 'the most important bits of how the agreement was to work'.

 

 

I have to totally disagree- a TRUE copy of the original is EXACTLy what the creditor must supply- a "reconstruction" of any description cannot be a "true" copy nor can the author make a claim that it is, unless he is looking at the orginal when he makes the true copy.

 

any more than the policeman can say :- - even though i did not actually see it done- the deceased was shot by the accused- it is an identical killing to the one he was convicted for before so to the best of my knowledge it is true that the accused did it

 

 

Meaning of ‘true copy’*

 

In this context, the courts decided that a ‘true copy’ need not necessarily be an ‘exact copy,’ but it must be ‘so true that nobody reading it can by any possibility misunderstand it’ or be misled by it*(In re Hewer ex parte Kahen*(1882) LR 21 Ch.D. 871 at 875). The copy must contain ‘every material provision which is contained in the original’ (except that if the defect is made good by reading the document as a whole, the omission will not be fatal) (Court of Appeal in*Burchell v Thompson*[1920] 2 KB 80 at 98-99). Further, it is not sufficient for the copy merely ‘to state with complete accuracy in a summary form the effect of the stipulations contained in the original. It is not merely a document that is to state the true legal effect of the original; it is to be a copy of the original’ (per Atkin LJ in*Burchell*at 105).*

Edited September 20, 2009 by diddydicky

[diddydicky]

I side with pt on this - if you actually want a copy of the agreement, then s78 etc is not the right legislative tool to use. The Civil Procedure Rules are more appropriate.

 

I rather like the present arrangement,

 

if in response to a s77/79 request the lender sends a document and makes a statement or claim that this is a true copy of the original executed agreement (with the signatures left out), then this is the ONLY document he can use to bring a court action. The act says that statements made by the creditor in relation to s78 are binding.

 

If he produces another document to support a claim then clearly he made a false statement and the document sent in response to s78 was NOT a true copy therefore the action that the creditor has embarked upon to take the debtor to court is unlawful as he was prevented from this action by the CCA whilst he remains in default of his s78 obligations

 

IMO it just needs presenting to the court in the right way

[diddydicky]

Ah, for once we agree then DD!

 

AC

 

had to happen sometime AC:D

[vint1954]

Totally and emphatically disagree!

 

Sending a reconstructed agreement is not acceptable, especially if the creditor has nothing upon which to base their reconstruction; the inception terms & conditions.

 

One also, has to look at matters such as, when an agreement has been varied under section 85 and if that varied agreement was legally varied.

 

A creditor may attempt to state that they have complied with section 77/78 by sending current terms and/or a conjectured reconstruction but this will not get them very far unless, they have a true executed copy of the credit agreement and any other document that is referred to in it.

 

The OFT and TS have taken enforcement action under the CPUTR's but not 'any' against banks or DCA's...no surprises there, as they would not take action against the same offenders when a breach of s77/78 came under criminal law (criminal sanctions); said breach was de-criminalised.

 

The CPUTR's fall under Criminal Law, they carry both criminal and civil sanctions.

 

My view is that next year: 2010, the OFT will have to think again!

 

AC

From citizenb,

 

Section 7 of the above act states at

 

Paragraph (1) Where an agreement has been varied in accordance with section 82(1) of the Act

 

The relevant section of the act being:

 

82(1) Where, under a power contained in a regulated agreement, the creditor or owner varies the agreement,

 

The implication of this section of the act being that modification of the agreement can only take place where the prior version of the agreement makes provision for such an amendment within in its terms. Ultimately the authority to amend an agreement must refer back to such a provision with the executed agreement. In the absence of such a provision, or the inability to authenticate such a provision, subsequent, modified agreements are invalid.

 

Further more, Section 7 paragraph 1 of the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 goes on to say:

 

(1) Where an agreement has been vaired in accordance with section

82(1) of the Act, every copy of the executed agreement given to a debtor, hirer, or surety under any provision of the Act other than section 85(1) shall include either : ......

 

This paragraph clearly places a duty upon the creditor to provide a modified agreement (copy of) as an inclusion to a mandated provision of a copy of the executed agreement.

 

So, if they have amended, varied, altered the terms of the original agreement.. not only do they have to provide all the amendments.. but the original that gives them the power to do so.

[vint1954]

Quote:

It is a huge step between a copy of the executed ( signed ) agreement that omits signatures and dates, to the fiction that is a reconstitution.

I think this is the issue, it is assumed that a reconstituted agreement is a fiction, some less honourable creditors might do so, but it does not follow that a rebuilt agreement is automatically a fiction.

 

And there lies the problem. We all know that any agreement signed, was in all probability an application form with adverts and offers included. Very little space to contain personal details and prescribed terms.

 

Therefore the pages and pages of small text, supplied as a true copy, cannot be a true copy. It contains many times the amount of information that the origonal did. It is therefore wrong to pass this off as a true copy.

