Unenforceable Agreement Case Details

[Nightmare4banks]

Hi all!

 

A POSSIBLE USEFUL PRECEDENT CASE ...............

 

The case of

 

LONDON NORTH SECURITIES LTD. V MR.& MRS. MEADOWS & ANOTHER

 

(COURT OF APPEAL [2005] EWCA Civ 956)

 

 

The details of this case can be found on the following website:

 

 

London North Securities Ltd v Mr

 

 

Also,there is a link to details of the full case.

 

 

Basically,any agreement becomes unenforceable when say a lump sum PPI amount is added BEFORE calculating interest and thus in breach of Section 127(3) of

the Consumer Credit Act 1974.

[callumsgran]

So am i right in thinking finance providers are not allowed to charge interest on ppi? god people have been subject to this for years by the banks etc! very interesting methinks!!! mmmmmm

[Guest NATTIE]

Cilt-might be worth a read of the full case notes

[lickthewallfatboy]

you need to dig further about this-non status loans have special provisions and protections not afforded to mainsteam loans......

[BaldyBaldwin]

sorry if i am highjacking this thread, but i am a bit interesred in this, but not sure if this affects me.

after send DPA reqest and recieving statements from halifax re. two loans i had with them ,i noticed that there was a sum for insurance added to the loans.

i was quite suprised by this as i was never informed that any insurance was required and what it was for. it also seems quite expensive at 955 against a 7,000 loan plus the fact that i had been paying interst on it for 3 years. i have not started a claim against halifax as yet because i have 4 claims in process at the moment.

Do you think any of the above posts are relavent to what i have just stated?

[lickthewallfatboy]

can't be sure,but IMHO if you ae sold insurance you should at least have been informed beforehand,and given the opportunity not to take it up.

 

If it was a compulsory condition of the loan being accepted,I would have thought that thay may have been an unfair condition placed upon you.IMHO of course...

[BaldyBaldwin]

i am 100% certain that there was no mention of insurance at the time i took out the loan. do you think the best way forward would be to request a signed copy of the original agrrement and see what that shows up?

[Bookworm]

Yes.

[Guest NATTIE]

back to the thread. from my original reading of the case it seems that what the company that sold the mortagage stated was that the insurance was the only way that the mortgage was going to go through and that no information as to what the insurance covered and the exclusion were which is in part why the judgement was successful. The company did not give the option of no insurance even though that was what was asked of in the first place. Will finish off reading the full judgement later on.

[Nightmare4banks]

Hi all!

 

From what I understand and conclude here:

 

The loan MUST be regulated under the Consumer Credit Act 1974 i.e.

 

1.either an unsecured loan upto to £25,000 - based on current limits.

 

or

 

2.A secured loan upto to £25,000 - based on current limits.

 

The difference between regulated and unregulated is that there IS a cooling off period - to mainly to protect consumers from pushy salespeople.It is a very serious matter for the lending company/broker that is placing the finance to contact the consumer during the cooling off period - I think it is 16 days(2 weeks plus 1 day each way for 1st class post) but not visa versa.

 

Regarding this specific case,the regulated loan threshold was £10,000 at the time.

 

3.Another issue is that the type of loan i.e. non-status,adverse,clean credit etc is of no bearing.It is how the agreement is drafted that counts.

 

4.In comparision to the other case that was allowed in favour of the lending company was it seems mainly because the arrears seemed very modest.Thus there was no exploitation of the consumer.I have yet to conclude any further distinctive differences.I will read through the cases again.There maybe be more to come!

 

 

5.Finally to add on further,a mortgage say for £50,000 would not be covered under the Consumer Credit Act 1974.However,this may not necessarily mean it would be enforceable if say arrears letters charges etc were added on.My guess would be that it would come under the Unfair Terms Legislation.Personally,I think any unlawful charges i.e.arrears letters,"iffy Payment Protection Plan amount" would be added up and removed from the balance owed plus any interest that may have been charged then the amount owed would be calculated again in order to reach to the correct figure.Could be complicated if it streched over a few years but seems to be the correct method to obtain accurate figures.

 

Anyway,another interesting thing for us all to investigate more!

 

At the moment,this is my further 2p's worth!

[nathal]

open and direct retail add interest to the insurance and alot at that.

[Guest NATTIE]

please look at the link and read the case and full judgement, original loan required £2000, total cost including arrears on two previous mortgages and insurance premium that was not wanted £5750. Interest he got charged 34%.

It is worth a read of the judgement and why it won and it refers to another case similar that didn't win.

[Glenn UK]

Dear All

 

Ive been reading the link re the case with the contract which included insurance and other charges

 

London North Securities Ltd v Mr

 

If i read it correctly part of the reason for the contract being ruled unenforceable was to do with the fact the insurance was added as part of the total amount of loan rather than as a seperate item.

