Extortionate Credit Agreements

[Amethyst]

Just collecting some infomation together. If anyone has any further information please feel free to add to this thread.

Extortionate Credit in the UK
http://www.opsi.gov.uk/ACTS/acts2006...0060014_en.pdf
http://www.publications.parliament.u...025/fair-1.htm
The Office of Fair Trading: OFT supports proposals to tackle extortionate credit
Article Display
http://www.oft.gov.uk/shared_oft/pre.../extcredit.pdf
Extortionate Credit
The Poverty Premium

The Office of Fair Trading: Unfair relationships

http://www.efbf.org/jobs/Press-Cryin...ates-12618.htm

Provy or loan shark? There may be no choice - money.scotsman.com

http://www.competition-commission.or...urdoorstep.pdf

Adjudication - re GMTV and provident

The Case for a Cap on Interest Rates in the Home Credit Market

[Nattie]

Re: Extortionate Credit Agreements

Daylight Robbery and CAB report
http://www.citizensadvice.org.uk/pdf_drob.pdf
summary of above which is from 2000 http://www.nacab.org.uk/index/campai...ylight_robbery
Slightly dated but 1999 report called extortionate credit in the UK
http://www.pfrc.bris.ac.uk/Reports/E...20the%20UK.pdf
Extortionate credit re insolvency
http://www.insolvency.gov.uk/freedom...rt5/part_5.htm
some case law on extortionate credit.
http://www1.lexisnexis.co.uk/lawcamp...ID=14184&tid=7
this looks very interesting
http://www.creditlaw.co.uk/Refpages/extortionate.htm
another interesting bit from the Oxford uni boys and girls
http://www.oup.com/uk/orc/bin/978040.../0203/ch26.pdf

[Nattie]

Re: Extortionate Credit Agreements

Sections 137 - 140 of the CCA 1974
http://books.google.com/books?id=oxw...kCVKPdNq4awuNw
worth a look me thinks

[Amethyst]

Re: Extortionate Credit Agreements

Competition Commission - Inquiries - Home Credit

[Nattie]

Re: Extortionate Credit Agreements

http://www.thisismoney.co.uk/credit-...7&in_page_id=9
from 2005 but may still have some relevance

[Nattie]

Re: Extortionate Credit Agreements

slightly older but from a speach by David Clelland who is still a Labour MP
http://www.david-clelland.org.uk/030212poverty.htm

[Nattie]

Re: Extortionate Credit Agreements

http://www.scotland.gov.uk/Topics/Pe...ion/17413/9272
scottish policy and page was updated on 16/02/08.

[Nattie]

Re: Extortionate Credit Agreements

Source:
http://www.opsi.gov.uk/Acts/acts2006/en/06en14-a.htm



UNFAIR RELATIONSHIPS
44. Sections 19-22 repeal and replace sections 137-140 of the 1974 Act which empowered the Court to reopen an 'extortionate credit bargain'. A bargain was 'extortionate', if at the time the agreement was made, it required the debtor to make payments which were grossly exorbitant or otherwise grossly contravened ordinary principles of fair dealing. In coming to its conclusions the court was required to consider evidence produced concerning specific factors relevant to prevailing interest rates, the debtor (e.g. age, experience or degree of financial pressure) and creditor (e.g. accepted risk having regard to value of security).
45. The amended provisions will enable a court to consider whether the relationship between the creditor and debtor arising out of that agreement is unfair to the debtor because of the terms of the agreement, the way in which the agreement is operated by the creditor or any other thing done or not done by or on behalf of the creditor before or after the agreement was made. The court may take into account all matters it thinks relevant relating to the creditor and debtor in making its assessment. The court is provided with a broad range of remedies under new section 140B to address the unfairness.
Section 19: Unfair relationships between creditors and debtors
46. Section 19 inserts a new section 140A after section 140 of the 1974 Act. Section 140A(1) enables a court to make an order under the new section 140B, inserted into the 1974 Act by section 20 (see below) if it finds that the relationship between the creditor and the debtor arising out of a credit agreement, or that agreement taken with any related agreement, is unfair to the debtor. A relationship may be unfair to the debtor because of one or more of the following:

• any of the terms of the agreement or any related agreement;

• the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;

• any other thing done (or not done) by, or on behalf of, the creditor (whether occurring before or after the making of the agreement or any related agreement).

