OFT Guidance on sec 77/78/79 CCA

**Amethyst** · 16th October 2010, 08:21:AM

Re: OFT Guidance on sec 77/78/79 CCA

CUSTOMER INFO

Have you got a loan or a credit card? Did you buy your sofa or something else on credit? Maybe you've hired a TV, a washing machine or a car? If you can't find your paperwork and would like to know what you agreed and how much you owe, here's how you can get the information you need.
Sometimes paperwork goes missing, so whether you've moved house and your filing is hidden under a pile of boxes, or it's just plain lost, you should know that for only £1 you can find out:
• what you originally agreed with the people you borrowed money or hired something from
• what your agreement is now (if it's changed)
• how much you still owe.
What you have to do
All you need to do is write to the people you owe and pay them £1. Tell them you want this information under Section 77-79 of the Consumer Credit Act 1974 and they should send you a copy of the information you need.
What you should get
You should get a copy of your agreement. If it's hard to read, for example a bad photocopy, ask them to send you a better version. It doesn't have to be the document you signed, though if it isn’t, they should let you know. The paperwork should:
• tell you what your original agreement was, and if there were any changes made to it later
• include your name and address at the time you first signed the agreement, but it doesn't have to include your signature, or the date you signed it
• include the statements about your rights that were in the agreement you signed.
You should also get copies of any other documents mentioned in your agreement, although there are some that you don't have to be given.
You should also get a statement of your account (that they have signed) telling you:
• how much you still owe
• how much you should be paying and when
• if you borrowed a fixed amount of money, from the bank or someone else, how much you have paid already.
What happens if you don't get this information?
If you've already paid off all the debt they don't have to give you anything.
However, if you still owe money and you don't get what you are entitled to after 12 working days, then your debt is called 'unenforceable' until you get the information you asked for.
What does unenforceable mean?
This does not mean your debt is wiped out. You still owe the money, and if you don't pay you can be charged interest on what you owe, be charged for not paying (these are called default charges) and it could affect your credit record.
But if you haven't been given the information, they cannot:
• make you pay off your debt before you're supposed to
• get a court judgment against you
• take back anything you've hired or bought on credit, or take anything you used as security (like your house) when you took out the agreement.
However, they can still:
• ask you to pay what you owe
• send you a letter called a default notice if you miss any payments
• pass your information on to a credit reference agency, which might affect your credit record
• pass your information on to a debt collector
• sell your debt to someone else
• take your case to court, although they won't be able to get a court judgement against you unless they give you the information you're entitled to.
Helpful tips
• You can't be asked to pay more than £1, so make sure you don't pay more.
• If your case is taken to court, you can ask the court not to go any further (called a stay of proceedings) until you get the information you are entitled to.
• If your agreement is very old (made before 19 May 1985) or if your agreement isn't available, for example if it was lost in a fire or a flood, the rules are a little bit different. In these cases you can be given a copy of what they think the current terms of your agreement are. You should be told if that's what they've done.
• Your debt could have been sold to someone else. If it has, the people you originally signed the agreement with should tell you who to contact, or tell the people they sold the debt to, to give you the information you've asked for.
Having trouble paying?
Writing to the people you owe and asking for this information should not be thought of as an easy way to make your debts go away, or a way to avoid paying what you owe. Even if they can't give you the information you asked for right away, the debt still exists. If you stop paying off your debt while it is unenforceable it can affect your credit record. Also, once they send you the information the debt is enforceable again and if you haven't paid you may have to pay default charges.
If you are having problems with your payments speak to your creditor or seek debt advice. For more help and advice, you can contact the following not-for-profit organisations for free, confidential and impartial advice, or for details of where to get advice in your area:
Citizens Advice
For advice and information on debt and other topics, visit your local Citizens Advice Bureau (address in the phone book), or go to Adviceguide from Citizens Advice (England and Wales), The website of the Citizens Advice Bureau Service in Scotland
(Scotland) or Home - Citizens Advice Bureau
(Northern Ireland).
National Debtline
If you live in England, Wales or Scotland, phone 0808 808 4000 or visit National Debtline Call 0808 808 4000 for debt advice and information.
Advice4DebtNI
If you live in Northern Ireland, phone 0800 917 4607 or visit Home | advice4debt Northern Ireland | Debt Advice
Money Advice Scotland
If you live in Scotland, phone 0141 572 0237 or visit Money Advice Scotland to find contact details for debt advice in your local council area.
Consumer Credit Counselling Service
For debt advice throughout the UK, phone 0800 138 1111 or visit Debt help | Free debt advice for UK debt problems | Get debt free with Consumer Credit Counselling Service

Consumer Direct
For a list of independent advice agencies, and information about credit and hire agreements, phone 08454 04 05 06 or visit Consumer Direct
Community Legal Advice
If you qualify for legal aid, phone 0845 345 4 345 for free advice or visit Community Legal Advice - free legal advice for residents of England and Wales, paid for by legal aid
Financial Ombudsman Service
If you have a complaint that you can’t resolve with your lender, the Financial Ombudsman Service may be able to help, phone 0845 080 1800 or visit Financial Ombudsman Service

