Cancellation rights plus - Discussion

[vint1954]

Another point recently picked up on several thereds, is the lack of cancellation rights in credit agreements.

 

The following is for discussion as to whether the lack of the cancellation rights is enough to make an agreement unexecuted, unenforcable or????????.

 

I have highlighted some points in red. Those comments in blue, are inserted by me.

 

There is also a small thought at the bottom regarding changes to terms, wher the OC has no agreement. The difference between opening interest rates and latter rates could be huge, maybe enough to pay off any existing debt?

 

Data used is from CAB and legal website.

 

The UK's Distance Selling Regulations

 

This guide is based on UK law. It was last updated in October 2008.

Introduction

 

The Consumer Protection (Distance Selling) Regulations 2000 (the "Regulations") came into force in the UK on 31st October 2000.

The Regulations aim to protect consumers contracting at a distance from the supplier, where the consumer does not have the benefit of meeting face to face with the supplier and inspecting the goods or services offered for sale.

Essentially the Regulations provide consumers with a right to:

§ receive clear information about the supplier, the goods or services and the sale before deciding to buy;

§ confirmation of this information in writing;

§ a cooling off period of 7 working days in which to withdraw from the contract; and

§ protection from payment card fraud.

Regulated credit agreements

 

Most types of credit and hire agreements are regulated by the Consumer Credit Act 1974 which gives a borrower some important rights (see below). An agreement covered by the Act is called a regulated agreement. An agreement will be regulated if:

• the borrower is an individual, not a company; and
  
• it is not an exempt agreement
  

If you signed a credit agreement before 6 April 2008, it could only be a regulated agreement if it was for credit under a certain amount.

Consumer Credit Act 1974

 

If you enter into a credit agreement which is regulated under the Consumer Credit Act, you must be given a written copy of the agreement when you take out the loan. This must set out:

• what type of credit agreement it is, for example, credit sale, hire purchase or conditional sale. This confirms that the agreement must be headed correctly.
  
• the true cost of the credit, worked out according to a special formula (APR)
  
• the amount of each payment, when it is due to be paid, and how it is made up (loan, interest, administration charge)
  
• your cancellation rights and whether you can pay off the debt early (see under heading Paying the loan off early).
  

This obviously means that cancelation rights must be included within a regulated agreement.

Exempt agreements

 

Agreements which are exempt from the Consumer Credit Act include:

• agreements to hire gas, electricity or water meters
  
• trade agreements with short repayment periods, where the number of repayments is four or less (unless it is a hire purchase or conditional sale agreement)
  
• agreements where the whole of the credit for a period is repayable by a single payment, for example, charge cards, or milk bills. Hire purchase and conditional sale agreements are not exempt
  
• loans secured on land, for example, mortgages
  
• credit given at less than commercial rates of interest, for example loans from credit unions or an employer.
  

Cancelling a credit agreement

 

Cancelling before payments are made

 

Regulated credit agreements (see under heading Regulated credit agreements) may allow you to cancel the agreement if you want to change your mind. You have a ‘cooling off period’ in which you can change your mind. You can cancel the agreement if:-

• you signed it anywhere other than on the premises of the trader or creditor; and
  
• you discussed the credit face-to-face with the trader or creditor before you signed the agreement.
  

If you are entitled to cancel the agreement, you must be sent a cancellation notice within seven days of signing the agreement explaining that you have the right to cancel the agreement. A cancellation form will be enclosed with the notice and you can use this (or write a letter) to cancel the agreement. If you do want to cancel, the cancellation must be sent to the lender within five days of receiving the notice, preferably by recorded delivery. If the goods are bought from a mail order catalogue agent, the agreement may say that it can be cancelled within 14 days of the agreement being signed and no cancellation notice will be sent. If you cancel an agreement during the cooling off period, you must:-

• take reasonable care of the goods. This duty lasts for 21 days after cancellation
  
• hand the goods back to the supplier if they ask you in writing, either in advance or when they come to collect them. If you do not hand the goods over when requested in writing, and the request was made within 21 days of cancellation, you must take care of the goods until you hand deliver them or post them back at your own expense
  
• return any money advanced under the agreement
  
• pay for goods installed, for example, a conservatory, or a fitted kitchen or if they were supplied before the cancellation form was sent to meet an emergency.
  

