Closing accounts and clearing files - can anyone advise?

[lexis200]

Ok, I'll try and explain this as best I can - bear with me:) I've asked around the site briefly but not explained in full, so hopefully this'll be a better explanation.

 

So... you have a normal credit history with normal payments, nothing missed etc and all paid up to date. You pay your account up to date then close the account. All is good, your contract with creditor x is done and there is no longer a relationship between the two of you. As such, once that relationship is finished, you can contact the CRA and ask them to remove the account from your file. No worries, no hassles.

 

Now, your credit file is a mess due to the problems you've had, but you manage to get enough money together to pay your creditors off completely and close the accounts for good. This time your file is littered with defaults and arrears markers. However, as far as I can see it, the end result is still the same in that you have ended your contract and no longer have a relationship with creditor x. In this circumstance, you ask them to remove all reference to creditor x but you are told this is not possible for another 6 years.

 

Why?

 

The 6 years (unless it's for a CCJ etc) is an industry standard as opposed to a legal requirement. Once you paid up and ended the contract, you also ended your consent for data to be shared. If there is no legal relationship between the two parties (which there wouldn't be once the account was paid up and closed), then they can't possibly still claim a right to show details of that account as that would mean you allowed them to process your data in perpetuity - not a clause I've ever seen on a credit agreement.

 

This is the problem I'm trying to work out at the moment. Is what I've written above correct in facts or have I got something massively wrong?

 

I'm not worried about whether they'll (the CRA's) bluster that they have to keep the details on as we all know that's rubbish, what I want to know is do they have any legal right to keep your details once you have completely closed an account? If so, can someone please point me to where it does say that a CRA may keep your details on file when you no longer have a relationship with the other party so that I can see exactly what's what?

 

I'm also not entering any other problems into the equation - I'm not proposing arguing that an agreement is duff or that they co*ked up on a DN, I'm just saying you have an account, you pay off that account, you close that account. Simples.

 

Any thoughts on this would be really welcome:)

 

Thanks:)

[Jamesx81x]

They remain on your file as it forms part of your credit history for future lenders to see.

 

When accounts are closed it will mark the month it is satisfied. From then on data on that account will no longer be processed. It just sits on your file to form a history.

[lexis200]

Thanks James

 

Again though, that's simply an industry standard. I don't know of any legal reason that the information must stay on your file, this is what I want to find out. If I demand they remove it as there is no longer an association, what can they say?

 

If you look on MSE Martin recommends removing old closed accounts so that you don't have a ton sitting on your file - evidently some is good, many not so good. If this is the case then must be able to ask to have them removed once they're closed as they are no longer relevant.

 

There is also afaik no legal requirement for having a credit history, this is just something that the banks want to see (want, not must) if they lend you money, so the only reason for that history is to placate a lender. If I don't have a relationship with my creditor any more then I still can't see a legal reason that would enable them to keep the details there.

 

This is from Experian

 

An active account is a credit account that is still open. We keep a record of active accounts until they are settled, and then for six years afterwards. For example, if a credit account was settled on 25th July 2004 it will be removed from our records on 25th July 2010.

 

Note the wording - there is nothing saying 'we have to keep a record for 6 years' or 'by law we must...', it's simply 'we keep'.

 

I know a lot of this is old ground, but I do wonder if it would be any easier to remove an entry due to the account being closed as opposed to arguing that a default was unlawfully placed - it can't be any harder!

[DebtSucks]

I see your point and find the subject very interesting.

 

Although you are correct there is no legal requirement for the information to be held for 6 years; Sadly it would seem that it is not illegal for them to do so either.

 

Therefore any request for you to have data removed from your file based purely on the fact you want it removed is likely to fall on death ears (or blind eyes if done so in writing).

 

One approach I have considered relates to terms and conditions when signing a CCA whereby you give permission to the lender to share personal information with the CRA's:

 

1. If the borrower has defaulted on an agreement and the lender has wrote to them stating that the agreement has been terminated. Then that should include any terms that the lender has agreed to. Therefore meaning the permission once granted should be null and void along with the rest of the agreement.

 

2. Legally surely any permission granted by the lender should be able to be revoked by them once an agreement has ended. For instance I might grant permission for work to be carried out on any land belonging to me. However I have every right later on to revoke that permission if the work force outstays its welcome by dammaging my property or I simply change my mind. It's my land / the lender's information. What is the difference?

 

Good luck.

Edited April 23, 2010 by DebtSucks
Corrections

[lexis200]

Thanks DebtSucks

 

You're right, it's not so much that it's not a legal requirement, more that it's not illegal for them to do it. Nicely put.