 

The creditors quite obviously are trying to bulk out any origonal agreement.

 

In addition if you look at post #59, it is clear that variations to an agreement ( as varried ) should not form part of a true copy.

[diddydicky]

From citizenb,

 

Section 7 of the above act states at

 

Paragraph (1) Where an agreement has been varied in accordance with section 82(1) of the Act

 

The relevant section of the act being:

 

82(1) Where, under a power contained in a regulated agreement, the creditor or owner varies the agreement,

 

The implication of this section of the act being that modification of the agreement can only take place where the prior version of the agreement makes provision for such an amendment within in its terms. Ultimately the authority to amend an agreement must refer back to such a provision with the executed agreement. In the absence of such a provision, or the inability to authenticate such a provision, subsequent, modified agreements are invalid.

 

Further more, Section 7 paragraph 1 of the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 goes on to say:

 

(1) Where an agreement has been vaired in accordance with section

82(1) of the Act, every copy of the executed agreement given to a debtor, hirer, or surety under any provision of the Act other than section 85(1) shall include either : ......

 

This paragraph clearly places a duty upon the creditor to provide a modified agreement (copy of) as an inclusion to a mandated provision of a copy of the executed agreement.

 

So, if they have amended, varied, altered the terms of the original agreement.. not only do they have to provide all the amendments.. but the original that gives them the power to do so.

 

spot on

[angry cat]

Also, the above has been confirmed to me in writing by Trading Standards.

 

AC

[vint1954]

So, pulling everything together:

You have requested a True copy of the executed credit agreement covering this account pursuant to the Consumer Credit Act 1974 section 78, a copy of this request is enclosed.

In reply you receive:

1. only a generic agreement

2. only terms and conditions.

3. an illegible copy.

4. an application form which does not contain the prescribed terms.

5. a reconstructed agreement.

1st Challenge:

The documents that you have supplied, cannot be linked to any agreement which you claim that I have signed. Without production of the said agreement I am unable to assess if I am indeed liable for any alleged debt to you, nor does it give me any chance to evaluate whether any original agreement was ‘properly executed’ as required by the Consumer Credit Act 1974.

 

Contrary to your assertion, You have not complied with the terms of CCA 1974 s78. The documents that you have supplied, do not comply with your duties to supply a “True Copy” of any agreement you claim to have been signed by me.

2nd Challenge:

 

As you will be further aware, an agreement is not executed, until signed by both parties, so the document that you have supplied, being a 1,2,3,4, or 5, cannot be a True Copy of an Executed Agreement.

3rd Challenge

 

You will be aware that the rules and regulations governing regulated credit agreements are in place to protect BOTH lender AND borrower. If the lender fails to follow the rules then the lender must accept the consequences. It is no different from any other branch of the law.

4th Challenge

 

What is a true copy:

 

In a recent responses to Letters from a growing number of MP’s, the enforcement department of the OFT responded in writing, where the text below was quoted, explaining what is required.

 

“The copy of the executed agreement need not be an exact copy but it must be a ‘true copy’ and not some reconstruction of what the original might have been and it must contain the same terms as the original. Where the terms have been varied as provided for within the agreement, the copy of the original agreement must be accompanied by a document setting out the current terms, as varied. Certain details may be omitted from the original agreement eg the signature but the debtor must be in no doubt as to the true nature of his obligations under the loan.

 

Should no original agreement be in existence it is very hard to say that the copy the creditor offers to the debtor is, in fact, a true copy as there would be no original with which to compare it. In our view the onus of proof would be on the creditor to show that the copy is a true one and where none existed he may have difficulty discharging this. Neither should creditors suggest that a consumer has signed a credit agreement where they are unable to provide evidence to support this — to do so is likely to be a misleading action under Regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) and would also constitute an unfair or improper business practice.”

 

The above details that any “True Copy” that is supplied by yourselves, must indeed be a copy of the executed ( signed ) agreement and not a reconstruction or fabrication. In short it must be copied from the original agreement, but can for obvious reasons, omit signatures and date of signature.

5th Challenge:

I also refer you to the information below.

A valid credit agreement must contain certain terms within the signature document (s.60(1)(2) CCA 1974). These core terms are the credit limit, repayment terms and the rate of interest (SI 1983/1553 (6 Signing of agreement) which states that the prescribed terms must be within the signature document. (Column 2 schedule 6). s.61(1)(a) states the agreement must contain all the prescribed terms and be signed by both the debtor and on behalf of the creditor.

S61 of the consumer credit act 1974.

 

 

s61(a) CCA - Signing of agreement:

(1) A regulated agreement is not properly executed unless—

(a) a document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or on behalf of the creditor or owner, and

(b) the document embodies all the terms of the agreement, other than implied terms, and

© the document is, when presented or sent to the debtor or hirer for signature, in such a state that all its terms are readily legible.

