Unregulated Car Finance HP Agreement - Massive Redemption Figure - Advice needed

[Naim]

Hi,

 

I have somehow got myself into a mess with a sub-prime car finance lender called PCF (Private & Commercial Finance Group). I have had a poor credit rating for a couple of years due to two CCJ's that have been present on my record.

 

Due to this, when looking for car finance this year I used a car finance broker to get me a HP agreement for £22k on a vehicle of which he selected PCF. After 3 months I had to buy another car due to major issues wth the current one. i asked for a redemption figure and everything was in order.

 

The next car I bought was also financed through them, this time on a 5 year HP agreement. Due to my circumstances the rate was high (20% APR) but I accepted that this was the best i was likely to get and agreed to it after asking the broker if there was possibilities to make overpayment's, no massive early redemption etc. It seemed just like the previous agreement I had, which had only charged my 1 months interest to get out of it early. I trade in my car, put £6k in cash down and take the HP for a further £26k.

 

Ok, so fast forward 6 months. The reason I mentioned the CCJ's was that I have been pursing the claimant for over two years to get them to agree to the judgments being set aside. Finally they agree and I ask the judge to make an order. The order comes through on the 20/0/12 in my favor. Set aside and case dismissed.

 

I speak to the broker and say look can we get off this high APR now that my credit score has been fixed? he says yes, no problem, just get a settlement figure and we can start looking at it.

 

I call PCF yesterday and ask for a settlement figure, they tell me that it's is £37,516.71 That's over £10,000 more than I borrowed.

 

I call the broker back immediately and he says don't worry there is a mistake and that he'll call them and sort it out. I get a phonecall back today saying, ''sorry! you signed an unregulated agreement and they are charging you 5 years interest''.

 

I am shocked, seriously just dumbfounded that this can happen? I know i am partly to blame here for not picking this up when i looked through the paperwork but it just seems illegal to be able to do this? Even If I keep the car, it's a depreciating asset so i'll be left with that £11.5k to pay on trade in??

 

Is there anything I can do? I feel like i've just got my life straight with the CCJ's and now this has smashed me in the face.

 

Any advice would be appreciated!

[Nagasis]

Why is the agreement unregulated? Was the vehicle for a business ?

The limit of 25k was removed in 2008

[Naim]

From what the broker has told me today he said that they are a commercial lender, primarily to businesses and that anything over £26k is unregulated?

 

From what you are saying this is no longer the case?

 

I've found the agreement (happy to post this here). The front page states that there is a deceleration for exemption relating to businesses (sections 16b and 189(1) and (2) Consumer Act 1974) which states various terms, however like an idiot i skimmed over that as it said ''For Businesses''

 

I've been through it over and over and there is no mention of early repayment penalties in any of the sections?

[Naim]

Ps.. The vehicle was for my personal use, nothing to do with a business

[Nagasis]

When you signed the agreement, were you or are you a sole trader or in business in any way?

It does appear that if the creditor primarily lends to businesses they are exempt from the new rules if over 25k. In order for the exemption to apply the agreement must contain a prescribed form of declaration signed by the creditor/hirer indicating that the credit or hire is for business purposes.

 

However this does question why you were given a business agreement when/if you are not in business.

 

There is an business exemption clause to the upper limit so its important that we understand whether you are classed as an individual or a business.

My understanding is that a business / sole trader etc can waive their rights of the upper limit.

 

http://www.addleshawgoddard.com/view.asp?content_id=2788&parent_id=2781

 

I think your post would be better placed in the motoring or debt forum so it can get more responses. I will ask the mods to have it moved.

Edited October 3, 2012 by Nagasis

[Naim]

Hi,

 

I am setup as a limited company however this is not in an way done through that business? I will post the front page letter and the credit agreement as it is addressed to me, at my home and the DD is coming out of my personal account.

 

Appreciate your help.

[Naim]

I can't post it up yet as I have less than 10 posts.. Apologies but i'm going to have to post some 'crap' to get the count up

[Naim]

Business Lending Exemption

 

If a credit or hire agreement exceeding £25,000 of credit is "wholly or predominantly" for the purpose of a business carried on by the creditor, that agreement will not be regulated by the Act.

