Consumer Credit Act: A Brief History
In 1974, Parliament enacted the Consumer Credit Act (the “Act”). The Act was designed to protect the public from unscrupulous lenders. It laid down requirements which had to be complied with for a credit card or credit loan agreement (“credit agreements”) to be enforceable. The relevant part of the Act covers agreements for less than £25,000. The Act was drafted on the basis that lenders who fell foul of certain provisions could not enforce repayment of the loan in a court of law. It was never intended to catch out the large blue chip banks and credit card companies but it has become apparent that many lenders have fallen foul of the requirements and so some of their credit agreements are unenforceable.
The 1974 Act provides that an agreement must contain certain prescribed terms. If an agreement lacks the prescribed terms it is unenforceable unless the lender applies to court for an enforcement order. There are certain circumstances in which the court does not have power or jurisdiction to enforce the agreement so the agreement remains unenforceable and the lender is unable to recover any money in legal proceedings, from the borrower.
This is only the position for agreements signed before 6th April 2007. For agreements made on or after 6 April 2007 the court now has discretion under the Consumer Credit Act 2006 to enforce an agreement which does not comply with the 1974 Act’s requirements. In exercising its discretion, the court must balance the prejudice that would be suffered by the borrower if the court decided to enforce the agreement, against the prejudice that would be suffered by the Lender if the court decided not to enforce the agreement.
False Claims & Claims Management Companies
You may have seen advertised or on the internet companies claiming to be able to eliminate your debts and claim compensation on your behalf. Some companies are claiming that 80% of agreements are unenforceable. They may also claim that they will subsequently claim compensation for you. The Ministry of Justice (MOJ) who monitors Claims Management Companies who provide these services has issued warnings to consumers to help them identify unscrupulous companies, in particular ones who are not regulated by the Minstry of Justice.
Claims
Management
Companies
should not
be giving
guarantees
or making
promises to
get you out
of debt. The MOJ’s
concern is
that Claims
Management
Companies
are
essentially
selling
services,
using
misleading
statements,
that they
are unable
to prove.
What is
evident is
that a
potentially
large
proportion
of
agreements
are
unenforceable
but it is
wrong to
assume that
a high
percentage
of credit
agreements
are
unenforceable.
You will
need to be
informed of
your
position as
quickly as
possible
because if
you are not
making
repayments
you may be
incurring
additional
default
charges and
legal costs.
Services:
Compensation
Review
Compensation Review aims to give impartial information and advice regarding potential claims ranging from credit card claims, loan claims, bank charges claims and mortgage claims, payment protection insurance (PPI) claims as well as debt solutions.
Some people
are
concerned
that
challenging
their credit
agreements
may
prejudice
their credit
rating.
Others are
unsure as to
whether they
have to
continue
making
re-payments.
We will
advise you
on all of
these
issues. Our
carefully
chosen panel
solicitors
are
compliant
with the Law
Society in
the
provision of
these
services.
Media
Hype,
Miss-selling
and
Misunderstanding
As you may be aware, a great deal of current marketing by Claims Management companies has been regarded as misleading by the regulatory authorities. Some in the media have misunderstood the situation and wholeheartedly dismissed Claims Management companies as acting unscrupulously. Such a blanket dismissal overlooks the fact that whilst a significant percentage of such agreements might not be unenforceable, a good deal are. The only way to find out is to review the credit or loan agreement concerned in order to ascertain whether or not it fails to meet the requirements of the Consumer Credit Act 1974. This important issue has been misunderstood generally by the media. The services that we can offer are essentially tailored to finding out whether or not your credit agreement(s) are unenforceable and if so, what other support we can give you in this eventuality.
Consumer credit issues can be extremely complicated and there are a number of matters that need to be considered. To assist you please read our FAQs and contact us through our enquiries form.