Further, s.127(3) CCA 1974 makes the account unenforceable if it is not in the proper form and content or improperly executed.

6th Challenge:

In Wilson and another v Hurstanger Ltd (2007) it was stated “In my judgment the objective of Schedule 6 is to ensure that, as an inflexible condition of enforceability, certain basic minimum terms are included which the parties … and/or the court can identify within the four corners of the agreement. Those minimum provisions combined with the requirement under s.61 that all the terms should be in a single document, and backed up by the provisions of section 127(3), ensure that these core terms are expressly set out in the agreement itself: they cannot be orally agreed; they cannot be found in another document; they cannot be implied; and above all they cannot be in the slightest mis-stated. As a matter of policy, the lender is denied any room for manoeuvre in respect of them. On the other hand, they are basic provisions, and the only question for the court is whether they are, on a true construction, included in the agreement”.

7th Challenge:

 

s127(3) Consumer Credit Act 1974:

 

(3) The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer.

8th Challenge:

Section 7 of the Consumer Credit Act states at:

 

Paragraph (1) Where an agreement has been varied in accordance with section 82(1) of the Act

 

The relevant section of the act being:

 

82(1) Where, under a power contained in a regulated agreement, the creditor or owner varies the agreement,

 

The implication of this section of the act being that modification of the agreement can only take place where the prior version of the agreement makes provision for such an amendment within in its terms. Ultimately the authority to amend an agreement must refer back to such a provision with the executed agreement. In the absence of such a provision, or the inability to authenticate such a provision, subsequent, modified agreements are invalid.

 

Further more, Section 7 paragraph 1 of the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 goes on to say:

 

(1) Where an agreement has been varied in accordance with section

82(1) of the Act, every copy of the executed agreement given to a debtor, hirer, or surety under any provision of the Act other than section 85(1) shall include either : ......

 

This paragraph clearly places a duty upon the creditor to provide a modified agreement (copy of) as an inclusion to a mandated provision of a copy of the executed agreement.

 

So, if You have amended, varied, altered the terms of the original agreement.. not only do they you to provide all the amendments.. but the original that gives you the authority to do so.

9th Challenge:

 

Referring to the Consumer Law book by Professor John Keith Mcleod , barrister and professor of law, 2002 Edition, this edition deals with agreements of this age.

To clarify concerning 61(a) of the CCA 1974:

 

This section clearly requires that a regulated agreement including a credit token agreement must comply with the following requirements;

 

1. it must be in the prescribed form as to the Agreement Regulations.

 

2. On the SAME side as the signatures, the document itself must contain the terms prescribed in the agreement regulations (reg 6(1)): the credit limit, the rate of interest and a term stating how the financial obligations of the debtor is discharged and these must be stated together as a whole that will ensure that the larger list is included in the actual agreement rather than any document referred to in it.

The regulation makes it clear that the abscence of these terms takes an agreement outside the dispensing power of the court.

 

To explain what S61(b) means in this context:

 

The document embodies all the terms of the agreement, other than the implied terms.

 

This section requires that the regulated agreement contains or refers to all the express terms of the agreement ( NOT THE PRESCRIBED TERMS!!) the T&C's.

 

And further:

 

This is called the required terms and it is these terms (and NOT the PRESCRIBED TERMS) that are what is referred to on the NON-SIGNATURE side (the reverse). This is to COMPLY with S.189(4) 'embodies' the terms required by the Agreement regulations so that they must either be in the agreement OR in a document referred to in it.

 

 

So in summary, THE PRESCRIBED TERMS MUST BE ON THE SAME SIDE AS THE SIGNATURES. If the agreement refers to anything 'overleaf' then it is referring to basic T&C's.

10th Challenge:

The need for prescribed terms to be contained in the credit agreement is confirmed by the Author of the CCA1974 act, I quote ““As the draftsman of the Consumer Credit Act 1974 I would like to thank Dr Richard Lawson for his interesting and well-argued article (30 August 2003) on Wilson v First County Trust Ltd [2003] UKHL 40, [2003] 4 All ER 97.

 

 

Dr Lawson may be interested to know that I included the provision in question (section 127(3)) entirely on my own initiative. It seemed right to me that if the creditor company couldn’t be bothered to ensure that all the prescribed particulars were accurately included in the credit agreement it deserved to find it unenforceable, and that the court should not have power to relieve it from this penalty.

 

Nobody queried this, and it went through Parliament without debate. I’m glad the House of Lords has now vindicated my reasoning and confirmed that nobody’s human rights were infringed.” - 167 Justice of the Peace (2003) 773.”

Minimum prescribed terms on signature side of agreement.

