Consumer Credit Act examples

[Robertxc]

I was wading through the Consumer Credit Act 1974 (220 pages!!), and noticed at the end that they give a number of examples of different situations, and how the Act interprets them. A couple were quite interesting....:

 

EXAMPLE 17

 

 

Facts. The manager of the C Bank agrees orally with D (an individual) to open a current account in D’s name. Nothing is said about overdraft facilities. After maintaining the account in credit for some weeks, D draws a cheque in favour of E for an amount exceeding D’s credit balance by £20. E presents the cheque and the Bank pay it.

 

Analysis. In drawing the cheque D, by implication, requests the Bank to grant him an overdraft of £20 on its usual terms as to interest and other charges. In deciding to honour the cheque, the Bank by implication accepts the offer. This constitutes a regulated small consumer credit agreement for unrestricted-use, fixed-sum credit. It is a debtor-creditor agreement, and falls within section 74(1)(b) if covered by a determination under section 74(3). (Compare Example 18.)

 

EXAMPLE 18

 

 

Facts. F (an individual) has had a current account with the G Bank for many years. Although usually in credit, the account has been allowed by the Bank to become overdrawn from time to time. The maximum such overdraft has been is about £1,000. No explicit agreement has ever been made about overdraft facilities. Now, with a credit balance of £500, F draws a cheque for £1,300.

 

Analysis. It might well be held that the agreement with F (express or implied) under which the Bank operate his account includes an implied term giving him the right to overdraft facilities up to say £1,000. If so, the agreement is a regulated consumer credit agreement for unrestricted-use, running-account credit. It is a debtor-creditor agreement, and falls within section 74(1)(b) if covered by a direction under section 74(3). It is also a multiple agreement, part of which (i.e. the part not dealing with the overdraft), as referred to in section 18(1)(a), falls within a category of agreement not mentioned in this Act. (Compare Example 17.)

[dave]

Are these examples of breaches of the act?

[lee6370]

So am i right in saying that this blows a big hole in the 'It's a service' defence.

 

Example 17: "requests the Bank to grant him an overdraft of £20 on its usual terms as to interest and other charges. In deciding to honour the cheque, the Bank by implication accepts the offer."

 

In allowing us to go overdrawn they are accepting our requests, so unless they charge £30 to set up or increase an overdraft they are in beach of the act by imposing a £30 'penalty charge'

[Robertxc]

Are these examples of breaches of the act?

No, these are various scenarios, and how they are interpreted by the Act. TRhere are about 22 examples at the end of the Act.

 

It seems to confirm something I've been banging on about for a long time, which is that there is no such thing as an 'unauthorised overdraft'. If the bank makes the payment, then by definition it must be authorised.

[lee6370]

Any idea where i can view a copy of the act?

 

Can't seem to find it.

[lee6370]

Other than buying a paper copy at a cost of £16.95 does anyone know where i can get or view an electronic version?

[lee6370]

Wasn't easy to find but for anyone thats interested here is an electroinc copy of the Consumer Credit Act 1974.

 

http://www.passprotect.studio400.me.uk/Consumer_Credit_Act_1974.PDF

[Tinkerbelle]

Wasn't easy to find but for anyone thats interested here is an electroinc copy of the Consumer Credit Act 1974.

 

http://www.passprotect.studio400.me.uk/Consumer_Credit_Act_1974.PDF

 

You are an absolute star!!! Do you know how long I have been searching for that wretched thing