Voluntary termination refused

[Guest]

morning, wonder if you coukd advise me.
the last 3 months I have been on a payment holiday with my finance company SMF. On Wednesday I sent a letter to VT the car I am about 4500£ away from the 50% mark.
they called me saying I had to pay 4500 or they'll refuse my VT and make me VS or resposses the car. They also said they're serving me a default notice which surely they cant as I've ended the agreement already?!

I am happy to make monthly payments for the 4500 but theuvr emailed me and called to flat out refuse it because I'm not paid upto 50%.

Can anyone advise me what to do next?

[R0b]

Can you upload a copy of the email so we can see what it says.

[Jord894]

Hi Rob,
please see attached there email in return to my VT letter. Below:

Dear Sir / Madam,

TERMINATION OF AGREEMENT PURSUANT TO S.99
OF THE CONSUMER CREDIT ACT 1974

Agreement number:
Registration: Currently

I am writing to notify you that I wish to invoke my statutory right under section 99 of the Consumer Credit Act 1974 and hereby give you notice that the agreement is terminated effective immediately from the date of this letter. Please confirm by return acknowledgement of this letter and to make arrangements for collection of the vehicle.

I understand that I will owe you for the amount calculated under the formula in Section 100 of the Consumer Credit Act 1974.

The condition of the car is noted as being in a reasonable condition for its age and photographic evidence has been taken in the event of any future dispute as to the condition of the vehicle.

You will be aware that the Consumer Credit Act limits my liability to half of the total amount payable under the agreement but excludes any sum payable as a penalty, compensation or damages for a breach of the terms of the agreement. Such terms imposed are inconsistent with my rights under the Act and are therefore deemed void and unenforceable.

The vehicle is now available for collection and I would be grateful if you could contact me on to arrange a suitable time within the next 14 days.

Yours faithfully,

****** Hughes"

[R0b]

First of all, you need to remove your personal details as they are on show.

Second, when is the next payment date?

They can't deny your termination letter because you haven't paid 50% because the Consumer Credit Act doesn't stipulate that as a condition for terminating, you can actually terminate anytime before the final payment is due.

You can use the example response below and tweak it to suit your situation and I suggest you read the A guide to voluntary termination: Your rights as it explains everything you need. Here, you can either argue that termination was effected on the date you gave notice to them, or you could claim repudiatory breach and terminate on that basis. Again, the VT Guide explains this, so it's up to you how you move forward with this.

Dear Sir or Madam,

I am writing in response to your last email. In the email, you rejected my voluntary termination request because I had not paid 50% of the total price payable.

Section 99(1) of the Consumer Credit Act 1974 says:

"At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement." (my emphasis)

It is clear from the above reference that termination can be given at any time before the final payment is due and notice must be given in writing. It is not, as you appear to suggest in your email, a voluntary request that requires your consent nor is termination conditional upon having paid 50% of the total price payable. If, however, you do not agree with my interpretation, then I would invite you to direct me to the relevant provision in the Act that requires me to have paid 50% of the total price before I can terminate the agreement, although I am confident you won't find anything.

Please can you reconsider your position and confirm by Wednesday 8th July as to whether you will accept my notice of termination. If I don't hear from you by the end of that day, I will have to consider my options which may include, making a formal complaint and referring the matter to the Financial Ombudsman or treating your refusal as a repudiatory breach by denying me the exercise of my statutory rights.

I look forward to hearing from you in due course.

[Your Name]

[Jord894]

Hello
thanks my details have been removed.

My payment was due the end of June however the payment wasn't made due to having no funds, the VT I processed was Wednesday.

My question is while I complain if they issue me a default and responses in the 8 weeks it takes for an answer. What do I do then?

Thanks Rob

[R0b]

Just so I'm clear, you missed June's payment and then issued a notice of termination on the Wednesday (1 July)?

[Jord894]

Hi Rob,
yes thats the case, I've sent your email to them too from above.

Thanks

[pt2537]

1) They cannot refuse your VT, no way no how, the only way that could happen is if they terminate first for breach, but that doesnt seem to have happened here

2) You will be liable for the payment that is outstanding before the termination is progressed, that sadly is not something that VTing helps you with.

But i think youve been made aware of that any way as Rob is pretty much the guru on this type of issue

[Jord894]

1) They cannot refuse your VT, no way no how, the only way that could happen is if they terminate first for breach, but that doesnt seem to have happened here

2) You will be liable for the payment that is outstanding before the termination is progressed, that sadly is not something that VTing helps you with.

But i think youve been made aware of that any way as Rob is pretty much the guru on this type of issue

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Would I nit be able to pay that balance off in monthly installments though?

