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OFT Warns On CMCs

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  • OFT Warns On CMCs

    Press releases 2010 -


    Consumers warned on 'unenforceable debt' claims

    105/10 16 October 2010
    The OFT is warning consumers that businesses that claim to be able to use sections 77/78/79 of the Consumer Credit Act 1974 to wipe out their debts are misleading them.
    The OFT has today published a guide on the rights consumers have to request information under these sections of the Act. This explains that for a fee of £1 consumers can request a copy of their credit or hire agreement and information on their account so that they can find out:
    • what was originally agreed
    • what the agreement is now (if it has changed)
    • how much is still owed.

    If the lender fails to provide the requested information the agreement becomes 'unenforceable' which means the lender cannot get a court judgement against the borrower, take back hired items or items bought on credit, or take anything used as security (like a car) when the agreement was made.
    However, the guide warns that, even if a credit or hire agreement becomes 'unenforceable', consumers would still owe any outstanding money to the lender, interest could be added to their loan or hire agreement, default charges could be made, and any failure to pay could impact on their credit record. The guide also explains that the debt is enforceable again as soon as the lender provides this information.
    Ray Watson, Director of the OFT's Consumer Credit Group, said:
    'Consumers have a right to information on debts they owe, but it is important that they realise that these sections of the Act cannot be used to write off legitimately owed debts.
    'Although the debt can be classified as unenforceable until the right paperwork is provided, people are encouraged to seek advice and help on how they can continue to repay the money they owe. Consumers can get free advice on debt by contacting Citizens Advice or the Consumer Credit Counselling Service.'
    NOTES
    1. See guidance for consumers and a separate guide for the credit lending sector on the unenforceable credit agreements page.
    2. The guidance incorporates the findings of recent High Court cases. Sections 77-79 of the Consumer Credit Act 1974 (the CCA) allow a consumer to request (amongst other things) a 'true copy' of his/her agreement. The High Court ruled that a true copy does not have to be a photocopy or an exact copy of the original. The lender is allowed to provide a reconstituted agreement, as long as that version is accurate and contains all the original information apart from the few exceptions that the law allows (which include the signature, signature box and date of signature). The judgment in Carey v HSBC Bank Plc [2009] EWHC 3417 can be found on the Judiciary of England and Wales website.
    3. At the beginning of this year, the OFT prepared and consulted on draft guidance, after it became clear that there were a number of misunderstandings about lenders' obligations under Sections 77-79 of the CCA, and the impact on the enforceability of debts. Today's final guidance clarifies the OFT's position.
    4. Under the CCA, businesses that offer goods or services on credit or lend money or are involved in activities relating to credit or hire must be licensed by the OFT. The OFT has a duty to protect the interests of consumers by monitoring the fitness of those holding or applying for licences.
    5. Consumer can find general information about debt management from www.directgov.uk
    Tags: None

  • #2
    Re: OFT Warns On CMCs

    The OFT is warning consumers not to stop paying. I am also warning people to think extremely carefully before stopping paying, we have many many cases on here and across other forums where people have stopped paying, been taken to court, a copy (print out of computer stored original front of agreement and reconstructed terms and conditions) has been provided and have ended up with a CCJ for the original debt plus, in some cases, massive costs liabilities added on to the debt. The CCA should only be used to support LEGITIMATE DISPUTES over whether money is owed or terms are being applied correctly. Not as debt management.


    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

    #staysafestayhome

    Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

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