At the very least, an Agreement must contain the following within the signature document (on the same side) to be enforceable, even in court (see agreement Regulations 61(1)):

 

1. A credit limit or a statement as to how this will be determined.

2. An APR.

3. A schedule of repayments.

 

These are the prescribed terms as required by the Act and subsequent Regulations. There are also many other things, which are called required terms, that should be within the 4 corners of an agreement. These include but are not limited to:

 

1. Details of default charges.

2. Statements of protection for customers.

3. Cancellation rights

 

Lawful dispute

 

While The account remains in Lawful dispute, the relevant main points of the Law and OFT regulations while the account is in this state and the Original creditor remains in default are:

• They may not ask for payment against this account.
  
• You are not obliged to offer any payment against this account.
  
• They cannot register any data or information with a third party such as a credit reference agency.
  
• 
  
• (To register information with a credit reference agency, They must have written consent from the customer to collate and share such information. This consent is given in the form of a signed credit agreement, so until they produce such an agreement, They may not do this.
  The requirement for consent to share data is a clear requirement of the Data Protection Act 1998. any such attempts to share your data without consent should be met with a complaint to the Information Commissioners Office)
  
• They cannot take any enforcement action, including registering Defaults.
  
• They cannot pass the account on to a third party for collection.
  
• You cannot sell the account.
  

A Quote from the OFT MACKENZIE HALL PDF document:

“REQUIREMENTS IMPOSED BY THE OFT REQUIREMENTS RELATING TO: MACKENZIE HALL LIMITED

 

A debt is considered as in dispute where:

 

A request under section 77 or 78 of the Consumer Credit Act 1974 has not been complied with, and this prevents the agreement being enforced without the permission of the court”

 

I suggest that the above reference to ss.77 and 78 of the CCA 1974 is a very strong endorsement of the rights of consumers to be provided with true copies of Regulated agreements.

Statement for follow up:

In addition, as you have sent the above mentioned documents in response to my requests under Section 78 (1) of the Consumer Credit Act 1974, then this statement by you is now binding on you as per section 172 of the Act.

 

Section 172 states:

172 Statements by creditor or owner to be binding

 

(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), section 107(1)©, section 108(1)©, or section 109(1)©.

 

This means that the documents you have sent are the only documents you may now rely on in any attempt at enforcing this alleged debt in the future.

I maintain that this alleged debt is completely unenforceable under Section 127 of the CCA 1974. The CCA 1974 is clear on what agreements must contain in order to be enforceable, even in court. For full details I refer you to the excellent guidance from the Office of Fair Trading.

Further text by diddydicky

”if in response to a s77/79 request the lender sends a document and makes a statement or claim that this is a true copy of the original executed agreement (with the signatures left out), then this is the ONLY document he can use to bring a court action. The act says that statements made by the creditor in relation to s78 are binding.

 

If he produces another document to support a claim then clearly he made a false statement and the document sent in response to s78 was NOT a true copy therefore the action that the creditor has embarked upon to take the debtor to court is unlawful as he was prevented from this action by the CCA whilst he remains in default of his s78 obligations

 

IMO it just needs presenting to the court in the right way”

Section 127 was repealed in the Consumer Credit Act 2006 but this is not retrospective and applies only to agreements signed after 6th April 2007.

For information on this, you can see the 2006 Act here:

 

http://www.opsi.gov.uk/ACTS/acts2006/20060014.htm

 

I refer you particularly to the Transitional Provisions outlined in Schedule 3, which confirm that the repeal of Section 127 is NOT retrospective.

 

OFT Guidance

Below is the OFT response to s78 requests. Text version kindly supplied by BRW:

 

THE CONSUMER CREDIT ACT 1974 - Sections 77 and 78

 

Summary

On request and when accompanied by £1, a consumer has the right to:

 

• a copy of their executed agreement

• any other document referred to in it

• a statement showing

 

- the total sum paid under the agreement by the debtor

 

- the total sum which has become payable under the agreement by the debtor but remains unpaid, and the various amounts comprised in that total sum, with the date when each became due, and

 

- the total sum which is to become payable under the agreement by the debtor, and the various amounts comprised in that total sum, with the date, or mode of determining the date, when each becomes due. If the creditor is unable to give this information, he can state instead how the dates and amounts fall to be ascertained.

 

The copy of the executed agreement need not be an exact copy but it must be a ‘true copy’ and not some reconstruction of what the original might have been and it must contain the same terms as the original. Where the terms have been varied as provided for within the agreement, the copy of the original agreement must be accompanied by a document setting out the current terms, as varied. (This is probably the best argument for sight of the original agreement ) Certain details may be omitted from the original agreement eg the signature but the debtor must be in no doubt as to the true nature of his obligations under the loan.