[Jord894]

Just so I'm clear, you missed June's payment and then issued a notice of termination on the Wednesday (1 July)?

‐--------
Hi Rob,
yes thats the case, I've sent your email to them too from above.

Thanks

[pt2537]

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Would I nit be able to pay that balance off in monthly installments though?

No because you have terminated the agreement. This brings the agreement to an end and as such the outstanding sums are due and payable.in full, thus you would have to pay the missed payment right away

[R0b]

Like PT said in his earlier post, as June's payment became due and payable before you exercised your right to terminate, SMF have a legal right to the payment. As you've not paid the 50% threshold, your duty would be to make June's payment first and foremost and then any remaining balance after that to make up the 50%.

However, I would disagree with PT about the instalment option. Unless I'm mistaken and the FCA rules have changed, termination of the contract does not relieve SMF from their obligations under the FCA CONC rules, in particular, if you are struggling to pay the debt or cannot afford to pay it in one lump sum. So if you are unable to make the outstanding balance in one payment, SMF should consider your circumstances and try to come to an arragement to repay the balance. If they are awkward or they outright refuse, I'd be minding to take it to the Financial Ombudsman as a breach of FCA rules which they are required to comply with as part of their permissions (I'm talking about those marked as 'R' for rules, not 'G' which is guidance only)

As it currently stands, it seems to me that their refusal to accept your termination notice means they are treating the contract as still alive. So, two options:

1. As already mentioned, you could claim repudiatory breach of contract which in simple terms is akin to a material breach entitling you to terminate the contract. However, the key condition of repudiatory breach is that you need to communicate to SMF that you are treating it as a repudiatory breach and terminating the contract - it is not something that is done automatically. If try to claim repudiatory breach but don't communicate it and SMF then go on to terminate the contract, you will have lost your right and they can claim all the sums under the agreement. When you terminate this way, you are entitled to damages resulting from their breach and this is generally assessed as if the contract had been performed to the end.

In terms of the type of damages, I have looked into this in a bit more detail recently and there is legal authority that (in the case of HP where goods not of satisfactory quality or fit for purpose) the measure of damages should be the amount paid less a deduction for use. However that authority acknowledged that this is not a rigid rule and in a case like this, I think it is not unreasonable to say you should be entitled to damages based on the remaining instalments left under the contract and the balloon price (or the car itself if that suits) - that would equate to damages based on the contract having been performed. Also in my view, the liability for the remaining balance of the 50% would fall away, because there was effectively no voluntary termination as you terminated for repudiatory breach. A win, win perhaps.

That said, going down this route is not for the faint hearted, and can be complex depending on the nature of the situation. If you get it wrong, you could very well be in breach of contract yourself for wrongful termination. So it is well advised you seek some kind of legal advice to understand the position and what options you have. Obviously if you take this route then that's your own risk and decision and I'm happy to help where I can.

2. Your other option is to just continue treating this as a voluntary termination and anything they may do after the date of the termination date, is void and unenforceable. Of course you will still be liable for the remaining 50% balance and if they do issue a default notice or marker on your credit file, you will have good grounds to pursue a breach of data protection claim.

Ultimately, it is your decision and you should think about what outcome you want - don't sit on it and wait but equally don't rush to a hasty decision. If you need some legal advice PT works for a law firm he might be able to give you some initial free advice or if you are prepared to pay, some more detailed advice (which may be completely different to what I've mentioned here).

[pt2537]

I was speaking purely from the contractual point of view, that upon VTing the monies become payable immediately. It is always an option for the debtor to engage with the creditor over the possibility of paying any outstanding sums by instalments, but most creditors will have a script that they work to and often it is very rigid in how they deal with arrears.

That said, you may be able to agree something with them, but id say that you need to make sure that as part of any agreement you make sure they dont add adverse data to your credit file

[R0b]

Completely agree with your first point, and I was merely clarifying they still have some duties to comply with, it's not like they can do what they want.

I also agree that there should be a written arrangement for the repayment plan and no adverse data entered on the credit file. Even if they insisted then I think it's a questionable move since the contract ended from the VT date. However, we all know how these guys work and it's not always by the book.

[Jord894]

Completely agree with your first point, and I was merely clarifying they still have some duties to comply with, it's not like they can do what they want.

I also agree that there should be a written arrangement for the repayment plan and no adverse data entered on the credit file. Even if they insisted then I think it's a questionable move since the contract ended from the VT date. However, we all know how these guys work and it's not always by the book.

Hi Rob,

I sent them your emaik with the dealline of yesterday they have ignored it. So if I'll now escalate the claim further to the ombudsman, hopefully they don't reposes the car in the meantime!

Is there a certain format for ombudsman complaints and should the be emailed or written?