 

Your points regarding the CCA not allowing them permission in perpetuity are one that I and a few others have also pondered, but as it was relating to when they've chucked on a dodgy default as opposed to a genuinely closed account I thought someone may know something different.

 

I'll keep looking I think and see if I can find anything of use for removing entries on a closed (rather than disputed) account. It can't hurt anyway:)

[DebtSucks]

I can't see the difference personally between a disputed or closed account. In either event the original CCA is at an end or terminated. In both situations thus making all terms and conditions of such an agreement null and void.

 

A similar situation: I personally was taken to court by a former employer over a clause in my (then terminated contract) stating that I could not work for another company in the same trade as theirs for 6 months after leaving their employment.

 

I argued to the court that since my contract is no longer current after being terminated that I am no longer held by its conditions. The judge then ruled in my favour stating the only way my previous employer could stop me working for a rival company for 6 whole months, would be to keep me employed and have me in effect payed to stay at home for the duration of those 6 months.

[lexis200]

No, there isn't a difference if you're talking to a normal person, but when it comes to CRA's I think it helps if things aren't muddied in any way - to them a closed account will be more clear cut than a disputed one.

 

I'm not saying it would make things a breeze, but it may possibly ease things along more smoothly (she said in her optimistic moment:rolleyes:)

[Jamesx81x]

I totally agree that 6 years is too long but as said it has been agreed as industry standard and is backed by the ICO who are the government agency in charge of Data Protection.

 

This makes it extremely difficult to argue against as the CRA's have the ICO's permission to hold the data for 6 years so as it stands they are doing nothing wrong in doing so. Thats what they refer to when they say 'it is our right'. This is the right given to them by the ICO.

 

On the plus side keeping satisfied accounts that show good payment history can be a good thing as it shows you have maintained accounts correctly. Its just the others that are the pain.

 

To my knowledge i dont think there is any successful court action on these grounds(correct me if i am wrong) therefore unfortunately until the government change the legislation and add it to the Data Protection Act it will remain 6 years.

 

Personally i have found looking into the actual agreements and ensuring the eligibility of default notices to be the more easier route and that is not straight forward. That been said i have so far had 3 defaults removed due to banks not following the correct procedure.

[lexis200]

Hi again James

 

Can I ask how long it took you to get your defaults removed, and did you have to go the court route or did they accept they had mucked them up?

 

Thanks,

 

Lexis

[Jamesx81x]

No just wrote to them quoting the data protection act and guidance on defaults etc.

 

When a bank issues a default they have to send you a notice of intention accompanied by a legible default notice giving you a minimum of 28 days. If either of these are missing then the default is worthless and has to be removed.

 

These are the banks own words and also backed up by the ICO.

 

What defaults do you have?

[lexis200]

Wow, I honestly don't think I've seen anyone who's actually got them to take them off simply on the strength of a single letter!

 

I have a few defaults which the banks kindly gave me the moment I asked for payment plans. I don't have a single one that is correct. All either give 14 days max with no time for service or have terminated before the remedy date. Some are a mix of the two. This is combined with many not have an enforceable agreement (or not having one at all).

 

The thing is there are tons of people on here in exactly the same boat, but I've not seen a CRA remove a default marker without a big struggle before; not that I can remember anyway.

 

Very interesting...

[Jamesx81x]

Thats why its best to go through the company itself i always feel it is a waste of time going through the CRA's.

 

Are any of your defaults for unauthorised overdrafts and which banks are they?

[lexis200]

No, they're all cards, and most of them:rolleyes:

[Jamesx81x]

If they have terminated the account before the end of the default date then it is an illegal recission of contract.

 

If you have the default notices still and the dates they closed the accounts then you have them.

[lexis200]

You'd think wouldn't you, but oddly they are very reluctant to accept that despite me informing them many times and even being nice enough to send them the default regulations which proved my points.

 

I have been arguing the toss with most of them for about 18 months so far, and they won't even admit they were wrong let alone remove them. Like I said, I think what you've done is very much the minority (wish it wasn't!) as from what I can see most people have the experience that I do:(

[Jamesx81x]

Have you put each complaint through the FOS?

 

If it is clear they have made an illegal recission of contract then i cant see what their defence is.

 

Like you said it was fairly straight forward for me but with what you have said i would take them to court one by one. Start with the clear cut ones such as the recission of contract first. Think of the court fee as an investment:)

[Jamesx81x]

Do you have the terms and conditions of any of the cards?