Issues With Voluntary Termination And The Ombudsman

[hotdog004]

Hi,

I have followed the great advice from you guys but feel I've hit a brick wall. I VT'd my finance and refused to complete the forms as there was a collection charge and they were also asking me to declare damage which I was not happy to do. This was dragged out for a few months even with the threat of cancelling the tax etc and charging for storage, during this time the finance company have claimed that I have defaulted resulting in £500 of charges plus the collection charge. I took it to the Ombudsman and the have ruled in favour of the finance company, I have the option to continue my complaint but am not sure how to approach it. I have copied the letter from them below.

Any advice would be much appreciated.

Jon

your complaint about Clydesdale Financial Services Limited (trading as Barclays Partner Finance)

Thank you for waiting while I’ve been looking into your complaint. I’ve now looked at all the information that you and the business have given me. Based on what I’ve seen, I think the business have dealt with your complaint fairly – so I’m not asking them to do any more. I know this isn’t the answer you were hoping for. But I’ve explained below why I think this is the right outcome – taking into account everything that’s happened. your complaint You wanted to voluntary terminate (‘VT’) your agreement. You’re complaining that the business failed to carry out your instructions then incorrectly added arrears to the outstanding balance. my findings
 Essentially you didn’t sign the VT agreement until 18 January and until that point the agreement ran as normal with your payments falling due.  The VT document of 14 October 2015 is key and sets out the terms on which Barclays would terminate the agreement. It says that you need to sign and return the documents by 28/10/2015 and if you didn’t, then the business would assume you didn’t want to VT. You didn’t do this so your agreement wasn’t terminated and liability under your contract continued. You didn’t have the right to terminate the agreement without following Barclays’ instructions.  However, as you say, you’d paid over half the balance. The business doesn’t dispute this. They actually sold the car for less than the amount shown on your statement of account, thereby incurring a loss. You were only responsible for paying the arrears which had accrued when you missed your October, November and December payments – these were £499.17 – plus the collection charge and £18 to cover the difference between the CAP valuation and the price the car reached at auction (£18).
please write to Financial Ombudsman Service Exchange Tower London E14 9SR
dx 141280 Isle of Dogs 3 website www.financial-ombudsman.org.uk
2
 In terms of the collection fees, the VT document clearly states how much collection will cost you and gives you the alternative of delivering it if you didn’t want to pay this. The agreement at clause 7 also says you’ll be liable for collection costs. The business has explained that you’re liable for £70 (plus VAT) rather than £125 because you took the car to a local agent. Please tell me which part of the Consumer Credit Act 1974 (‘the CCA’) says you can’t be held liable for collection costs and I will consider this point further if necessary.  I can’t see any evidence that you were told the business would waive its collection costs – again, if you can provide evidence they did then I’ll reconsider.  The business told you what you’d have to do to VT the car but you decided not to pursue this option, regardless of the consequences.  You were given the wrong information about your outstanding liability before your payment of 30 September 2015. However, when you rang again on 8 October 2015, you were advised to keep paying. I therefore consider that you were told this well in advance of the payment due on 30 October 2015 – yet you didn’t make that one or the next two payments. The business has acknowledged you were given incorrect information and I’m satisfied that the £250 compensation was reasonable.  So by 31 December, you hadn’t terminated and had stopped payments. It was therefore reasonable for the business to send you send you a default notice at that point.  The CCA states at section 99 that you’re entitled to end the agreement by giving notice to the creditor. Section 100 goes on to explain that you were liable for paying one half of the total cost and also says that Barclays would be entitled to compensation if you hadn’t taken care of the goods. But while you have the right to end the agreement, they are entitled to specify terms.
my conclusions
In conclusion, I’m satisfied that you needed to comply with the terms of your agreement and if you wanted to progress the VT, you needed to sign and return the documents the business sent you.
what happens next If you don’t want to take your complaint further, you don’t need to reply. But if you don’t agree with what I’ve said, please let me know why by 29 April 2016. I’ll look at any new information you give me and let you know what I think. If we don’t hear from you by 29 April 2016, we might not be able to look at your complaint again. So if you want to reply but you think you’ll need longer, please tell me as soon as possible. In every case, both the business and their customer can ask an ombudsman to make a final decision. But I think it’s unlikely the outcome would be different – unless there’s any important information that you haven’t already given us

[R0b]

Re: Issues With Voluntary Termination And The Ombudsman

Hello hotdog, I'm sure we might be able to persuade the ombudsman to reconsider their findings. I'll pikely post something up tomorrow and see what you think of it. You do not have to accept the ombudsman decision and it won't be binding, Barclays will still need to take you to court if they want to enforce it but o think that will be difficult against a judge who has a legal background as opposed to someone who may have little or no legal knowledge.

[hotdog004]

Re: Issues With Voluntary Termination And The Ombudsman

Thank you for such a reassuring and prompt reply. One thing I failed to mention was the debt has been passed to a debt collection agency where will I stand with this?

