Credit file reporting two years after VT of Alphera finance contract

[pekingprawn]

Hello,

Hopefully someone can help me take next steps as this matter is causing me problems.

I successfully terminated a car finance agreement through Voluntary Termination (VT) with a lender with written confirmation of this on 1 Dec 2020.

My account was in good standing and every monthly payment for credit was paid on time. My credit file reflects this.

I received a notification of excess mileage charges due on 2 March 2021, totalling around £2k. I paid around £1000 in error and thought the matter was closed.

Since then (for two years), the lender has continued to report on my credit file each month that £945 is overdue which has greatly impacted my credit rating, which is otherwise unmarked by any other account or history - it has taken my rating from near perfect (950+ to very low, around 220)

It is my belief that the lender is not acting fairly because:

1) The amount due is not credit (it is a fee or charge).
2) They should have ceased the credit reporting when the agreement was terminated.
3) The fee was issued to me after the contract was terminated - however I do acknowledge that the fee calculation was agreed in the contract.

I have since paid the amount outstanding, but the financial ombudsman, lender and Experian all disagree with removal of the credit file reporting on the grounds that the principal of the fee was agreed in the agreement itself.

I would like the reporting removed for each month since termination but have no idea who to turn to or the legal grounds I should be using to request this. I cannot afford to pay a solicitor to do this for me but I could afford a single legal letter stating my case.

Any help or guidance appreciated!

[R0b]

Hello

I have plenty of personal experience with this kind of situation. If I remember, Alphera is part of the BMW group and the are aggressive in reporting late payments related to excess mileage charges.

I'm afraid that your only real resolution in fighting this is going to court and challenging it. If you are not prepared to do that, then I suggest you accept those late payment markers are going to be on your file for 6 years. Usually, BMW notify credit reference agencies that the contract is terminated and the account is set as "closed" but continue to report late payments or they have the account as open instead of reporting it as voluntary termination in the month you terminated. The marker on your credit file should be "VT".

Your grounds for bringing a claim will be breach of data protection in terms of inaccurate data under the Data Protection Act 2018. There is no definition in the act of accurate data, but there is a definition of inaccurate data which means incorrect or misleading as to any matter of fact.

The primary argument is that the data is both incorrect and misleading on the basis of what you have identified already, that the alleged non-payment relates to damages for breach of a contractual term, and doesn't form part of the credit. A late payment marker indicates that you have missed or otherwise not paid your credit instalments on time which is factually incorrect. The continued reporting of the late payment markers would indicate that the contract has not been terminated which again is factually incorrect and therefore misleading. Most credit reference agencies have a specific marker for voluntary termination and as I mentioned above, the marker is "VT". Once the VT marker is applied, the account is generally marked as closed.

Question is, has Alphera marked the account as VT to indicate you have voluntarily termintated the agreement? If not, then this is another reason to suggest they are not accurately reporting the information to CRAs and abusing their position.

Supporting your case there are two key points:

- The ICO's guidance on reporting arrears to credit reference agencies (link here). On page 7, it talks about defaults and when they should be recorded and it states that a default should not be recorded where the outstanding amount is solely made up of fees and charges. The same principal applies to late payments markers since multiple late payments amount to a default.

Also you should take notice of the of Principal 1 on page 3, where it says "The types of product that are reported all relate to forms of credit ... ". The onus s on Alphera to prove the reported amount is a form of credit, which of course they cannot.

- Grace v Blackhorse, Court of Appeal decision. This decision related to a wrongful registration by Blackhorse saying that the consumer had defaulted but the agreement was actually determined to be unenforceable and ultimately, the CoA found that the registration was wrong. The link to the decision can be found here and worth a read yourself but I'll highlight a key paragraph below that's relevant to your dispute.

38. As for the second submission, I have not been persuaded that the shortcomings in the CRAs’ registration systems can excuse a registration which is in substance inaccurate because of an omission (namely that the ‘default’ related to an unenforceable agreement). If an accurate registration cannot be accommodated, then the answer is for the industry to change its registration systems, and in the meantime for inaccurate registrations not to be made.

I should. warn you that BMW are pretty aggressive so I would expect them to defend any claim in full, though I have seen some people issue proceedings I have yet to see those people report back on the status of the claim. That could be because they have lost their case or maybe I suspect they have settled but are under a duty of confidentiality.

You can claim compensation for inaccurate data but there's no rule on what can be claimed. Previously I have claimed in the region of £1,000 to £1,500 but it could be more or less and the amount you claim then increases the court fees you have to pay so bear that in mind also. I'm guessing your primary concern is getting your credit file back to where it should be.

[pekingprawn]

Hello Rob,

Thanks for taking the time to respond. You have confirmed a number of points that I believe to be true and reflect inaccurate / incorrect reporting.