**Amethyst** · 16th October 2010, 08:25:AM

Re: OFT Guidance on sec 77/78/79 CCA

Guidance on sections 77, 78
and 79 of the Consumer Credit
Act 1974 – the duty to give
information to debtors and the
consequences of non-compliance on the
enforceability of the agreement
October 2010
OFT1272
© Crown copyright 2010
This publication (excluding the OFT logo) may be reproduced free of charge in
any format or medium provided that it is reproduced accurately and not used in
a misleading context. The material must be acknowledged as crown copyright
and the title of the publication specified.
CONTENTS
Chapter Page
Part 1 - The technical guidance 1
1 - Introduction 2
2 - The duty to give copy agreements and other documents 6
3 - The duty to give statements of accounts 17
4 - When the duty does not apply 21
5 - Sanctions for non-compliance 22
6 - Regulatory compliance 27
Part 2 - The plain English consumer guidance 29
PART 1 - THE TECHNICAL GUIDANCE
ON SECTIONS 77, 78 and 79 OF THE
ACT
OFT1272 | 1
1 INTRODUCTION
1.1 This guidance note, published pursuant to Section 4 of the Consumer
Credit Act 1974 (the Act), provides guidance to businesses in relation to
their duties (under regulated consumer credit and consumer hire
agreements) to give debtors and hirers copy documents and statements
of account on request under Sections 77(1), 78(1) and 79(1) of the
Act.1 The Act refers to the duty of the creditor and owner under these
sections as being one to give information and this guidance will refer to
requests made under these sections as 'information requests'.
1.2 The sanction under the Act for non-compliance with an information
request is unenforceability of the credit or hire agreement for so long as
the creditor or owner fails to comply with his duty.2 Where there is such
a failure, the courts have no discretion to allow enforcement.
1.3 For a variety of reasons, there has been a substantial increase in
consumer requests under these sections. Unfortunately, consumers have
often been given an exaggerated expectation of what the creditor or
owner must do in order to comply with an information request, as a
result of misleading claims by claims management companies and
inaccurate information on the internet. At the same time, however, a
number of creditors appear not to understand their obligations under the
sections or not to have in place suitable procedures to be able to achieve
compliance. As a result, numerous disputes have been generated over
whether a request has properly been made, whether the duties have
1 Similar provisions apply to requests by sureties under consumer credit and consumer hire
agreements (see sections 107 to 109 of the Act). Since these provisions mirror sections 77(1),
78(1) and 79(1), they are not dealt with separately in this guidance.
2 A declaration under section 142(1) of the Act (with the consequent application of section 106
(rendering securities ineffective) is not available, as section 142(1) does not apply to
unenforceability consequent upon sections 77(1), 78(1) and 79(1). The criminal offences for
non-compliance under section 77(4)(b), 78(6)(b) and 79(3)(b) have been repealed by the
Consumer Protection from Unfair Trading Regulations 2008. For potential sanctions that may
arise under separate legislation, see Part 5 of this guidance (Sanctions for Non-compliance).
OFT1272 | 2
been complied with and whether as a consequence the agreement can
be enforced.
1.4 Given the high level of information requests that are currently being
made, the OFT considers that it is helpful that guidance should be given
so that businesses can understand what steps they should take to
satisfy their obligations under the Act. This guidance is intended to
clarify the position so that unnecessary disputes can be avoided.
1.5 Exactly what the consequences are if an agreement is unenforceable is a
wider issue that arises not only in relation to these sections, but in
relation to other sections of the Act. The exact meaning and full scope
of enforcement is not defined in the Act.3 Guidance on the
consequences of an agreement being unenforceable as a result of a noncompliance
with an information request is given in Part 5 below. This
guidance note will be reviewed should there be any further clarification
of the consequences of an agreement being unenforceable that may
result from future cases.
1.6 Further to the limitation of the statutory requirements on traders, in so
far as creditors, debt collectors and owners of hired goods are required
by the Act to hold a licence issued by the OFT, their fitness to hold such
a licence will take into consideration their compliance not only with their
legal obligations but also with any evidence of business practices which
appear to the OFT to be deceitful or oppressive or unfair or otherwise
improper, whether unlawful or not.
1.7 In addition to evidence of unfair business practices, the OFT also takes
into account the general integrity and specific competence in the field of
the relevant regulated business of the trader and of its employees and of
its associates, which includes business associates. Competence in this
3 Whether certain specific activities amount to enforcement was considered in the High Court
case of McGuffick –v- The Royal Bank of Scotland plc [2009] EWHC 2386 (Comm).
OFT1272 | 3
context refers to the relevant practices and procedures, and knowledge,
skills and experience to enable a business to achieve compliance without
need for the OFT's intervention. It should be remembered that where the
OFT considers that the business is engaged in high risk credit activities,
a higher level of regulatory scrutiny will be applied.
1.8 This guidance therefore also constitutes the OFT's views on relevant
unfair business practices and the standards to be expected when dealing
with debtors and hirers in relation to requests for information under
these sections. The OFT will consider taking action under the licensing
provisions of the Act4 where it becomes aware of evidence that
businesses are not adhering to this guidance.
1.9 When giving this guidance, the OFT has borne in mind that the purpose
of the sections is to provide the debtor or hirer with the relevant
information about his or her contract, in particular the contract terms
and the current state of the account. Parliament appears to have
recognised that consumers may lose documentation, or may not keep
clear records of payments, and may be unable to ascertain accurately
what their contractual rights and obligations are or how much has been
paid and what is still owed. This is particularly important if there is a
dispute over what is owed, or an alleged default. In those cases,
preventing a creditor or owner from enforcing the contract until
clarification is provided is an important and reasonable protection for the
consumer.
1.10 At the same time, it is important to remember that the purpose of these
sections is to provide information to the consumer; it is not to provide a
method for consumers to avoid paying their debts. Unenforceability is
merely the sanction where there is a continuing failure to provide the
information. The OFT takes the view that the sections should be read in
a way that allows the consumer to obtain the information he or she
needs in order to be properly informed without imposing unnecessary
4 The OFT will also consider taking action under other consumer protection legislation if
appropriate, including the Consumer Protection from Unfair Trading Regulations 2008.
OFT1272 | 4
burden on business. The OFT's view is confirmed by the recent decision
in Carey v HSBC Bank plc [2009] EWHC 3417 (QB) that the requirement
to provide information under section 78 is not to establish whether or
not there was a properly executed agreement in the first place and that,
given the small fee and short timescale, the copy should be relatively
straightforward and cheap to create.
1.11 The judgment in Carey gave important guidance on a number of aspects