 

Should no original agreement be in existence it is very hard to say that the copy the creditor offers to the debtor is, in fact, a true copy as there would be no original with which to compare it. In our view the onus of proof would be on the creditor to show that the copy is a true one and where none existed he may have difficulty discharging this. Neither should creditors suggest that a consumer has signed a credit agreement where they are unable to provide evidence to support this — to do so is likely to be a misleading action under Regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) and would also constitute an unfair or improper business practice.

 

In our view a debt collector who has bought the debt is the ‘creditor’ and as such takes on the liabilities of section 77.

 

Under section 77(4), if the creditor is unable to provide this information, he is not entitled to enforce the debt while he remains in default (Decriminalised from 26 May 2008 on the coming into force of the CPRs).

 

Legal Argument

 

A copy of the executed agreement

 

Under the prescribed condition, section 77 of the Act requires the debtor to ‘...give the debtor a copy of the executed agreement (if any)....‘. The ‘if any’ most naturally refers to the exception for agreements older than 1985.

 

Where a creditor receives a request to supply a copy of the executed agreement, the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 (‘1983 regs’) apply. Regulation 3(1) sets out the basic position that ‘every copy of an executed agreement... shall be a true copy’.

 

Regulation 3(2) goes on to concede that there may be omitted from this true copy various information such as details which are not required to be in the agreement by law: the signature box, signature (it should be noted that sub-ss 3-5 of section 127 do not apply to agreements entered into after 1 April 2007.A Court may then, for example, enforce unsigned agreements if it considers it is just to do so.) and date of signature. In our view the effect of Regulation 3(2) is that the creditor is only obliged to send out a generic copy of the agreement the debtor has signed up to. The creditor is not obliged to make an actual photocopy of the agreement.

 

However, the copy does have to be a ‘true copy’. This is a technical term, which has been discussed in a number of cases, mostly relating to bills of sale and the need to register a ‘true copy’ of the bill with the High Court. These cases come from the days before typewriters, when copies were made by hand. The consequences of filing a copy which was not a true copy were severe, since the bill would then be void and the creditor deprived of his security.

 

Meaning of ‘true copy’

 

In this context, the courts decided that a ‘true copy’ need not necessarily be an ‘exact copy,’ but it must be ‘so true that nobody reading it can by any possibility misunderstand it’ or be misled by it (In re Hewer ex parte Kahen (1882) LR 21 Ch.D. 871 at 875). The copy must contain ‘every material provision which is contained in the original’ (except that if the defect is made good by reading the document as a whole, the omission will not be fatal) (Court of Appeal in Burchell v Thompson [1920] 2 KB 80 at 98-99). Further, it is not sufficient for the copy merely ‘to state with complete accuracy in a summary form the effect of the stipulations contained in the original. It is not merely a document that is to state the true legal effect of the original; it is to be a copy of the original’ (per Atkin LJ in Burchell at 105).

 

Hewer, ex parte Kahen - the filed copy of the bill omitted the precise day of the month on which payment was to be made. The court held this was trivial, and no debtor would be misled by it.

 

Sharp v McHenry (1888 )LR 38 Ch.D. 427- the copy contained blanks which were not in the original. The court decided that the blanks were unimportant, since the omitted words were not required for the original bill to be valid.

Burchell v Thompson [1920] 2 KB 80 - the copy failed to include the words ‘per annum’ after the interest rate of 55%. The reader of the copy would have to guess whether the interest was per annum, per month or something else but as one could sensibly assume, correctly, that it was per annum it was a true copy.

Commercial Credit Company of Canada Ltd v Fuiton [1923] AC 798 - suggested further that where there are a raft of smaller differences in a bill of exchange copy, this could prevent it being a true copy. However where the differences were such as to make the copy contract actually different to the original, the copy will not be true. Lord Sumner, speaking of the man who may wish to refer to the copy, concluded that ‘the Act promises him ... a true copy, not a puzzle. He is to inspect it, not to recover the original by a process of conjectural emendation’ (at 807).

 

Terms and Conditions

 

Regulation 7(1) of the 1983 Regs requires that a requested copy of an agreement which has been unilaterally varied under section 82(1) of the Act, shall be accompanied either by the latest notice of variation or a copy of the terms and conditions as varied. Regulation 7(2) extends the principle to copies of varied securities supplied either to the consumer or the surety.

 

Debt collectors as creditors

 

A consumer credit debt can be assigned in two ways: in law under the Law of Property Act 1925 or in equity but in practice we need to be concerned only with statutory assignments.

 

For a debt to be assigned in law, there are three conditions:

 

• the assignment must be absolute.

 

• the assignor must make the assignment in writing.

 

• express notice of the assignment must be given in writing to the debtor (see section 136 of the Law of Property Act 1925).

 

The reason the debt is assigned is immaterial. For instance, books of loans may be sold on to be collected as an asset rather than as a discounted debt.