Thanks again

Jon

[R0b]

Re: Issues With Voluntary Termination And The Ombudsman

Thank you for such a reassuring and prompt reply. One thing I failed to mention was the debt has been passed to a debt collection agency where will I stand with this?

Thanks again

Jon

Afternoon, I wouldn't worry about the debt collection agency just yet, your complaint is with the ombudsman so just ignore them for now and wait and see the Ombudsman's response. I have drafted a letter or email of reply based on the Ombudsman's response you have posted. Not sure whether it was sent by email or letter so you will need to amend it slightly where I have said letter/email.

Let me know your thoughts on this, I have highlighted in red something which needs verification from you. I know that creditors a lot of creditors put wording in about agreeing to damages in the VT documents so just double check that.

I've attached the word document too for formatting purposes.

------------------------------------------------


Dear [NAME]

Reference number:
Re: Voluntary termination complaint

Thank you for your letter/email concerning my complaint with Barclays Partner Finance, I have had the opportunity to review your comments regarding the additional charges levied by Barclays. In your letter/email, you suggested that you would review your decision should any new information come to light. I understand that your decision is not binding nor am I obliged to accept your findings however, I am writing to you in the hope that you reverse your decision, finding in my favour based on the information provided below. For ease of reference, sub-headings are provided for each set of charges against me.


Accrued arrears totalling £499.17
In your letter, you had suggested that the agreement was not terminated until 18 January 2016 despite giving notice to Barclays on [DATE] 2015. Your decision is based on the fact that I was required to sign and return the VT documents to Barclays and until this was done, the agreement continued.

In arguing this point, I refer you to section 99(1) of the Consumer Credit Act 1974 (CCA). As you acknowledged, this section enables a consumer to terminate an agreement by giving notice to an authorised person who is entitled to receive the sums under this agreement and in this case Barclays. However, I disagree with your comments stating that Barclays can determine the terms of the termination such as signing the VT documents before the agreement is officially terminated.

Section 99 does not stipulate any specific formalities when a consumer gives notice to terminate, such as signing any documents, the method of the notice given etc. but merely states that notice should be given. To suggest that Barclays can dictate the terms of how and when the voluntary termination takes effect goes beyond the obligations required under section 99.

This is further re-enforced under section 173(1) of the Act (copy attached) which says the following:
“A term contained in a regulated agreement or linked transaction, or in any other agreement relating to an actual or prospective regulated agreement or linked transaction, is void if, and to the extent that, it is inconsistent with a provision for the protection of the debtor or hirer or his relative or any surety contained in this Act or in any regulation made under this Act”

As you can see, subsection (1) explicitly states that that any terms which are inconsistent with the Consumer Credit Act shall be void and cannot be enforced. Therefore, and with respect to your initial findings, by the fact that Barclays requires me to sign the VT documents and return them before the agreement can be terminated is inconsistent with section 99 insofar as it only requires myself to notify Barclays that I wish to terminate the agreement. It could be further argued that, termination of the agreement takes effect once that notice is received in accordance with the usual postal delivery times.

Furthermore, the VT documents which I am allegedly required to sign, contains additional terms which acknowledges that I shall be liable for any damages contained in the damage report and regardless of whether or not I disagree with the damage report, I am still liable as I have signed the VT documents agreeing to this. I am therefore in a catch-22 situation whereby the agreement cannot be terminated until I sign the VT documents but equally, if I do sign the VT documents, my liability may increase a substantial amount as I had agreed to pay any damages noted in the damage report even if the vehicle was returned in a reasonable condition as outlined in section 100 (2). A further explanation of why I cannot incur further charges are set out below.


Collection fees (£70) and CAP valuation (£18)
As regards to the collection charges, I also disagree with your view that Barclays is entitled to recover these sums. Referring to section 100(1) of the CCA, a consumer’s liability where the agreement is terminated in accordance with section 99, liability is restricted to one-half of the total price under the agreement.

The definition of what is meant by “total price” is set out in section 189 of the CCA, which is the definitions (copy attached). The Act defines “total price” as:
“the total sum payable by the debtor under a hire-purchase agreement or a conditional sale agreement, including any sum payable on the exercise of an option to purchase, but excluding any sum payable as a penalty or as compensation or damages for a breach of the agreement” (emphasis added).

It is therefore my argument that as you rightly pointed out, my liability is restricted to one-half of the total amount payable under the agreement. As the definition of total price implies, this excludes any sums dues which as a result of breaching any terms of the agreement. As such, The CCA makes it very clear that creditors cannot impose any further charges on me provided that I have terminated the agreement as per section 99 and paid one-half of the total price payable. This is also mentioned in section 173(2) which confirms that:

“Where a provision specifies the duty or liability of the debtor or hirer or his relative or any surety in certain circumstances, a term is inconsistent with that provision if it purports to impose, directly or indirectly, an additional duty or liability on him in those circumstance” (emphasis added).