of compliance with information requests and these have been
incorporated into the guidance.
OFT1272 | 5
2 THE DUTY TO GIVE THE DEBTOR OR HIRER A COPY OF THE
AGREEMENT AND OTHER DOCUMENTS
2.1 Section 77(1) of the Act deals with fixed-sum credit agreements. It
provides that the creditor under a regulated agreement for fixed-sum
credit 'within the prescribed period after receiving a request in writing to
that effect from the debtor and the payment of a fee of £1, shall give
the debtor a copy of the executed agreement (if any) and of any other
document referred to in it'. Under Section 78(1), an identical duty
applies in respect of running-account credit agreements.
2.2 In relation to hire agreements under section 79(1), the wording is also
identical but for the omission of the words 'if any'. The OFT does not
consider that this omission makes any difference of substance to the
duty.
2.3 This duty raises a number of detailed points, which are dealt with below.
The creditor or owner
2.4 For there to be a valid request, it must be made to the 'creditor' or the
'owner', and it is on the 'creditor' or the 'owner' that the duty to comply
with the request lies. The definition of these terms is to be found in
section 189(1) of the Act. It clearly includes the creditor or owner who
enters into the agreement and also anyone to whom the rights and
duties under that agreement have passed by operation of law. In the
OFT's view, where there has been a novation (that is, the debtor or hirer
has agreed that a new party will be substituted as creditor or owner for
all purposes under the agreement) the new party is the creditor or the
owner. It is further the OFT's view that, giving the definition of the
terms a purposive construction and one which is most likely to assist the
consumer, the 'creditor' or 'owner' includes an assignee5 of only the
5 In referring to assignees and assignments we mean legal assignees and legal assignments only.
An equitable assignee who has acquired only the beneficial interest would not be regarded by
the OFT as the 'creditor' for these purposes.
OFT1272 | 6
rights under the contract. Thus, the OFT considers that the 'creditor' in
sections 77 and 78 and the 'owner' in section 79 includes a person who
has merely bought the debts under the agreement.
2.5 In any event, the OFT considers that it is an unfair business practice to
seek to take advantage of any confusion, ignorance or difficulty on the
part of the debtor as to whom he or she should send an information
request where there has been a sale of the debt. The debtor has asked
for information and if the recipient considers that another person is the
creditor or owner, the recipient should either inform the debtor or hirer of
who it considers is the correct recipient or pass the request on to that
person for it to be dealt with by them. In that way the consumer can be
assured that any request will be made or will have been made to
someone who is prepared to accept responsibility for responding to it.
2.6 As the purpose of the sections is to provide the consumer with
information, the OFT considers that, where there has been an
assignment of the debt, it is good practice for assignee and assignor to
ensure that their contractual arrangements allow for each of them to
appropriately respond to information requests. Although the OFT would
normally expect the primary responsibility for providing the requested
information to rest with the assignee (which has become the creditor by
virtue of the assignment), given that in commercial agreements for the
sale of debts there is often a clause under which unrecovered debts for
example may be returned to the assignor, it will usually be in both
parties' interests to ensure that the agreement is enforceable. Thus, as
well as assignees ensuring that they are able to obtain from the assignor
copies of agreements and documents and historical information on the
account, the original creditor should also ensure that, if necessary and
appropriate, it is able to readily obtain from assignees any necessary
information on the most recent state of the account.
2.7 The OFT considers that failure to arrange matters in any contract of
assignment so as to ensure that information requests can be properly
answered is not an answer to criticism by the OFT for non-compliance
with requests. It should also be remembered by businesses that if, rather
than providing the information requested, the response to a request is
OFT1272 | 7
merely to place the obligation of responding onto a third party, there is a
risk that that third party will not respond adequately or at all and the
agreement may be unenforceable as a consequence.
A request from the debtor or hirer
2.8 Commonly, the request for information is not made directly by the
debtor or hirer but by someone acting on their behalf. This may be a
friend or relation, a solicitor or a claims management company. In the
OFT's view, such a request is still one 'from' the debtor or hirer. Under
the Data Protection Act 1998 and the Data Protection Principles, the
creditor or owner is not allowed to reveal such information to a third
party without the authority of the debtor or hirer. It should therefore
satisfy itself that the writer of the request has proper authority to obtain
the information. If a copy of such authority is not enclosed with the
request, the creditor is entitled to reply by asking to see the authority.
2.9 Where there are two or more debtors or hirers and the request comes
from one only, it must be nevertheless complied with, and the response
must be given to both (or all) debtors or hirers.6
The fee of £1
2.10 The fee is set at £1 by the Consumer Credit (Further Increase of
Monetary Amounts) Order 1998 [SI 1998/997]. Even though this fee
may be inadequate to cover the administrative costs of responding, the
creditor or owner is not entitled to ask for more than the fee in order to
comply with the information request.
Give the copy to the debtor or hirer
2.11 'Give' is defined by section 189(1) of the Act as 'deliver or send by an
appropriate method'. The method may have been pre-agreed in the
6 See section 185(1) of the Act. The dispensing power under section 185(2), allowing
statements to be given to one debtor or hirer only, does not apply.
OFT1272 | 8
agreement. The OFT considers that, since the fee is only £1, sending a
copy of the documents by ordinary second class post would satisfy this
requirement. The address to which the response is sent should normally
be the address given in the request.
2.12 It is wise to retain some record of posting to avoid future disputes as to
whether the request was responded to in time or at all.
2.13 The OFT is aware that some creditors refuse to deal with claims
management companies which do not hold a licence under the Act and
which would be committing an offence if the request under these
sections was made as part of an unlicensed debt adjusting or credit
information business. Where a request is received from a debtor or hirer
through such an unlicensed business (or, similarly, through a claims
management business which should be authorised as such by the
Ministry of Justice but is not), it should nevertheless be responded to as
it is a request by the debtor or hirer. However, a response sent directly
to the debtor or hirer is acceptable. Under such circumstances, the OFT
would expect the creditor to inform the debtor/hirer why the information
is being sent to him directly and to notify the OFT and Ministry of
Justice that it has been approached by an unlicensed business.
The prescribed period
2.14 The period within which the duty must be complied with is 12 working
days after the request is received. This is set by the Consumer Credit
(Prescribed Periods for Giving Information) Regulations 1983 [SI
1983/1569]. Since the period of 12 working days runs from 'after' the
receipt of the request, when calculating the period the day the request is
received is not included. However, the information must be given (that