 

In some instances, the debt collector may have purchased a debt but not have the relevant agreement. Whilst, in general, ‘liabilities’ cannot be assigned there must be a question mark over whether ‘duties’ are the same. This is important since there is a rule, expressed in Tito v Waddell (No 2) [1977] Ch 106 at 289 to 302, that where a benefit is conditional upon some burden, the assignee must also take the burden. An example is where the contractor has the right to mine on condition that they pay compensation to those disrupted by the mining. If they assign their right to mine, the assignee takes this right subject to the duty to pay compensation.

 

Therefore, there is a strong argument that under the Act, the right to payment is never absolute. It is always subject to duties (many of which are imposed under the Act). For instance, the right to enforce the credit agreement at all is subject to the duty to comply with section 77 or 78. This duty is not a ‘liability’ as such under the credit agreement but is a condition of the right to repayment.

 

There has been a suggestion that debt collectors can avoid complying with section 77 and 78 by claiming that the agreement is no longer `live’ in some way as it has been ‘terminated’ based on section 103 of the Act. This talks of a ‘trader’ who was the creditor under a regulated agreement, implying that ‘trader’ is no longer a creditor once an agreement is ended. Section 103, however, deals with where the customer no longer owes any money at all and therefore it is correct to say that he is no longer a debtor and the trader is no longer his creditor. Where money is still owed, section 103 would not apply, since the consumer would not be entitled to a termination statement.

 

The first issue on when the debt collector becomes the creditor is relatively simple. Section 189(1) of the Act defines ‘creditor’ as ‘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.’

 

Where the debt collector is not acting as the creditor’s agent, or otherwise on his behalf, the only legal basis he can have for demanding payment from the debtor is if the creditor’s rights and duties have been assigned to him. Therefore we can be reasonably confident that a debt collector who has bought the debt is the ‘creditor’.

 

Unpalatable though section 77 and 78 may be for some creditors, if the debt collector is unable to prove the debt, they should be more careful about the debts they buy. They cannot complain that the sections are somehow unfair as it is in the Act and so must be complied with. It is up to them to ensure they purchase and maintain sufficient records to be able to prove the debt and comply with the other requirements of the Act.

 

Misleading statements to debtors

 

Sections 77 and 78 refer to supplying a copy of the ‘executed’ agreement within 12 working days of receiving a written request from the debtor. Failure to do so makes the agreement unenforceable against the debtor until a copy is provided. In addition, if the default continues for a period of 1 month the creditor is in breach of the Act.

 

Execution involves signing the agreement. If no agreement has been executed, it is impossible to supply a true copy of the agreement. Should a creditor supply a copy agreement, even though the debtor has never signed any agreement with that creditor, no indication should be given that it is a true copy or a copy of an executed agreement. To do so may contravene Regulation 5 of the CPRs and be an unfair or improper business practice.

 

The consequence of the debtor not having signed a credit agreement with the creditor is that the agreement is unenforceable except where the court orders that enforcement may take place. Where the agreement was made before 6th April 2007 the court is not able to make such an order unless the agreement was signed by the debtor.

 

Therefore it is misleading to state, when complying with a section 77 or 78 request, that the debtor has signed or would have signed (or similar) the enclosed agreement where the debtor has not done so. From 26 May 2008 such a statement will be a breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Regulation 5 of the CPRs states that a commercial practice is a misleading action if it contains false information in relation to the main characteristics of the product (amongst other matters) and is likely therefore to cause the average consumer to take a transactional decision he would not have taken otherwise. The product in question is the credit agreement and the main characteristics include the ‘execution of the product’ (Regulation 5(5)(d) of the CPRs).

 

Telling a consumer that he signed such an agreement is also a misleading statement about his rights and the risks he might face as covered by Regulation 5(4)(k) of the CPRs. It is our view that it is likely that a consumer will take a transactional decision to make a payment under the credit agreement or to refrain from exercising his rights under the agreement as a result of being misled about whether he signed it.

 

Breach of Regulation 5 of the CPRs is a criminal offence under Regulation 9 and can also be enforced under Part 8 of the Enterprise Act 2002. Under section 218A of the Enterprise Act, where an application for an Enforcement Order is made the court may require the Respondent ‘to provide evidence of the accuracy of any factual claim’ (such as a claim that a debtor has signed a credit agreement).

 

In addition, it should be noted that threats to take action that cannot be taken is listed as one of the factors that will be considered in assessing aggressive practices in Regulation 7(2) of the CPRs.

 

May 2008

 

Susan Edwards

Head of Credit Investigations and Enforcement, Office of Fair Trading

Application forms.

An application form is considered a pre contract document and as such, should not be relied on as an agreement by a creditor.

(could use some corroborating data here )

Agreement Headings.

 

An agreement needs to be clearly headed.

This is a Credit Card, Loan etc, regulated by the Consumer credit act 1974.

Executed agreements

An agreement is not executed, unless signed and dated by both parties.