 

So in regards to this I am not a business although it does say on the front of the agreement:

 

Declarations for exemption relating to businesses** (sections 16B and 189 (1) and (2) Consumer Credit Act 1974)

 

** References in this declaration to ''I/We'' are you, the Customer(s)

[Naim]

High Net Worth Exemption

 

Where the creditor/hirer is a natural person of "high net worth" the regulations under the Act will not apply. "High net worth" Individuals are defined as persons whose income after tax and national insurance is not less than £150,000 per year or as persons who have net assets of no less than £500,000 excluding their primary residence, any redundancy payments or any pension or other retirement benefit payments.

 

I do not fall into this category in regards to high net worth

[Naim]

So here is the credit agreement front page, there's nothing in there that says anything about early redemption penalties?

[Naim]

[Nagasis]

As your'e probably aware unregulated agreements don't offer early settlements so that's the reason it isn't shown on the agreement.

 

I'm inclined to say that you should not of signed this agreement as it wasn't to be used solely or primarily for a business and the agreement should be regulated.

 

My first port of call would be to start getting my info from the finance company and the broker.

Are they in possession of any information that may make them believe that the HP agreement was for a business.?

 

Once I had the information to hand I would be making formal complaints to both the finance company and the broker.

 

My points would be:

1) The HP agreement was for an individual and the goods/credit was not for a business whatsoever.

2) You provided no information that led them to believe it was for a business.

3) You were led to believe as the previous HP agreement from the same finance company was regulated the current one was also. Additionally the broker or finance company never informed you of such a major change.

4) As the HP agreement is for an individual as can be demonstrated by your personal details inc. home address the HP agreement is unenforceable as an unregulated agreement and should be a regulated agreement.

5) The agreement must be varied so it becomes regulated pursuant to s82 of consumer credit act.

[Naim]

Thank you, I'l get on it

[assisted blonde]

Hi, If you are set up as a Ltd company, does the agreement mention the Ltd co name anywhere? or did you tell this company that youuwere set up as a Ltd co. Your co does not have to be trading and payments can be made from a personal account to a debt owed by the ltd company.

[Naim]

Hi, If you are set up as a Ltd company, does the agreement mention the Ltd co name anywhere? or did you tell this company that youuwere set up as a Ltd co. Your co does not have to be trading and payments can be made from a personal account to a debt owed by the ltd company.

 

Hi, They would be aware that I was a company director as it would have gone through on the credit form in regards to employer. It doesn't mention the LTD company anywhere on the credit forms though? Just me and home address.

[citizenB]

Whilst this is not strictly a "legal issue", I have moved you to those forums, I think you might attract more experienced people to help with this.

 

[citizenB]

You will probably need to send Subject Access Requests to all those involved. It will cost you £10.00 for each company.

 

You can find draft letters in the CAG library and although the request actually demands all information.. if there is anything specific, perhaps you should identify it.

[Gaston Grimsdyke]

Sorry but you are stuck with it being an unregulated agreement because you have signed the declaration that the business exemption applies.

It doesn't matter whether you actually use the vehicle for business purposes or not,

but you have represented to PCF that it does so they have relied on it by putting the agreement onto unregulated form.

 

 

You can't therefore claim the agreement should have been regulated when you have signed the declaration to say it shouldn't.

 

 

I don't think you have anywhere to go on the interest rebate issue either.

Rather than see it as being penalised for redeeming early,

see it as not having the right to redeem early.

 

 

PCF expected to recover 5 years interest from you, which is their profit on the deal,

so if they let you redeem early and rebate the interest they are losing their profit on the deal.

 

 

The only way you can get full value out of this agreement is by keeping the car and carrying on,

as otherwise you pay exactly the same only you won't have the car.

 

 

Having said that, it is worth checking the terms and conditions to see if there is a right for you to terminate the agreement early.

[Naim]

Sorry but you are stuck with it being an unregulated agreement because you have signed the declaration that the business exemption applies. It doesn't matter whether you actually use the vehicle for business purposes or not, but you have represented to PCF that it does so they have relied on it by putting the agreement onto unregulated form. You can't therefore claim the agreement should have been regulated when you have signed the declaration to say it shouldn't. I don't think you have anywhere to go on the interest rebate issue either. Rather than see it as being penalised for redeeming early, see it as not having the right to redeem early. PCF expected to recover 5 years interest from you, which is their profit on the deal, so if they let you redeem early and rebate the interest they are losing their profit on the deal. The only way you can get full value out of this agreement is by keeping the car and carrying on, as otherwise you pay exactly the same only you won't have the car. Having said that, it is worth checking the terms and conditions to see if there is a right for you to terminate the agreement early.