I have attached a picture from my Experian credit file - it states:

The lender has reported that the account has been closed under Section 99 of the Consumer Credit Act 1974. This relates to hire-purchase and condition-sale agreements (credit used to buy a car or other vehicle) and allows you to return the car and owe nothing once you have repaid half of the total price.

I'm not sure if this means the account has been properly marked as VT.

I should note that I had already submitted a complaint to the ICO and their response is noted below. It would be worthwhile seeking your view on this - in my mind I should be able to follow up regarding my complaint and ask for it to be reviewed on the basis that I didn't complain to the ICO regarding arrears - the matter is about data accuracy. I have highlighted one of their response comments in bold - it might be worthwhile quoting something that shows innaccuracy as a matter of fact?

Thank you for your correspondence to the Information Commissioner’s Office (ICO) in which you have complained about Alphera Financial Services.

The ICO’s role

Part of our role is to consider complaints from individuals who believe there has been an infringement of their data protection rights. Our role is to consider whether there is an opportunity to improve the information rights practices of organisations. We may not investigate or adjudicate on every individual complaint.

We will put most of our effort into dealing with matters we think give us the best opportunity to make a significant difference to an organisation’s information rights practices.

It is up to us to decide whether or not we should take further action. Even where we decide that further action is not required at the moment, perhaps because the organisation has made a mistake but is working to put things right, we will keep concerns on file. This will help us over time to build a picture of an organisation’s information rights practices.

Our decision will not affect your ability to enforce your rights through the courts.

Our view

I have considered the information available in relation to this complaint and I am of the view that there remains a dispute about an arrears in relation to an agreement you held with Alphera.

Where there remains a dispute about a matter between an individual and a controller, it is something for the two parties to resolve between them. It is not the role of the Information Commissioners Office to comment on the dispute or act on behalf of individuals to resolve matters to their satisfaction. We use information gained from our decisions to aid in our regulatory process but this does not necessarily mean that individual’s specific disputes will be resolved by the ICO.

For us to look into accuracy of the reporting on your credit file, the information would have to be incorrect as a matter of fact. You would have to prove as a matter of fact that the arrears should not exist for example, you did not go over the agreed mileage and/or the car was not returned damaged.

We are unable to comment on contract matters and this is something you will have to seek independant legal advice for if you choose to do so. If after you have done this, resolve the contract matter and are provided with an outcome, you may want to bring this to us if you remain unhappy about the data protection related matters that are within it.

We understand that you may be disappointed with this outcome. However, I trust that this information has helped to clarify the role of the ICO and the application of the data protection legislation in this instance.

Right to an effective judicial remedy / Right to compensation and liability [GDPR Articles 79 & 82]

If you are seeking personal redress or compensation for the way an organisation has dealt with your personal information, you will need to pursue this independently through the courts or with an industry's own ombudsman or regulatory body.

Please be advised that this is not a process that the ICO can assist you with. We therefore recommend that you seek independent legal advice if you wish to pursue this course of action.

[R0b]

The ICO are useless so that's a pretty standard response and a bit of a cop out. I'm pretty sure there's something in the legislation that allows you to make a formal request to the ICO to determine whether a controller is correctly processing your data, can't remember what section it falls under but I'd have to check. It's a bit of a double edged sword because if you go down that route and that the ICO does not find in your favour, you can bet Alphera will use that against you if you brought a claim for inaccurate data. However, the ICO is not always correct and the courts have found that the decisions by the ICO are not always right.

I don't know what credit agency you are looking at as I tend to use Experian (you say it's Experian though looks different to me so could be through a third party) but it looks like Alphera have given notice that you have VT'd the agreement given the statement in the box. There is usually a status code of VT in the month that you terminated and then after that the account should be marked as closed but some credit reference agencies show it differently. Despite that, it does look like that Alphera have continued to report late payments despite you having terminated the agreement so that could go against them and they would need to explain that.

I suggest you double check the agency you are viewing and if it's not Experian, you can obtain a free regular report via Money Saving Expert's Credit Club but do correct me if I am wrong.

So, I guess the crucial question is, what do you want to do? Are you prepared to take it all the way to court, if necessary?

[pekingprawn]

Hello,

Thanks again for your response.

The screenshot was from Experian Credit Expert. I have attached another screenshot from Credit Club.

I am prepared to take the matter to court - the issue is that I need the marker removed promptly as I have a balance transfer credit card ending this month and the interest rate is very high when the 0% rate finishes. It will cost me over £500 a month in interest alone unless I can transfer to another (new) transfer credit card which with my current rating will not be accepted. Going through the courts will take more time than I have.

My thoughts were to respond to the ICO clearly stating why (based on legal argument) I believe the markers should be removed. There is a chance they find in my favour and if they do, I can use this to issue a legal letter to Alphera along with a threat to sue.