63.

Duty to supply copy of executed agreement.

—(1) If the unexecuted agreement is presented personally to the debtor or hirer for his signature, and on the occasion when he signs it the document becomes an executed agreement, a copy of the executed agreement, and of any other document referred to in it, must be there and then delivered to him.

 

(2) A copy of the executed agreement, and of any other document referred to in it, must be given to the debtor or hirer within the seven days following the making of the agreement unless— (a)subsection (1) applies, or(b)the unexecuted agreement was sent to the debtor or hirer for his signature and, on the occasion of his signing it, the document became an executed agreement.

(a)subsection (1) applies, or(b)the unexecuted agreement was sent to the debtor or hirer for his signature and, on the occasion of his signing it, the document became an executed agreement.(a)subsection (1) applies, or(b)the unexecuted agreement was sent to the debtor or hirer for his signature and, on the occasion of his signing it, the document became an executed agreement.(a)subsection (1) applies, or(b)the unexecuted agreement was sent to the debtor or hirer for his signature and, on the occasion of his signing it, the document became an executed agreement.

(3) In the case of a cancellable agreement, a copy under subsection (2) must be sent by post.

(4) In the case of a credit-token agreement, a copy under subsection (2) need not be given within the seven days following the making of the agreement if it is given before or at the time when the credit-token is given to the debtor.

(5) A regulated agreement is not properly executed if the requirements of this section are not observed.

Who if any of us have received a copy of a signed agreement, at the time the CC was taken out.

 

Links

 

 

For cancellable agreements, you can find the guidance at:

http://www.oft.gov.uk/shared_oft/bus...dit/oft018.pdf

 

For non-cancellable agreements, you can find the guidance at:

http://www.oft.gov.uk/shared_oft/bus...dit/oft019.pdf

 

For guidance on Debt Collection here:

http://www.oft.gov.uk/shared_oft/bus...dit/oft664.pdf

CCA 1974

http://www.johnantell.co.uk/CCA1974.htm

 

Section 127 was repealed in the Consumer Credit Act 2006 but this is not retrospective and applies only to agreements signed after 6th April 2007.

For information on this, you can see the 2006 Act here:

 

http://www.opsi.gov.uk/ACTS/acts2006/20060014.htm

 

I refer you particularly to the Transitional Provisions outlined in Schedule 3, which confirm that the repeal of Section 127 is NOT retrospective.

 

 

Good CPUTR 2008 link, provided by Angry Cat

 

http://www.out-law.com/page-9050

Further comment, additions or thougts very mmuch appreciated.

Vint

[vint1954]

deleted

Edited September 21, 2009 by vint1954
duplicate

[Undercover-Elsa]

Brilliant work Vint

Elsa xx

[vint1954]

Well thanks and credit to all that have chipped in, on this and other threads.

[haggis1984]

I love it!

 

I have a question though. Ive been looking for ages for the source of this guidance:

 

While The account remains in Lawful dispute, the relevant main points of the Law and OFT regulations while the account is in this state and the Original creditor remains in default are:

• They may not ask for payment against this account.
  
• You are not obliged to offer any payment against this account.
  
• They cannot register any data or information with a third party such as a credit reference agency.
  
• (To register information with a credit reference agency, They must have written consent from the customer to collate and share such information. This consent is given in the form of a signed credit agreement, so until they produce such an agreement, They may not do this.
  The requirement for consent to share data is a clear requirement of the Data Protection Act 1998. any such attempts to share your data without consent should be met with a complaint to the Information Commissioners Office)
  
• They cannot take any enforcement action, including registering Defaults.
  
• They cannot pass the account on to a third party for collection.
  
• You cannot sell the account.
  

Can someone point me in the direction of the legislation or guidance this info originated from?

[vint1954]

I think this comes from the unable to enforce comment in the CCA1974.

 

However I have not seen these terms in black and white.

[haggis1984]

I think this comes from the unable to enforce comment in the CCA1974.

 

However I have not seen these terms in black and white.

 

I looked through the CCA1974 but couldnt see this guidance their. I even spoke directly to the OFT. The only document theyve published with any reference to disputes is the Debt Collection Guidance (Unfair Business Practices) PDF. In this there is only 1 sentence stating that its unfair for a creditor to ignore a legitimate dispute.

 

All I can find in CCA1974 is that 'if a default continues he is to unable enfore the agreement.' (s77-78

 

Would be very interested to know where this guidance came from as its mentioned very regulary but ive been completely unable to find where it originated.

Edited September 22, 2009 by haggis1984

[vint1954]

Not sure where it comes from. Looking at other sites today, it seems common advice though.

 

"Q. What if no credit agreement exists, or they just can't find it?