is, sent) 'within' the period, so that the calculation of the period will
include the day the information is sent.
2.15 By section 189(1) of the Act, 'working day' means any day other than a
Saturday or a Sunday, Christmas Day or Good Friday or a bank holiday.
OFT1272 | 9
A copy of the executed agreement
2.16 The meaning of 'copy' is dealt with in section 180 of the Act and in the
regulations made under that section, the Consumer Credit (Cancellation
Notices and Copies of Documents) Regulations 1983 ('the Copies of
Documents Regulations').
2.17 The copy of the executed agreement must be a 'true copy' of the
original. However, as confirmed in the recent case of Carey v HSBC
Bank plc,7 the term 'true copy' does not mean a carbon, photocopy,
microfiche copy or other exact copy of the signed credit agreement.
2.18 Further, section 180(1)(b) and regulation 3(2) of the Copies of
Documents Regulations expressly allow certain matters to be omitted
from the copy. There may be excluded from the copy of the executed
agreement to be provided under these sections:
• any information relating to the debtor, hirer or surety, or information
included for the use of the hirer or creditor only, which is not
required to be included by the Act or any regulations made under the
Act as to the form and content of the agreement
• any signature box, signature or date of signature
• in the case of pawn agreements, any description of the article taken
in pawn.
2.19 Often consumers and their advisors assume that if a signed copy is not
provided by the creditor or owner, this necessarily means that the
agreement cannot be enforced: either on the basis that section 77(1),
78(1) or 79(1) (as the case may be) has not been complied with, or in
reliance on section 127(3) (in the case of agreements to which that
subsection still applies). This overlooks the fact that there is no
obligation on an information request to provide a copy which includes a
7 [2009] EWHC 3417 (QB).
OFT1272 | 10
copy of the signature. It also overlooks the fact that section 127(3) does
not apply merely because a signed document is not available at the court
hearing; the section requires that a document containing the prescribed
terms 'was' signed by the debtor or hirer. The creditor or owner may be
able to provide evidence that its practice was always to require a
signature to its agreements and that its agreements always complied
with section 61(1)(a) of the Act and the debtor or hirer may be unable to
satisfy the court that he or she did not sign an agreement.
2.20 The creditor or owner may not have preserved a copy of the executed
agreement. Since the requirement is not to provide an exact copy, let
alone a carbon, photocopy or microfiche copy, it can reconstitute a
copy. It can do this, for example, by re-populating a template of the
relevant agreement form with the details of the specific agreement taken
from its records, a method approved in Carey v HSBC Bank plc.8 This
will provide the information that the debtor or hirer may require as to the
terms of the agreement. If the creditor or owner does provide a
reconstituted copy, it should explain that that is what it has done, to
avoid misleading the consumer that this is a contemporaneous copy. It
can explain that this procedure is satisfactory under the Act.
2.21 However, the reconstituted copy must be a 'true copy' of the executed
agreement. It must therefore contain any terms and conditions which
were contained in the original, together with all the prescribed
information and statements of protection and remedies required by the
Consumer Credit (Agreements) Regulations 1983 that were set out in
the executed agreement. The creditor or owner must ensure that it gives
the terms and conditions applicable at the time the contract was
executed. It was held in Carey v HSBC Bank plc9 that, subject to spelling
mistakes and similar discrepancies (described as 'low level omissions'),
only those matters listed in regulation 3(2) of the Copies of Documents
Regulations could be omitted. The name and address at the time of
8 [2009] EWHC 3417 (QB), at paragraph 53(12).
9 [2009] EWHC 3417 (QB) at paragraph 60(4).
OFT1272 | 11
execution must therefore be included, although, as Carey explains, that
can be taken from any source available to the creditor or owner.10
2.22 Where the agreement was executed before 19 May 1985 and due to an
accident or some other reason beyond its control, the creditor or owner
does not have in its possession the executed agreement or any copy of
it, the copy to be given may comprise an easily legible statement of the
current terms of the agreement insofar as they are known to the creditor
or owner.11
'If any'
2.23 Some creditors rely on the words 'if any' in sections 77(1) and 78(1) to
say that the obligation to provide a copy only extends to the situation
where an extant copy actually exists. Thus if the creditor has not
preserved a copy, no copy need be provided. The relevant words are
'shall give the debtor a copy of the executed agreement (if any) and of
any other document referred to in it'. While recognising the possibility of
such a construction, the OFT considers that the words 'if any' refer to
whether there was an executed agreement in the first place. An
executed agreement is defined as 'a document, signed by or on behalf of
the parties embodying the terms of a regulated agreement, or such of
them as have been reduced to writing'.12 The words 'if any' therefore
merely reinforce the fact that, if there has never been an executed
agreement, then no copy can be produced.
2.24 The OFT's view is not only consistent with the approach that a
reconstructed copy can be provided, it also means the owners under hire
agreements are not under a more onerous duty than creditors. The
words 'if any' do not appear in section 79(1) and therefore it would not
10 [2009] EWHC 3417 (QB) at paragraph 61.
11 Regulation 9 of the Copies of Documents Regulations.
12 Section 189(1) of the Act.
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be open to owners to argue that, if no copy of the executed agreement
has been preserved, they are released from any obligation to provide a
copy to the hirer. There would not appear to be any policy reason to
support such a distinction. In the case of both creditors and owners,
therefore, the duty to provide a copy exists whenever there was
originally an executed agreement and whether or not a copy has been
preserved.
2.25 In a case where there never was an executed agreement,
unenforceability would not arise as a result of non-compliance with a
request under sections 77(1), 78(1) or 79(1), but the absence of such a
document may mean13 that, by reason of sections 61 and 65(1) of the
Act, the agreement is unenforceable without an order of the court, and,
if section 127(3) applies,14 may be wholly unenforceable.
2.26 If the creditor or owner is aware that there was never an executed
agreement and one was required, it would be misleading and an unfair
business practice to try and conceal that fact, either by suggesting that
the agreement cannot now be found or by creating a copy agreement
purporting to be a true copy. If the reason why no copy is given to a
request under these sections is that there never was an executed
agreement, the creditor or owner should acknowledge this in its
response.
Where there has been a variation of the terms and conditions of the
agreement
2.27 Where an agreement has been varied in accordance with section 82(1)
of the Act, the OFT considers that, by virtue of Regulation 7 of the
Copies of Documents Regulations, the duty is to provide not only a copy
of the agreement as originally executed but also either
13 There are cases where no executed agreement is required by the Act, for example, certain
bank overdrafts.
14 Section 127(3) continues to apply to agreements made before 6 April 2007.
OFT1272 | 13
• a copy of the latest variation given in accordance with section 82(1)
