Log Book Loans !!!

[Bigbear733]

Hi Everyone

I have a way to get back at Log Book Loans (“LBL”) and Mobile Money (“MM”). I assure you, this will work - I am a lawyer.

I have read the various threads with some horror at the tactics used by LBL and MM and this is my reason for posting.

Unfortunately, first some bad new – the loans they issue, and the way they secure their interest over a vehicle, via a Bill of Sale (“BOS”), is completely legal, if they follow the correct procedure. I have reviewed a LBL case and they seem to be doing everything correctly; I have not looked a MM, but I would presume they are also following the correct procedure. Furthermore, despite some posts that suggest the contrary, they can take possession of goods which are secured by way of a BOS without a court order.

Sorry, it gets worse before it gets better – if you are unfortunate enough to purchase a vehicle which has a chattel mortgage (what the BOS effectively creates) attached to it then, even though you are an innocent party, the vehicle can still legally be taken off you without a court order.

I am surprised that I have seen another lawyer in a press article suggest that this is illegal – he referrers to innocent parties purchasing vehicles with outstanding hire purchase (“HP”) agreements and, what he refers to as “other loans” (although he does not elaborate on what other loans are), and states that the an innocent purchaser obtain the goods with good legal tile. He is completely correct in relation to HP agreements as s27 Hire Purchase Act 1964, as substituted by the Consumer Credit Act 1974, provides that an innocent purchaser without notice (ie in non legal speak - a private individual who buys something not knowing that the item was subject to a HP agreement) takes the goods purchased with good legal title. However, there is no such provision for security taken by way of a BOS. In fact, the common law position was amended by s27 and a good analogy to explain why the law works this way is to consider stolen property. If your car was stolen and sold to an innocent party do you think that if the police managed to locate the vehicle you should not be able to re-claim the car – obviously I would think most of you would think that if something is stolen from you then you can take it back once located – and this is exactly the legal position. The general rule in law is that someone can only give good legal title if they themselves posses it, and, unless there is some legislative exception, this rules applies to the sale and purchase of all chattels (in simple terms, chattels is legal speak for property which is not land and buildings – sorry if I sound patronising but I know there are some reader who are not as legally conversant as other and I just want them to understand what I am saying).

I have read a number of other posts that incorrectly state the law and give false hope but I don’t have the time to deal with each issue raised.

Unfortunately, in my opinion it will be very difficult to legally challenge LGL or MM based on the BOS.

However, now for the good news. To operate within the law lenders require a consumer credit licence. This is issued by the Office of Fair Trading (“OFT”) and recent legislative changes have given the OFT significantly more discretion and powers in who to issue consumer credit licences to and, where appropriate, to revoke such licences.

My proposal is that we work together to get the consumer credit licences of LBL and MM removed and this is how to do it:

The law in relation to credit advertising was changed recently by the Consumer Credit (Advertising) Regulation 2004 (the “Regulations”). I will not bore you with the details but the OFT have issued guidance to lenders on the interpretation of these regulations. Basically a lender must publish a typical APR where, amongst other things, they offer credit to people with a poor credit history or where they offer an incentive.

The OFT have stated that terms such as “No Credit Checks” or “Super Fast Loans”, or similar, will trigger the requirements to publish a typical APR. See para 8.16 of the following guidance: http://www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/oft746.pdf

I have seen advertisement placed by both MM and LBL that contravene the Regulations by not stating a typical APR. I saw one today – they are not difficult to find.

This is what I propose that everyone does – look out for MM and LBL adverts. If they say anything like “fast loans”, “no credit checks”, “CCJ’s - no problem”, “Cash Loans within 30 minutes” etc then they must quote a typical APR. If they don’t then they have broken the law.

Report every breach of these regulations to your local trading standards (a letter or e-mail is best, but phone if you don’t have time). If enough complaints are received then the OFT will have to consider revoking their consumer credit licences. What’s even better, the directors of LBL and MM will face criminal prosecutions and convictions as breaching the Regulations is actually a criminal offence.

If enough people take action, as I have suggested, then LBL and MM will lose their consumer credit licences and this will stop them trading – in short, there is more than one way to skin a cat!

I hope this has been helpful and I wish you all luck.

[Bigbear733]

TS do have the powers to deal with the matter and should in fact do so. I would still write a letter to them and cc it to the OFT. As the local TS's report to the OFT they are more inclined to look into the issue if you do this.