The bit I need is a convincing legal argument showing that the marker is inaccurate / not allowed....

[R0b]

Going through the ICO will inevitably delay matters and even if you do get a favourable decision, the court's are not obliged to accept it, though you are right it is persuasive material.

Under the old Data Protection Act 1998, there used to be a right for data subjects to ask the ICO to make an assessment of whether their rights have been infringed. It was known as a 'section 42 request' because that was the section under the 1998 Act that gave individuals the right to request an assessment.

Under the new DPA 2018 the only thing that comes close to that is section 165 which is a right to complain that your rights have been infringed. There are some obligations for the ICO to investigate and come to a conclusion but the response you provided to me seems like they are evading their duties as a regulator. It is irrelevant whether the issue relates to a contractual dispute, your concern is the fact that they are processing your data unlawfully and that, as the UK's regulator for data protection, falls within their jurisdiction. If the regulator doesn't comply then you can make an application to the Information Tribunal for a determination and order that the ICO considers your complaint and investigates it.

Link to section 165 and section 166 for your own reading.

I have some old materials I will try and dig out later today and upload it, which you may be able to use to support your case with the ICO but I think if you are going down the ICO complaint route, then I think your letter should be clearly identified as a section 165 complaint so there is no misunderstanding as to what you are asking for. I might have an old section 42 assessment letter lying around that might help you to frame your complaint but otherwise, going down the letter before action route is going to be your only other viable solution.

[pekingprawn]

Thanks so much.

I will likely take two routes - ICO complaint and a letter to BMW Group Finance in parallel rather than Alphera (where I sent my previous correspondence). Both letters will contain elements of your advice. If the ICO complaint works, I'll forward that to BMW to support my argument.

If either fail, I'll ask a solicitor to draft a letter to BMW Group Finance threatening to sue.

If that fails, I'll go to the courts but will get that ball rolling now anyway, just in case. It costs very little to start, I believe.

[R0b]

I've found a couple of things from a few years ago when the GDPR recently came into force, which might be useful to you in compiling a complaint to the ICO and any letter before action. The LBA probably needs updating as I did spot a reference to the definition of inaccurate data referring to the 1998 act whereas the same definition can be found in section 205 of the 2018 act. Otherwise the majority of it is probably there and you get the gist.

Note the Experian guidance document is no longer available on their website but I retained a copy as it's useful as a reference point on status codes and what they mean.

I suggest you have a full read of all documents and try to familiarise yourself before jumping in and sending something off in haste. Happy to answer any questions where I can and if you want any feedback on your LBA/complaint then feel free to post up a draft but make sure to remove personal info.

[pekingprawn]

Apologies for not responding to your very kind advice before now. I have drafted the LBA attached and have forwarded the same to a data breach specialist Solicitor for advice. My next move is to issue the letter with any suggested amendments from you / the Solicitor or both, soonest.

I have removed personal / sensitive information from the PDF copy.

Thank you again for being so kind to assist with this matter.

[M3Cutter]

I've found a couple of things from a few years ago when the GDPR recently came into force, which might be useful to you in compiling a complaint to the ICO and any letter before action. The LBA probably needs updating as I did spot a reference to the definition of inaccurate data referring to the 1998 act whereas the same definition can be found in section 205 of the 2018 act. Otherwise the majority of it is probably there and you get the gist.

Note the Experian guidance document is no longer available on their website but I retained a copy as it's useful as a reference point on status codes and what they mean.

I suggest you have a full read of all documents and try to familiarise yourself before jumping in and sending something off in haste. Happy to answer any questions where I can and if you want any feedback on your LBA/complaint then feel free to post up a draft but make sure to remove personal info.

Hi, I don't post on here so much, but I do visit here regularly, as I find it a fantastic source of information.

I'll be really interested in the outcome as I'm experiencing an almost identical situation with the same company, though my agreement was a PCP agreement, rather than HP.

It was interesting what you said about the salesman. I had a similar chat, with the salesman recognising that my mileage was over the predicted limit, said "you might be as well VT-ing the car, because you won't have to worry about the mileage. They don't like you doing it, but that would get out of it" (I'd experienced a catastrophic loss of income 3 months before the end of a 4 year agreement at the time). I got back on the ladder enough to think I could get a cheaper car through BMW, and chose one, with the car going to auction, wiping the mileage, and needing me only to pay £1000 deposit on the new car, but my wife intervened, and long story short, I ended up VT-ing the car anyway (no charges on inspection). When I cancelled the order, the salesman said "it's unlikely you'll get the deposit back, because the manager is really p***ed off at you at the moment". I didn't get it back.

Anyhoo, I look forward to hearing about any future developments...