The supplier:-

• if they want to collect the goods, must request this within 21 days of cancellation
  
• must return any goods given in part exchange (or give a cash equivalent) within ten days of serving the notice of cancellation
  
• must return any payments you have made, for example, deposits and instalments
  
• cannot ask for payment for perishable goods or goods ‘consumed by use’, for example, fuel or spare parts.
  

If you have made a pre-payment for goods or services which you are buying on credit (as a deposit or part-payment), you should get all of your money back when you cancel unless you arranged your own credit.

And moving on to another point

Varying the agreement

 

A lender may try to vary the agreement. The change must not be unreasonable. It can only be done if there is a term in the agreement allowing for variation, for example, because of a change in the interest rate, or if both sides to the agreement do not object.

If the lender wants to vary the agreement they must give you, the borrower, seven days’ notice before doing so. However, if the right to vary is part of the original agreement, the lender may simply announce the changes in the national press.

( Does his not mean that to vary interest rates, the OC must have a signed agreement. No signed agreement, then no term to alter. Origonal rates and conditions must stand?)

[42man]

My take on this is that....if the agreement doesn't contain notice of cancellation rights as prescribed in the Cancellations Notices and Copies of Documents Regs 1983, then it is unenforceable....

[postggj]

what about our friends in the sub prime car industry

 

signed on trade premisis so cant cancel

 

is that still valid that clause or has the oft done some thing about it by now like not force a person into ppi at point of sale, (2 weeks to decide)

[rubyredshoes]

My Egg agreement does not mention cancellation rights, but they also sent me a copy of generic terms and conditions that does mention cancellation rights - we have no way of knowing whether we ever received this extra document (and to be honest it looks pretty recent - you can tell by the design etc) at the start of the loan. I don't think there is any way of proving either way whether they sent this document or not. I think Egg sent this to cover their tracks quite frankly.

[angry cat]

You need to be looking at the Distance Marketing regs!

 

and:

Distance selling for financial services: explanation of the law

 

AC

[rubyredshoes]

Actually - have just noticed a reference number printed on the side of the terms and conditions EP/1686 01/09 mmmm!!

does this mean this document originated in Jan 09??? crafty and the reference number is in a different colour which means it won't show through on the scan.

[vint1954]

My take on this is that....if the agreement doesn't contain notice of cancellation rights as prescribed in the Cancellations Notices and Copies of Documents Regs 1983, then it is unenforceable....

hi 42man,

 

That was my take aswell. Most egg cc agreements are like this.

[vint1954]

what about our friends in the sub prime car industry

 

signed on trade premisis so cant cancel

 

is that still valid that clause or has the oft done some thing about it by now like not force a person into ppi at point of sale, (2 weeks to decide)

I think they are ok if you sign it on site or in a bank branch. The agreement is executed at that point, however reading through, they should then follow up with a copy signed agreement and cancellation rights in the post, within 7 days.

[vint1954]

My Egg agreement does not mention cancellation rights, but they also sent me a copy of generic terms and conditions that does mention cancellation rights - we have no way of knowing whether we ever received this extra document (and to be honest it looks pretty recent - you can tell by the design etc) at the start of the loan. I don't think there is any way of proving either way whether they sent this document or not. I think Egg sent this to cover their tracks quite frankly.

I am going to shorten your name a touch, so hi shoes, it was your egg agreement and an earlier one that prompted me to look at the cancelation rights.

 

Your agreement, not T&C's, should have cancellation rights on the signing documents, something like your right to cancel. You have a short period.........., then a ref to see clause xyz in the T&C's attached, but I am convinced from what I have read, that the CR's must be in the signing document.

[vint1954]

You need to be looking at the Distance Marketing regs!