of the Act relating to each discrete term of the agreement which has
been varied, or
• a clear statement of the terms of the agreement as varied in
accordance with section 82(1) of the Act.
2.28 Although some creditors have apparently considered it is sufficient to
provide a copy of the current terms and conditions (that is, 'a statement
of the terms of the agreement as varied'), that does not comply with the
requirements of Regulation 7. In Carey v HSBC Bank plc15 there was
detailed analysis of this issue and it was confirmed that 'include' meant
that the documents showing the variations were to be supplied in
addition to a copy of the original agreement.
Legibility of any copy
2.29 Any copy must be easily legible, as must any copy of notices of
variation or statement of the terms of the agreement as varied.16 If the
creditor or owner has a poor quality photocopy or microfiche, it should
retype it or repopulate a template of the relevant agreement form with
the details of the specific agreement, so that the copy sent can be easily
read.
2.30 In these circumstances, it would be advisable to send a copy of the
photocopy or microfiche as well: although not strictly required, it may
assist in avoiding disputes.
Any other document referred to in the executed agreement
2.31 As well as a copy of the executed agreement, sections 77(1), 78(1) and
79(1) require that a copy of any document referred to in it be given to
15 [2009] EWHC 3417 (QB) at paragraphs 77 and 78.
16 Regulations 2 and 7 of the Copies of Documents Regulations.
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the debtor or hirer. Commonly terms and conditions are contained in a
separate document to the executed agreement and that document is
incorporated by reference.17
2.32 The reference must be to a 'document'. Reference to a transaction
which may or may not be in documentary form does not trigger an
obligation to give a copy of any document that may evidence or contain
the transaction. For example, a mere reference in contract terms and
conditions to an 'agreement' is not, without more, a reference to a
document.
2.33 Even if the following documents are referred to in the executed
agreement, copies do not have to be given to the debtor or hirer:18
• a document obtained by the debtor or hirer from a person other than
the creditor or owner and supplied by the debtor or hirer to the
creditor or owner
• in the case of an agreement of the description specified in the
Schedule to the Consumer Credit (Notices of Cancellation Rights)
(Exemptions) Regulations 1983 and terms of which are contained in
a catalogue which is at all reasonable times during the agreement
readily available for inspection by the debtor, a copy of the catalogue
in question
• a document, not being a security, which constitutes, evidences or
relates to title to property of any kind or relates to the rights or
duties of the debtor or hirer in respect of such property
• a document kept, or to be kept, by the debtor or hirer under the
terms of, or in consequence of, the agreement
17 By section 61(1)(b) of the Act, the executed agreement must 'embody' all the express terms
of the agreement, and section 189(4) provides that a document embodies a provision if the
provision is set out in the document itself 'or in another document referred to in it'.
18 Regulation 11 of the Copies of Documents Regulations 1983.
OFT1272 | 15
• an official or certified copy of any entry in a register maintained by,
or on behalf of, a government department or other body charged
with a public administrative or statutory function and open to public
inspection (whether in the United Kingdom or elsewhere)
• an enactment, other than Schedule 3 to the Conveyancing and
Feudal Reform (Scotland) Act 1970
• a document, other than an enactment, published by, or on behalf of,
a government department or other body charged with a public
administrative or statutory function (whether in the United Kingdom
or elsewhere)
• where the regulated agreement is secured on land, any document
referred to in the executed agreement where the debtor or hirer has
earlier been supplied with a copy of that document in an identical
form by virtue of any requirement of the Act.
OFT1272 | 16
3 DUTY TO GIVE STATEMENTS OF ACCOUNT
General
3.1 Together with the copy documents dealt with above, the creditor or
owner is obliged to give the debtor or hirer a statement of account. The
form of that statement differs depending on whether the agreement is a
fixed-sum credit agreement, a running-account credit agreement or a hire
agreement.
3.2 In all cases, the statement is to be prepared only according to the
information to which it is 'practicable' for the creditor or owner to refer.
This means practicable at the time of the request and in the OFT's view
includes information which can be obtained from third parties.
Information may not be available because of earlier failure to take proper
steps to preserve information or, if the debt has been assigned, as a
result of making insufficient provision in the contract of assignment to
ensure the information will be available in order to respond to a request.
While this may mean that it is not practicable to refer to the information
for the purposes of these sections, it may constitute an improper
business practice not to take steps to ensure that information is
preserved and kept available to be used to give information to the
consumer.
3.3 The statement must be signed by or on behalf of the creditor or owner.
3.4 By section 172(1) of the Act, a statement provided under sections
77(1), 78(1), 79(1) is binding on the creditor or owner. By virtue of
section 113(1), a surety will also be able to rely on the binding nature of
the statement as between the creditor or owner and the debtor or hirer.
However, if in court proceedings it is sought to rely on the statement
and the statement is shown to be incorrect, the court may direct such
relief (if any) is given to the creditor or owner from the operation of
section 172(1) as appears to be just.19
19 Section 172(3) of the Act.
OFT1272 | 17
3.5 If a default sum20 is payable, the statement may incorporate the notice
of the default sum that is required under section 86E of the Act.21
Equally, if post-judgment interest is payable under the agreement, the
statement may incorporate the notice that is required under section
130A.
3.6 The OFT considers that, so long as the creditor or owner provides a
statement representing the state of the account as held by it, there will
be compliance and the agreement will remain enforceable even if the
account turns out to be inaccurate as judged against the terms of the
agreement. The purpose of the obligation is to allow the debtor to
understand what the creditor is stating is owed, a statement which the
debtor can challenge, rather than requiring that the creditor or owner
must provide a correct statement of the debt in fact due under the
contract if the duty under these sections is to be satisfied. This is
supported by the fact that the sections only require that the statement is
made according to the information to which it is practicable for the
creditor or owner to refer. Further, section 172(1) provides that a
statement given under section 77, 78 or 79 is binding on the creditor or
owner. This provision would appear to be unnecessary if the duty under
these sections required a statement correctly stating the amount
contractually due, as opposed to a statement of what the creditor or
owner considers is due. Section 172(3) provides that where in court
proceedings it is sought to rely upon a statement so given and the
statement is shown to be incorrect, the court may direct such relief (if
any) to be given to the creditor from the operation of section 172(1) as
appears to the court to be just. If the agreement is unenforceable unless
the statement was correct, this provision would also appear to be
unnecessary.
20 See section 187A of the Act.
21 Section 86E(3) of the Act.
OFT1272 | 18

