Greg Standing
Finance
companies are, I am sure, very aware of their obligations to treat
consumers fairly as policed by the Financial Services
Authority.
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Failure to keep good records and an
aggressive enforcement policy by finance companies can also lead to
censure by the courts, as was the case in Harrison vs Link
Financial Ltd.
The claimant was in arrears with
his credit card repayments and a default notice was served. The
claimant brought proceedings alleging he was not liable for any
sums outstanding under the agreement due to breaches of the
Consumer Credit Act 1974 (the Act). The alleged breaches
included:
- A failure to send a copy of
the terms and conditions with the application pack or credit
card; - A failure to provide a copy
of the executed agreement; - An invalid default notice –
the claimant had not been given the requisite 14 days time to
comply with it.
Additionally, the claimant alleged
harassment by the defendant in the way it had pursued the debt by
making numerous, unidentifiable telephone calls.
The defendant produced evidence of
its procedures and systems to show that, in the ordinary course of
events, the terms and conditions and a copy of the executed
agreement would have been sent to the claimant.
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By GlobalDataSuch evidence would usually suffice
on a balance of probabilities. However, the claimant was a
meticulous record keeper who had retained copies of the application
form and supporting documents. The terms and conditions were not
included indicating they had never been received. The court
preferred the claimant’s evidence.
The court held that, although the
vast majority of consumers do not read such terms and conditions,
it is still a requirement to provide them. Failure to do so is
likely to lead to a reduction in the sum recoverable, rather than
an elimination of it altogether.
The defendant had, albeit
belatedly, provided a reconstituted copy of the executed agreement
sufficient to comply with the requirements of section 78 of the
Act.
On a balance of probabilities, that
reconstituted agreement did contain the relevant terms and
conditions governing the agreement with the claimant.
The court agreed that the default
notice did not comply with the statutory requirements and so
enforcement could not be attempted in reliance upon it. A valid
enforcement notice could always be served afresh.
Finally, the court found quite
damning the way the defendant hounded the claimant to recover the
debt. Such conduct has no proper place in the recovery of consumer
debts.
The court dismissed the
counterclaim but did not order repayment of the sums already repaid
by the claimant.
Comment
Finance companies must take care
when pursuing consumers for debts.
There is a world of difference
between a series of measured warnings which lead to properly
prosecuted legal proceedings and hounding consumers until they feel
they have no alternative but to pay up. The ends do not always
justify the means.
The author is a partner in Wragge & Co’s finance,
insolvency, recoveries and sales team