 

and:

Distance selling for financial services: explanation of the law

 

AC

Hi AC,

 

Yes I did look at this website, although a different page and that seemed to have got one point wrong, saying that no cancelletion rights were required if the agreement was signed off premisses, obviously the reverse is true. This page seems to have it right.

 

Thanks

 

Vint

[vint1954]

Actually - have just noticed a reference number printed on the side of the terms and conditions EP/1686 01/09 mmmm!!

does this mean this document originated in Jan 09??? crafty and the reference number is in a different colour which means it won't show through on the scan.

Yes, those will be the current T&C's

[angry cat]

Vint, you need to take a look at the DMD & Distance Marketing Regulations.

 

Here is an interesting link:

Distance marketing of financial services | OUT-LAW.COM by Pinsent Masons LLP

 

AC

[vint1954]

Hi Ac,

 

yes some of my first post was taken from here. Am I missing something obvious?

 

It is also covered in CCA1974.

 

Vint

[angry cat]

My comments relate to internet applications.

[vint1954]

My comments relate to internet applications.

Ok, see what you mean.

[Deb T]

My egg card was prior to the 2000 distance selling regs so one assumes I am not covered by it and neither is my agreement....but there are no cancellation rights on the agreement anyway.

[Pinky69]

I will shortly be arguing in court that the fact that there is no original Terms and Conditions with an agreement negates the creditor's argument that current T&Cs can apply. There is nothing to say they can vary the terms.

[vint1954]

My egg card was prior to the 2000 distance selling regs so one assumes I am not covered by it and neither is my agreement....but there are no cancellation rights on the agreement anyway.

It should still have cancellation rights, if sold off of their premises or taken away and signed at home for arguments sake.

[vint1954]

I will shortly be arguing in court that the fact that there is no original Terms and Conditions with an agreement negates the creditor's argument that current T&Cs can apply. There is nothing to say they can vary the terms.

The other point to remember is that if they vary the agreement, they must send a copy of the ORIGINAL, with the new terms, showing that they can do this.

 

Is it s82?

[mystery1]

Consumer Credit (Agreements) Regulations 1983

 

4 Cancellable agreements to which

section 68(b) of the Act applies.

YOUR RIGHT TO CANCEL

You can cancel this agreement within FOURTEEN days

(starting the day after you signed it) by giving WRITTEN

notice to*.

If you intend to cancel, you should not use any goods you have

under the agreement and you should keep them safe. You can

wait for them to be collected and you do not need to hand

them over until you receive a written request for them. . . .

Notes:

*Creditor or agent to insert the name and address of person to

whom the notice may be given or an indication of the person

to whom a notice may be given with clear reference to the

place in the document embodying the agreement where his

name and address appear.

 

 

 

5 Cancellable agreements not

included in paragraphs [4 or 6].

 

 

 

6 Modifying agreements .......

 

 

 

CCA 1974

 

68 Cooling-off period

 

(b) if (by virtue of regulations made under section 64(4)) section 64(1)(b) does not apply, the end of the fourteenth day following the day on which he signed the unexecuted agreement.

 

 

 

 

 

 

 

 

I have an online loan with Lloydstsb (2006). I have no dates or signatures on my S77 requested copy. The right to cancel section reads "You have the right to cancel the agreement. This cancellation right will start on the day after you submit this agreement signed by you to us by clicking the "confirm" button below and lasts for 14 days. If you wish to cancel you must repay the total loan amount. Please send any notice to cancel to Lloyds Tsb personal loan centre, PO box 42, Peterlee, SR8 2YQ. This agreement will continue to apply if you don't cancel.

 

 

 

 

 

 

Now does anyone think that my agreement falls under section 4 as i think i've read too much to make my mind up.

 

If it does then it's unenforceable as the cancellation rights are not as prescribed etc etc.

 

Cheers

 

M1

[Sunshine54]

hi I'm preparing for a hearing next week and the solicitor for the claimant has said that 's64 of the 1974 Act doesn't apply s64 only applies where the agreement is cancellable pursuant to s67 of the 1974 Act

The loan application was handled over the telephone and the defendant was not subject to face to face persuasion therefor the agreement was not cancellable within the meaning of s67 of the 1974 act

 

so - question.