• 47. The court may take into account all matters it thinks relevant (including matters relevant to the debtor and to the creditor) in determining whether a relationship is unfair. This may include anything done or not done on behalf of or in relation to the creditor's associates or former associates (as defined by section 184 of the 1974 Act).

48. Section 140A does not apply to agreements that are exempt under section 16(6C) of the 1974 Act. Section 16(6C) exempts consumer credit agreements secured on land that are regulated by FSA under FSMA.
Section 20: Powers of the court in relation to unfair relationships

• 49. Section 20 inserts a new section 140B after the new section 140A (inserted into the 1974 Act by section 19). Section 140B sets out the types of orders that a court may make in relation to any determination that a relationship between a creditor and a debtor is unfair.

Section 21: Interpretation of ss.140A and 140B of the 1974 Act
50. Section 21 inserts a new section 140C after the new section 140B (inserted into the 1974 Act by section 20). The new section 140C defines the types of agreements that are covered by sections 140A and 140B. Any agreement that involves the provision of credit to an individual, whether or not regulated by the 1974 Act (except as specified (see paragraph 48 above)), is covered. The sections also cover, through the definition of "related agreement", the practice where the creditor enters into successive credit agreements with a debtor for the purpose, for example, of increasing the total amount of the debt or obtaining multiple fees from the debtor for setting up each loan.
Section 22: Further provision relating to unfair relationships
51. Section 22 makes consequential amendments. In particular, it inserts a new section 140D, which requires OFT to give advice and information about the interaction between the provisions on unfair relationships and Part 8 of the Enterprise Act 2002. Part 8 of the Enterprise Act 2002 allows OFT to bring proceedings against a person who, as a consequence of a breach of a statutory obligation, harms the collective interests of consumers in the United Kingdom. The advice and information published by OFT may include examples of the circumstances, conduct or practices that, in the opinion of OFT, could give rise to an unfair relationship between creditors and debtors.
52. Section 22(3) repeals sections 137 to 140 of the 1974 Act, which permit the court to re-open or set aside a credit agreement if it finds the credit bargain to be extortionate (see paragraph 44 above).

[Nattie]

Re: Extortionate Credit Agreements

This one is voidable transactions so may not be relevant
http://www.harneys.com/files/legal-g...ansactions.pdf

[TANZARELLI]

Re: Extortionate Credit Agreements

http://www.pfrc.bris.ac.uk/Reports/E...20the%20UK.pdf

I think you posted this in post#1 but this is a better copy Amethyst.

EDIT sorry have just noticed Nattie has also posted this lol

[Happyolddog]

Re: Extortionate Credit Agreements

My eldest son has just completed his masters degree, so after so many years at ubiversity he has amassed considerable debts. I was disgusted that Vanquis had been able to pick up on his problems and try to exploit this to their profit. Here is a copy of their offer to him.

[Nattie]

Re: Extortionate Credit Agreements

50% interest rate perhaps??? I have seen them and they are extortionate but legal.

[Paule]

Re: Extortionate Credit Agreements

Figures from FinanciaProvident l have shown that nearly two million people took out loans in 2007 with interest rates as high as 100 per cent . The doorstep smallloans lender now has 1.6 million customers – a 5 per cent increase on 2006 – who borrow an average of £400. 2007 saw Provident Financial make pretax profits of £115.2 million – an 11 per cent increase on 2006. With the number of people being rejected for loans by major banks on the up – Provident estimate there are now ten million people who struggle to get loans from high street banks – the doorstep lender looks set to enjoy a profitable 2008.