 

A couple of questions if i may?

 

• I'm not a business so how is by signing a business exemption declaration make me into a business? I haven't declared to PCF that i am in any way using this for business purposes either?
• From 2008 the consumer credit act was amended so that all credit was regulated, is this correct? If so then how can this be legal?
• I have found out that the lender in question no longer hold a valid CCA license. Their company number remains unchanged but they have never held a CCA in the name of PCF Business Finance. The former company held one until 2007. Does this affect it in any way?
   
   
   
  

[Gaston Grimsdyke]

A couple of questions if i may?

 

• I'm not a business so how is by signing a business exemption declaration make me into a business? I haven't declared to PCF that i am in any way using this for business purposes either?
• From 2008 the consumer credit act was amended so that all credit was regulated, is this correct? If so then how can this be legal?
• I have found out that the lender in question no longer hold a valid CCA license. Their company number remains unchanged but they have never held a CCA in the name of PCF Business Finance. The former company held one until 2007. Does this affect it in any way?

 

But you have declared to PCF that you are using the vehicle for business purposes - read the declaration above your signature on the agreement. Of course this doesn't turn you into a business, but it does saddle you with the representation that you are.

 

The amendments to the CCA did not make all credit regulated; it removed the 25K ceiling but also allowed for two exemptions, being high net worth individual and business exemption. Your agreement is covered by the latter. By signing it, you have agreed to opt out from the CCA.

 

PCF Business Finance is just a trading style of Private and Commercial Finance Company Limited, which does hold a CCA licence (number 0023195).

[Mike_hawk]

Hi Gaston

 

I believe the OP's query referred to company no. 2036087 as party to agreement. I'm struggling with the question of whether you can opt in or out in the circumstances?

 

Could the opt out term be considered fair?

 

Its a bit beyond my comfort zone for HP agreements

[Gaston Grimsdyke]

Oh yes didn't spot that.

 

 

I guess PCF Business Finance Limited only do unregulated business,

in which case they don't need a CCA licence at all.

 

 

Can't see any reason why two commercial parties operating at arms' length shouldn't agree to opt out of the CCA.

 

 

I suppose it all boils down to whether PCF knew the OP was not actually using the vehicle for business purposes or not;

 

 

the likelihood is they didn't as all the communication was between the OP and the dealer.

[Naim]

But you have declared to PCF that you are using the vehicle for business purposes - read the declaration above your signature on the agreement. Of course this doesn't turn you into a business, but it does saddle you with the representation that you are.

 

The amendments to the CCA did not make all credit regulated; it removed the 25K ceiling but also allowed for two exemptions, being high net worth individual and business exemption. Your agreement is covered by the latter. By signing it, you have agreed to opt out from the CCA.

 

PCF Business Finance is just a trading style of Private and Commercial Finance Company Limited, which does hold a CCA licence (number 0023195).

 

Thanks for the clarification!

[Mike_hawk]

Just wondering if there would be some recourse with the dealer/broker? Not just for the bliddy huge pricetag on a 3 year old Cayenne

 

Absent any business details in the agreement it does appear the dealer has tried to slip one through the net to secure a deal.... although [admittedly] we only see one side of the argument

 

May be worth a punt if only to put the dealer under pressure to source a more agreeable alternative, it's all just commerce after all

 

Perhaps an informal approach first?

[Naim]

Just wondering if there would be some recourse with the dealer/broker? Not just for the bliddy huge pricetag on a 3 year old Cayenne

 

Absent any business details in the agreement it does appear the dealer has tried to slip one through the net to secure a deal.... although [admittedly] we only see one side of the argument

 

May be worth a punt if only to put the dealer under pressure to source a more agreeable alternative, it's all just commerce after all

 

Perhaps an informal approach first?

 

Cayman S.. You know when your heart says just do it and your head says, don't? Well this is turning out to be one of those times. I think I'll call them again Monday and plead my case. I had an agreement with them for a previous car and it was regulated so more fool me for not realising what was going on.