 

Is this correct and should I have quoted the Distance Marketing Regs or are they just blinding me with science?

many thanks in advance

regards

S

Edited November 1, 2009 by Sunshine54
oops yet another type

[angry cat]

YES!

 

Distance marketing of financial services: Regulations published | Pinsent Masons LLP

[Sunshine54]

hi AC

 

so I used the wrong reason for cancellation clause being required?

 

can I still argue the case but using the Distance Marketing regs then?

best regards

[angry cat]

Selling at a distance

 

Do you offer credit or insurance to your customers? Do you sell on-line or by telephone, fax or mail? If so, are you up to date with consumer credit legislation which may affect your business?

Rules governing the distance selling of goods and services came into force in 2000, but financial services and credit were excluded. Now, an EU Directive, The Distance Marketing of Consumer Financial Services Directive has been implemented in the UK by the Financial Services (Distance Marketing) Regulations 2004. Many financial services, such as banking, credit, insurance, personal pensions, investment or payment services, lend themselves to being sold over the internet, or by fax, telephone or through the mail, with cost and access benefits for consumers and business alike.

The Regulations deal mainly with pre-contract disclosure with individual consumers, and do not cover sales to sole traders, partnerships or unincorporated associations. Generally, the following must be disclosed to the consumer in all distance sale contracts for financial services, including consumer credit and insurance:

• The identity and the main business of the supplier, his geographical address and any other geographical address relevant to the consumer's relations with the supplier

• Where the consumer's dealings are with any professional other than the supplier (for example, a broker), the identity of that professional, the capacity in which he is acting with respect to the consumer, and his geographical address

• Where the supplier is registered in a trade or similar public register, the particulars of that register and his registration number or an equivalent means of identification in that register

• Where the supplier's activity is subject to an authorisation scheme, the particulars of the relevant supervisory authority.

• A description of the main characteristics of the financial service

• The total price to be paid by the consumer to the supplier for the financial service, including all related fees, charges and expenses, and all taxes paid via the supplier or, where an exact price cannot be indicated, the basis for the calculation of the price enabling the consumer to verify it.

• Any limitations of the period for which the information provided is valid

• The arrangements for payment and for performance

• Any specific additional cost for the consumer of using the means of distance communication, if such additional cost is charged

 

• Whether or not there is a right of cancellation and, where there is a right of cancellation, its duration and the conditions for exercising it, including information on the amount which the consumer may be required to pay as well as the consequences of not exercising that right

• The minimum duration of the distance contract in the case of financial services to be performed indefinitely or recurrently (such as revolving credit)

• Information on any rights the parties may have to terminate the distance contract early or unilaterally by virtue of the terms of the contract, including any penalties imposed by the contract in such cases

• Practical instructions for exercising the right to cancel indicating, among other things, the address to which the notice of cancellation should be sent and any relevant facsimile number or email address

• The EEA State or States whose laws are taken by the supplier as a basis for the establishment of relations with the consumer prior to the conclusion of the distance contract

• Any contractual clause on the law applicable to the distance contract or on the competent court

• Whether or not there is an out-of-court complaint and redress mechanism for the consumer and, if so, the methods for having access to it

• The existence of guarantee funds or other compensation arrangements.

The Regulations covering regulated consumer credit agreements came into force on 31st May 2005.

The Regulations also focus on the right of the consumer to withdraw from the contract. In general this right lasts for 14 days from the date that the contract was concluded for most contracts like credit and general insurance, but 30 days for life insurance and personal pensions. Customers have to be made aware that they have cancellation rights. The rules relating to cancellation came into force on 31st October 2004.

The full text of the Regulations can be found at: The Financial Services (Distance Marketing) Regulations 2004

Remember that failure to comply with the Regulations may render your distance contracts unenforceable - so your customers would not have to pay you!"

 

AC

[Sunshine54]

hi AC

 

many thanks for posting the detail (I couldn't get the link to work)

 

sorry for asking the same question but will I still be able to use this in my case when my defence actually refered to the CCA, not these regulations?

regards

S