**Amethyst** · 16th October 2010, 08:25:AM

Re: OFT Guidance on sec 77/78/79 CCA

Fixed-sum agreements
3.7 The statement must contain
• the total sum paid under the agreement by the debtor
• the total sum which has become payable under the agreement by the
debtor, but which remains unpaid, and the various amounts
comprised in that total sum, with the date when each became due
• the total sum which is to become payable under the agreement by
the debtor, and the various amounts comprised in that total sum,
with the date, or mode of determining the date, when each becomes
due. If the creditor possesses insufficient information to enable it to
ascertain these amounts and dates, it is sufficient if the statement
gives the basis on which, under the agreement, they would fall to be
ascertained. For example, this will cover variable charges based on
an index.
Running-account agreements
3.8 The statement must show the state of the account and in addition must
show
• the amount if any, currently payable under the agreement by the
debtor to the creditor (this would not therefore include payments
payable to third parties), and
• the amounts and due dates of any payments which, if the debtor
does not draw further on the account, will later become payable
under the agreement by the debtor to the creditor. If the creditor
possesses insufficient information to enable it to ascertain these
amounts and dates, it is sufficient if the statement gives the basis on
which, under the agreement, they would fall to be ascertained. For
example, this will cover variable charges based on an index.
OFT1272 | 19
Hire agreements
3.9 The statement must show the total sum which has become payable
under the agreement by the hirer but remains unpaid, the various
amounts comprised in that total sum and the date when each became
due. The statement will therefore be a breakdown of any arrears.
OFT1272 | 20
4 WHEN THE DUTY DOES NOT APPLY
4.1 Sections 77, 78 and 79 set out a limited number of situations where the
duty to supply copies and statements does not apply.
• It does not apply to an agreement under which no sum is, or will or
may become payable by the debtor or hirer. It will therefore not
apply where the agreement has been paid off and terminated. It will
also not apply where judgment has been obtained, unless there is an
interest-after-judgment clause in the agreement which the creditor or
owner has not expressly waived. Where, however, the agreement
has merely been terminated, but monies are or will or may be
payable under it by the debtor or hirer, the OFT considers that the
duty will still apply.22
• It does not apply when the request is made less than one month
after a previous request relating to the same agreement (regardless
of whether the request was made by the debtor themselves or by
someone else on their behalf).
• It does not apply where the agreement is a non-commercial
agreement (that is, an agreement not made by the creditor or owner
in the course of a business carried on by it).
4.2 It should be noted that, while the obligation under section 78(4) to
provide periodic statements in relation to running-account credit
agreements does not apply to small agreements, no such exclusion
applies in relation to the provision of copies and statements on a request
under section 78(1).
22 In Rankine –v- American Express Services Europe Ltd [2008] GCCR 7701 it was held that the
prohibition on enforcement in section 78(6) did not apply to an agreement that 'was at an end'.
However the finding was obiter as the Judge held there had been compliance with the section in
any event. The question whether the duty to provide copies and statements where the
agreement has been terminated but under which monies nevertheless are, will or may be payable
was not an issue in that case.
OFT1272 | 21
5 SANCTIONS FOR NON-COMPLIANCE23
5.1 If the creditor or owner fails to comply with the duty under section
77(1), 78(1) or 79(1), it is not entitled, while the failure to comply
continues, to enforce the agreement.24
5.2 Enforcement of the agreement includes:
• a retaking of goods or land to which a regulated agreement relates
(section 65(2))
• demanding earlier payment of any sum, or recovering possession of
any goods or land, or treating any right conferred on the debtor or
hirer by the agreement as terminated, restricted or deferred (section
76(1))
• terminating the agreement, or demanding earlier payment of any
sum, or recovering possession of any goods or land, or treating any
right conferred on the debtor or hirer by the agreement as
terminated, restricted or deferred, or enforcing any security (section
87).
5.3 In the recent judgment of McGuffick –v- The Royal Bank of Scotland
plc,25 Flaux J held in a case under section 77 of the Act that passing
details of a debt to a credit reference agency and related activities do
not constitute enforcement under the Act. He also held that steps taken
23 Note that this section of the Guidance deals only with the question of whether an agreement
is unenforceable in relation to sections 77, 78 and 79. A creditor's rights to enforce an
agreement may be restricted for a variety of reasons, both under the Act and by virtue of the
general law.
24 Sections 77(4), 78(6) and 79(3). A declaration under section 142(1) of the Act (with the
consequent application of section 106 (rendering securities ineffective) is not available, as
section 142(1) does not apply to unenforceability consequent upon sections 77(1), 78(1) and
79(1).
25[2009] EWHC 2386 (Comm)
OFT1272 | 22
with a view to enforcement, including demanding payment from a
claimant, issuing a default notice, threatening legal action and the actual
bringing of proceedings, are not themselves 'enforcement' under the
Act. On the other hand he confirmed that the actions listed under
sections 76(1) and 87(1) did amount to enforcement notwithstanding
that some of the actions 'less obviously' amounted to enforcement.26
These actions are demanding earlier payment, recovering possession of
goods or land, treating any right conferred on the debtor by the
agreement as terminated, restricted or deferred, enforcing any security
and terminating the agreement.
5.4 While Flaux J agreed with the decision of HHJ Simon Brown QC (sitting
as a Deputy High Court Judge) in Tesco Personal Finance v Rankine 27
that commencing proceedings was not enforcement, but a step taken
with a view to enforcement, both he and HHJ Simon Brown appear to
have been drawing a distinction between commencing proceedings and
entering judgment in those proceedings.28 29
5.5 Importantly and further to the specific interpretation of the statute, the
OFT considers that in taking any such steps, a creditor should in no way,
either by act or omission, mislead a debtor as to the enforceability of the
agreement. To do so would be an unfair or improper business practice
and would be highly relevant to a creditor's or owner's fitness to hold a
licence under the Act. It may also be an unfair commercial practice under
the Consumer Protection from Unfair Trading Regulations 2008 and
26 Paragraphs 74 and 75 of the judgment.
27 [2009] C.C.L.R. 3.
28 Flaux J considered that 'unenforceability' under the Act was a barring of the remedy, not an
extinction of the right. HHJ Simon Brown QC considered that the appropriate response to a
failure to provide information under section 78 during the course of proceedings was to apply to
stay the proceedings.