 

A. Then they cannot enforce it and no more payments need to be made.

 

 

Q. Sounds too good to be true?

 

A. Well, they can enforce again as soon as they provide you with a copy. They do not need permission from the Court to do this, as long as the agreement meets all of the requirements of the CCA 1974.

 

 

Q. I see, but if they don't provide it, will they still ask me for payment?

 

A. It's important to realise that the debt being unenforceable does not make it disappear, they just cannot get a judge to make an enforcement order. They can still write to you and ask you to pay. This can be ignored. If they begin to harass you, then see this thread here.

 

 

Q. Does this apply to all agreements made at any time?

 

A. The CCA 1974 was amended in 2006. Section 127 (3) to (5) was removed from the Act, and this is the section that makes agreements completely unenforceable. This repeal of Section 127 came into force on the 6th April 2007. It is not retrospective, meaning that if your agreement is dated prior to this, then this all still applies to you. If you take on credit after this date, then you cannot rely on this action. A judge can then enforce even in the absence of a regulated agreement."

[Undercover-Elsa]

Hi Vint & Haggis,

I have a question though. Ive been looking for ages for the source of this guidance:

 

 

While The account remains in Lawful dispute, the relevant main points of the Law and OFT regulations while the account is in this state and the Original creditor remains in default are:

• They may not ask for payment against this account.
  
• You are not obliged to offer any payment against this account.
  
• They cannot register any data or information with a third party such as a credit reference agency.
  
• (To register information with a credit reference agency, They must have written consent from the customer to collate and share such information. This consent is given in the form of a signed credit agreement, so until they produce such an agreement, They may not do this.
  The requirement for consent to share data is a clear requirement of the Data Protection Act 1998. any such attempts to share your data without consent should be met with a complaint to the Information Commissioners Office)
  
• They cannot take any enforcement action, including registering Defaults.
  
• They cannot pass the account on to a third party for collection.
  
• You cannot sell the account.
  

Can someone point me in the direction of the legislation or guidance this info originated from?

 

This question has been driving me nuts!

I've mooched around t'internet this morning and tbh I don't think it's written in its entirety anywhere..it just seems to be a clarification of the main points of the effects of being "unable to enforce the agreement" collected from various sources.

In reality, I believe that simple statement from the CCA covers it all, but banks and DCA's being what they are, they need a little Xtra help in understanding the implications!

 

Nonetheless, here's a few more snippets with refs which support it:

 

OFT Debt Guidance

2.6

h. ignoring and/or disregarding claims that debts have been settled or are disputed and continuing to make unjustified demands for payment

k. not ceasing collection activity whilst investigating a reasonably queried or disputed debt.

 

2.12 Examples of unfair practices are:

f. visiting or threatening to visit debtors without prior agreement when the

debt is deadlocked or disputed1

 

Banking Code 2008

13.6 We may give information to credit reference agencies

about the personal debts you owe us if:

• you have fallen behind with your payments;

• the amount owed is not being disputed; and

• you have not made proposals we are satisfied with

for repaying your debt, following our formal demand

 

Hope this might proof useful,

Elsa x

Edited September 22, 2009 by Undercover-Elsa
clarification

[the_shadow]

Nonetheless, here's a few more snippets with refs which support it:

 

OFT Debt Guidance

2.6

h. ignoring and/or disregarding claims that debts have been settled or are disputed and continuing to make unjustified demands for payment

k. not ceasing collection activity whilst investigating a reasonably queried or disputed debt.

 

2.12 Examples of unfair practices are:

f. visiting or threatening to visit debtors without prior agreement when the

debt is deadlocked or disputed1

 

Unfortunately the OFT debt collection guidelines are only to be used when an account has been defaulted according to the OFT website. So its not a one size fits all.

 

Banking Code 2008

13.6 We may give information to credit reference agencies

about the personal debts you owe us if:

• you have fallen behind with your payments;

• the amount owed is not being disputed; and

• you have not made proposals we are satisfied with

for repaying your debt, following our formal demand

 

This is the better angle I feel as under CPUTR a code of practice is legally binding. Trouble is nobody seems keen to enforce.

 

S.

[Undercover-Elsa]

Good points Shadow, thanks for that.

On the bright (?) side I suppose most CCA requests are made as a response to or following being defaulted..ie at the DCA harrassment stage.

[the_shadow]

Good points Shadow, thanks for that.

On the bright (?) side I suppose most CCA requests are made as a response to or following being defaulted..ie at the DCA harrassment stage.

 

Yep, absolutely

 

S.

[greendollar]

Can anyone tell me if is valid,its on a credit agreement for Swinton car insurance under MISCELLANEOUS;

 

"This agreement will become binding when it is signed by you.By making your first monthly payment,(or by arranging with a third party for it to be paid),you are confirming that you have signed this agreement and that you intend it to be fully binding and enforceable by us.

 

Have another thread under Swinton car insurance and could do with some advice ,thanks