Conclusion
In light of the above, I believe it is correct that Barclays cannot require me to sign the VT documents or that they are entitled to the collection charges and the CAP valuation. This is because those terms are inconsistent with my rights in relation to voluntary termination. I hope this further clarifies my position and I urge you to reconsider your initial findings against me based on the relevant provisions of the CCA referred to in this letter/email.

I look forward to hearing your response.

Regards,

[hotdog004]

Re: Issues With Voluntary Termination And The Ombudsman

Hi Rob,

Thank you for taking the time to draft this for me it is a very well composed letter and it will be sent to the Ombudsman as soon as I have completed it.

Yes you're correct the VT documents had a comprehensive damage report that Barclays wanted me to sign. Within my contract with them it does stipulate there will be collection charges is it the case that the CCA supersedes this?

Thanks

Jon

[R0b]

Re: Issues With Voluntary Termination And The Ombudsman

In terms of hierarchy, statutory legislation trumps contract law, particularly when it comes to business to consumer agreements. So the CCA will overrule the contractual provisions if there is a conflict and that is set out in the sections I have referred to in the letter. If however, you decided not to VT and followed the agreement to the end, then you would not be entitled to rely on section 99 and the collection charges as well as any damages to the vehicle if not returned in a condition according to the contractual terms would be enforceable. Because section 99 explicitly restricts you liability, you are entitled to that protection where there is a conflict.

[hotdog004]

Re: Issues With Voluntary Termination And The Ombudsman

That's great

I've sent it and willl post tge response when I hear back from the ombudsman.

Many thanks

Jon

[R0b]

Re: Issues With Voluntary Termination And The Ombudsman

Good stuff,

As I have said in the letter, even if the review of findings still does not go in your favour I believe you can request an Ombudsman's final decision. Even still, that is not binding on you and you do not have to accept it. It will then be down to Barclay's to decide whether or not they wish to take you to court - I would say that it is unlikely given the sums and the majority of the amount relates to sums allegedly owed after you gave notice to terminate.

The Ombudsman of course does not need to follow the law to the letter when making their decisions but if it went to court, then the judge would indeed follow what the CCA says.

Just out of curiosity, in your agreement, where it says you have the right to terminate, does it say that you must sign and return the VT documents they send out? or does it just say that you need to give notification?

[hotdog004]

Re: Issues With Voluntary Termination And The Ombudsman

No it says

"you have the right to end this agreement. To do so, you should put it in writing to the person you make payments to. They will then be entitled to the return of the goods and to half the total amount payable under this agreement That is £xxxx.xx. If you have paid at least this amount plus any overdue installments and have taken reasonable care of the goods, you will not have to pay any more."

It's interesting as this and various other bits of information are all under a heading of Conditional Sale Agreement by the Consumer Credit Act 1974 all of the delivery charges are on a different page (still with no mention of having to sign documents) that seems to be Barclays interpretation of the rules lol..

Thanks Again I will keep you updated.

Jon

[R0b]

Re: Issues With Voluntary Termination And The Ombudsman

Its a pretty standard clause that, so again something you could put forward to the Ombudsman and point out that there is nothing in the agreement which says that you must sign the VT documents so you find it difficult to understand how he/she has come to the conclusion that the agreement continued for refusing to sign them.

It will be interesting to see the final decision because I don't believe there is a published decision on the FOS website about VT on Conditional Sale/HP agreements so a finding in your favour would be very useful.

[hotdog004]

Re: Issues With Voluntary Termination And The Ombudsman

I actually stated that in my first complaint, something the ombudsman has seemed to dismissed. Let's hope they look at it properly this time..

Jon

Jon

[R0b]

Re: Issues With Voluntary Termination And The Ombudsman

Certainly something to re-raise if you speak to the person again or request a final ombudsman decision. Lets wait and see what happens.

[hotdog004]

Re: Issues With Voluntary Termination And The Ombudsman

OK. Thanks again for the advice it is very much appreciated.

Jon

[hotdog004]

Re: Issues With Voluntary Termination And The Ombudsman

This is the response I have received. Why do they need a signed copy of my contract do you think?

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Thank you for your email. I’ll consider the points you’ve raised and respond as soon as I can.

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Please could you send a copy or an image of your signed agreement? The parts you’ve sent don’t show your signature.

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I’d be grateful if you could forward this as soon as possible and no later than 21 April.

*

[R0b]

Re: Issues With Voluntary Termination And The Ombudsman

Not sure, perhaps he is looking at the view that if you didn't sign the agreement they can't impose the terms?

If you don't have a signed copy or weren't given one then just say.

I would suggest also it being a good time to re-mention to him that in light of your further comments made, you would also like to remind him and add that as regards to the signing of the VT documents, there is no specific reference in the agreement that you are required to any documents prior to the agreement being terminated. This is because as you have pointed out in your email, to do so would be inconsistent with your rights. If he still disagrees and upholds his initial findings, you would like a clear explanation as to why he believes the agreement did not terminate until signing the documents despite there being not reference in the contract to do so.