29 Note: This section of the Guidance describes the analysis in relation to unenforceability
outlined in recent High Court judgments. The OFT will review this section should there be any
further clarification of the consequences of an agreement being unenforceable that may result
from future cases.
OFT1272 | 23
attract enforcement proceedings under the Enterprise Act 2002. An
obvious example of this would be threatening court proceedings when
aware that a judgment could not be obtained because sections 77, 78 or
79 cannot be complied with, without also making that clear to the
debtor/hirer.
5.6 It should also be noted that the court in McGuffick was dealing with the
issue of enforceability under section 77. The court expressly
distinguished the situation where the agreement was improperly
executed at the outset, and accordingly the creditor's rights were always
restricted.30
5.7 The principles of enforcement action in this area are judged by the OFT
to be similar to those applying to statute barred debt. If sections 77, 78
or 79 cannot be complied with so the debt cannot be enforced in the
courts, this does not mean that the debt disappears, and it is perfectly
acceptable for a creditor to seek to pursue the debt. It is also
acceptable, in this context, to register accurately any arrears or default
with a credit reference agency. However, if they were to threaten court
action, knowing that judgment will not be possible and that therefore
court action will not actually be taken, this would be judged by the OFT
to be misleading and oppressive.
5.8 In particular, where an agreement is unenforceable because of noncompliance
with an information request under sections 77, 78 or 79, the
OFT's guidance to creditors or owners on this issue is as follows:
• The OFT would firstly expect the creditor or owner to take steps to
check that there was in fact an agreement with the debtor or hirer,
and in particular whether there are in fact monies outstanding under
it, and if so for how much. This should be capable of being
demonstrated to the debtor or hirer.
30 Paragraph 70
OFT1272 | 24
• Secondly, no communications or requests for payment should in any
way threaten court action or other enforcement of the debt where
the creditor or owner is aware that it will not be entitled so to
enforce the agreement.
• Thirdly, the creditor or owner should make it clear when
communicating to the debtor about the debt that the debt is in fact
unenforceable. Failure to do so, where the creditor or owner is aware
of unenforceability, would in our view unfairly mislead the debtor by
omission.31
• Any communication that implies expressly or otherwise that the debt
is enforceable when it is known that it is not would be misleading.
One way to avoid this would be for the creditor to explain the full
meaning of 'unenforceable'.
5.9 However, where a creditor or owner has satisfied itself that a debt does
exist and is correctly described, even if it is unenforceable under
sections 77, 78 or 79, the OFT's view is that it is acting fairly in
registering a default with credit reference agencies and in informing the
debtor or hirer that it intends to do so. Once again though, the debtor or
hirer should not be told this is the intention unless it is actually intended
to register the debt with a credit reference agency.
5.10 As indicated above, unfair or improper business practices, including
failure to comply with this Guidance, may form the basis for action by
OFT under the Act, including by licensing action or the imposition of
formal requirements. In addition, to mislead debtors into making payment
may amount to an unfair commercial practice under the Consumer
Protection from Unfair Trading Regulations 2008.
31In McGuffick, the bank, knowing that, since it had not complied with section 77, it could not
enforce payment of the loan, when writing to the debtor made it clear that it would not be able
to enforce the loan, although they still thought he should pay since the contract was not void. It
also made it clear that any continuing default would be reported to credit reference agencies.
OFT1272 | 25
5.11 Finally, while non-compliance with an information request is no longer a
criminal offence under the Consumer Credit Act,32 non-compliance with
an information request remains a 'domestic infringement' under the
Enterprise Act 2002, and enforcement proceedings could be issued
under that Act33 if considered appropriate to do so taking account of the
conduct of the creditor or owner.
Further issues in relation to enforcement
Unfair Relationship
5.12 A breach of sections 77, 78 or 79 does not 'of itself' give rise to an
unfair relationship. This view is consistent with the OFT guidance 'Unfair
Relationships - Enforcement action under Part 8 of the Enterprise Act
2002' published in May 2008, at paragraphs 3.10 to 3.17.
Individual Actions
5.13 If a creditor has commenced legal proceedings while non-compliant
under sections 77, 78 or 79, it is appropriate for the debtor to apply to
the court to obtain a stay of the proceedings pending compliance under
sections 77, 78 or 79.
32 The criminal offences for non-compliance under the Act no longer apply as sections 77(4)(b),
78(6)(b) and 79(3)(b) have been repealed by the Consumer Protection from Unfair Trading
Regulations 2008. Note however that these Regulations may provide criminal liability, for
example in circumstances where a failure to provide information affects a transactional decision
of the consumer.
33 By section 170(3), injunctive relief is available in respect of a breach of a requirement of the
Act notwithstanding that section 170(1) states that such a breach shall incur no separate civil
sanction.
OFT1272 | 26
6 REGULATORY COMPLIANCE
Evidence of compliance
6.1 The OFT expects traders affected by this guidance to take reasonable
steps to ensure that they have suitable business practices and
procedures in place to facilitate their own compliance (for example
through training, auditing, record keeping, disciplinary policies/
procedures, or any other means necessary and appropriate to the
business) and to facilitate – and monitor compliance by - their staff,
agents and associates, implementing any changes as necessary.
6.2 The OFT may use its information gathering powers in order to seek
evidence that businesses are following this guidance in appropriate
cases. In addition to its power to require information generally under
section 36B of the Act, in accordance with section 36C of the Act, the
OFT may, by notice to a licensee, require him to facilitate access to his
business premises by an officer of the OFT or a local authority trading
standards officer, in order to allow him to observe the carrying on of the
licensed business or to inspect documents of the licensee which are
specified or described in the notice.
6.3 It may be incumbent on traders affected by this guidance to provide
such documents or information as the OFT requests relating to the
practices and procedures that they employ in connection with their
regulated consumer credit business (for example where the OFT requests
documents pursuant to sections 36B or 36C of the Act) to enable the
OFT to form a view as to whether the practices and procedures that
they employ are effective. Amongst the matters that the OFT is likely to
wish to consider are whether the trader:
• provides accurate copies of documents that give the consumer the
information they are entitled to under sections 77, 78 or 79 of the
Act
