ARTICLE...
Credit Agreements and Enforceability
Put simply, a consumer credit agreement is a contract between a lender and a borrower which sets out how the lender will lend the money, what price they are charging for it and when and how much the borrower will need to repay.
In the vast majority of cases, this is what will happen. The lender will loan the money, the customer will sign the agreement and then will repay to the agreed terms.
But in recent years there has been a spate of cases whether consumers have tried to shed doubt on a technicality, often encouraged by claims management companies (CMCs), which in some cases have no licence to offer such services.
We have been working with the MoJ and the OFT on ensuring licensing across the board for CMCs. The OFT have just released guidance for lenders, borrowers and the CMCs on the duties of the lender when they are asked to produce the credit agreement or statements of account.
A recent test case in Manchester (Carey vs HSBC) ruled that lender did not have to produce the original credit agreement as signed by the borrower, but could reform a 'true copy' – that is with all the terms and conditions that applied at the time of the agreement, plus a copy of the borrowers' specific loan terms.
We broadly welcome this guidance from the OFT, but further discussion is required around the OFT's interpretation of enforcement issues in the light of recent test cases, in particular McGuffick vs RBS and Carey vs HSBC. That said, it is another welcome step to avoid consumers being misled into thinking their credit agreement is unenforceable.
There has been an alarming rise in the number of companies claiming to be able to get debts written off, so the OFT clarification is helpful for both consumers and lenders to know where they stand in regard to their responsibilities.
Original article, by Richard Bostock, senior policy adviser at the FLA, courtesy of CCR.