 

There was also a question about the consumer believing that the insurance was required as part of the contract rather than as an option, therefore they were forced to take it to get the loan.

 

Have i understood the case correctly?

 

If I have got it wrong does this mean that including the insurance in the final amount of the loan would render a contract unenforceable?

 

Cheers

 

Glenn

[jamesbond]

hi glen...i have looked at this and the basis of this case was that the loan was not correctly laid out, as in the breakdown of the loan was not correctly worded.

as in the insurance was not entered as an individual part of the agreement it was all placed in one item which in turn left questions as to if the credit for the ppi was part o the credit or not. basically if you take out a loan which inludes ppi, it must clearly be added on after the intial loan sum and itemised as such. this was a pretty tricky example to use anyway due to the time lapse and lack of defence available and also the interest rates were quite high.

ppi seems to be a very grey area where loans are concerned prior to 2005 where amendments were enforced regarding its sale. i think there will be a lot of issues and problems arising from ppis that were sold prior to this amendment, and i for one am studying an issue of a loan with i beleive missale of ppi insurance occurring.

007

[zootscoot]

Hi Glenn

 

 

If i read it correctly part of the reason for the contract being ruled unenforceable was to do with the fact the insurance was added as part of the total amount of loan rather than as a seperate item.

 

Yes it should have been added to total charge for credit rather than included in credit amount.

 

There was also a question about the consumer believing that the insurance was required as part of the contract rather than as an option, therefore they were forced to take it to get the loan.

 

Yes if there was an option to take out the credit it could be included as part of the credit rather than as total charge for credit.

 

If I have got it wrong does this mean that including the insurance in the final amount of the loan would render a contract unenforceable?

 

 

Only if the loan was conditional upon taking out the insurance.

 

Incidentally adding an admin charge to loan amountrather than charge for credit will also render contract unenforceable.

 

See:

 

House of Lords - Wilson and others v. Secretary of State for Trade and Industry (Appellant)

 

 

Hope this helps

 

Zoot

[Glenn UK]

Zoot

 

Thanks for coming back so quickly, youre a star.

 

So in the loan i have with egg, the agreement states the amount of the initial loan, then a seperatie item listed as ppi, followed by a total amount of the loan.

 

The original agreement i signed had the amount on, but i was never asked if i wanted the insurance and the thing i signed didnt give me an option to reject/confrim acceptance.

 

Bearing in mind you havent seen it if i am correct is this likley to make the loan unenforceble?

 

FWIW the loan has been short settled, if the agreement is not enforceable then it may have an impact on the action i will take against egg. Oh if its of any importance the agreement was taken out in 2003.

 

THanks

 

Glenn

[lickthewallfatboy]

I have checked my Marbles credit card statement-they add interest to the PPI!!

 

And Barclaycard add interest to my wife's accidental death cover payment!!

 

Are they in trouble?

[zootscoot]

Hi Glenn,

 

Its difficult to say. Also the case is unreliable as it was based on Consumer Credit (Total Charge for Credit) Regulations 1980, as they stood in April 1989 which I think have been superseded by new provisions.

I'll do some more digging later to see if I can find anything out.

[zootscoot]

Hi Lickthewall

 

If its credit card then its running account rather than a fixed sum so the issue of stating the correct figure in the actual original document does not arise.

 

Unfortunately adding interest to the PPI is not initself unlawful

 

Zoot

[lickthewallfatboy]

a very great pity zoot!!!

[zootscoot]

Indeed - we'd all be quids in otherwise:D

 

Its actually quite refreshing to see the banks acting lawfully tho eh? lol

[nikkiandmidgets]

I took a loan with associates\CITI in May 2003 which I have now paid off. It was to pay off an original loan with them, a loan with another company and give me some money as I was getting married for our honeymoon. I didnt want to take the insurance as it was high and my work are good to staff for accident/sickness/redundancy. I later took voluntary redundancy as my job was being outsourced and used this money to pay off the loan - would i be able to do anything about this seeing as I was told the only way they could offer me the loan was with the insurance which was very expensive? For info I signed the loan papers in their office and got the money that same day.

[zootscoot]

No the CCA does not apply to closed accounts

[BaldyBaldwin]

zootscoot

i have just this minute sent off 2 cca requests for the original agreements of 2 loans i had with the halifax that have been paid off, does your above post apply to them??

[zootscoot]

Hi Kevluff

 

to be more precise part iv of CCA only applies during the currency of accounts.This includes ss77 & 78 but not default notice requests.

 

Hope this helps

 

Zoot