• provides documentation that is easy to read
• provides copies of documentation referred to in the agreement
OFT1272 | 27
• is being obstructive in responding to a reasonable request.
6.4 Policies, practices and procedures should be documented and capable of
being made available for the consideration of the OFT and/or the relevant
local authority Trading Standards Service. They should contain sufficient
detail in respect of the actual procedures employed to allow the OFT to be
able to form a view as to whether the procedures appear appropriate.
Traders may be asked to provide a record of the responses they have
given to requests for information made under sections 77, 78 and 79 of
the Act to assess whether, in practice, they are giving effect to their
documented practices and procedures.
6.5 Where appropriate, similar assessments may be made of applicants for
consumer credit licences.
OFT1272 | 28
PART 2 – THE PLAIN ENGLISH
CONSUMER GUIDANCE
OFT1272 | 29
Need information about your credit or hire agreement?
Have you got a loan, or a credit card? Did you buy your sofa or something else
on credit? Maybe you've hired a TV, a washing machine, or a car? If you can't
find your paperwork and would like to know what you agreed and how much
you owe, here's how you can get the information you need.
Sometimes paperwork goes missing, so whether you've moved house and your
filing is hidden under a pile of boxes, or it's just plain lost, you should know that
for only £1 you can find out:
• what you originally agreed with the people you borrowed money or hired
something from
• what your agreement is now (if it's changed)
• how much you still owe.
What you have to do
All you need to do is write to the people you owe and pay them £1. Tell them
you want this information under Section 77 - 79 of the Consumer Credit Act
1974 and they should send you a copy of the information you need.
What you should get
You should get a copy of your agreement. If it's hard to read, for example a bad
photocopy, ask them to send you a better version. It doesn't have to be the
document you signed, though if it isn't, they should let you know. The
paperwork should:
• tell you what your original agreement was, and if there were any changes
made to it later
• include your name and address at the time you first signed the agreement,
but it doesn't have to include your signature, or the date you signed it
• include the statements about your rights that were in the agreement you
signed.
OFT1272 | 30
You should also get copies of any other documents mentioned in your
agreement, although there are some that you don't have to be given.
You should also get a statement of your account (that they have signed) telling
you:
• how much you still owe
• how much you should be paying and when
• if you borrowed a fixed amount of money, from the bank or someone else,
how much you have paid already.
What happens if you don't get this information?
If you've already paid off all the debt they don't have to give you anything.
However, if you still owe money and you don't get what you are entitled to
after 12 working days, then your debt is called 'unenforceable' until you get the
information you asked for.
What does unenforceable mean?
This does not mean your debt is wiped out. You still owe the money, and if you
don't pay you can be charged interest on what you owe, be charged for not
paying (these are called default charges) and it could affect your credit record.
But if you haven't been given the information, they cannot:
• make you pay off your debt before you're supposed to
• get a court judgment against you
• take back anything you've hired or bought on credit, or take anything you
used as security (like your house) when you took out the agreement.
However, they can still:
• ask you to pay what you owe
• send you a letter called a default notice if you miss any payments
OFT1272 | 31
• pass your information on to a credit reference agency, which might affect
your credit record
• pass your information on to a debt collector
• sell your debt to someone else
• take your case to court, although they won't be able to get a court judgment
against you unless they give you the information you're entitled to.
Helpful tips
• You can't be asked to pay more than £1, so make sure you don't pay more.
• If your case is taken to court, you can ask the court not to go any further
(called a stay of proceedings) until you get the information you entitled to.
• If your agreement is very old (made before 19 May 1985) or if your
agreement isn't available, for example if it was lost in a fire or a flood, the
rules are a little bit different. In these cases they can give you a copy of
what they think the current terms of your agreement. You should be told if
that's what they've done.
• Your debt could have been sold to someone else. If it has, the people you
originally signed the agreement with should tell you who to contact, or tell
the people they sold the debt to, to give you the information you've asked
for.
Having trouble paying?
Writing to the people you owe and asking for this information should not be
thought of as an easy way to make your debts go away, or a way to avoid
paying what you owe. Even if they can't give you the information you asked for
right away, the debt still exists. If you stop paying off your debt while it is
unenforceable it can affect your credit record. Also, once they send you the
information the debt is enforceable again and if you haven't paid you may have
to pay default charges.
If you are having problems with your payments speak to your creditor or seek
debt advice. For more help and advice you can contact the following not-for-
OFT1272 | 32
profit organisations for free, confidential and impartial advice, or for details of
where to get advice in your area:
• Citizens Advice
For advice and information on debt and other topics, visit your local Citizens
Advice Bureau (address in the phone book), or go to Adviceguide from Citizens Advice
(England and Wales), The website of the Citizens Advice Bureau Service in Scotland
(Scotland) or
Home - Citizens Advice Bureau
(Northern Ireland).
• National Debtline
If you live in England, Wales or Scotland, phone 0808 808 4000 or visit
National Debtline Call 0808 808 4000 for debt advice and information.
• Advice4DebtNI
If you live in Northern Ireland, phone 0800 917 4607 or visit
Home | advice4debt Northern Ireland | Debt Advice
• Money Advice Scotland
If you live in Scotland, phone 0141 572 0237 or visit
Money Advice Scotland to find contact details for debt advice in
your local council area.
• Consumer Credit Counselling Service
For debt advice throughout the UK, phone 0800 138 1111 or visit
Debt help | Free debt advice for UK debt problems | Get debt free with Consumer Credit Counselling Service

• Consumer Direct
For a list of independent advice agencies, and information about credit and
hire agreements, phone 08454 04 05 06 or visit
Consumer Direct
• Community Legal Advice
If you qualify for legal aid, phone 0845 345 4 345 for free advice or visit
Community Legal Advice - free legal advice for residents of England and Wales, paid for by legal aid
OFT1272 | 33
• Financial Ombudsman Service
If you have a complaint that you can't resolve with your lender, the Financial
Ombudsman Service may be able to help, phone 0845 080 1800 or visit
http://www.financial-omb

OFT Guidance on sec 77/78/79 CCA

OFT Guidance on sec 77/78/79 CCA

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