Mis-selling of car hire purchase finance

[TerryR52]

My son, aged 26, has just broken up with his partner and their two daughters. As part of that break up he has moved back home and I’ve had my first opportunity to look at his finances over the last year.

He works for the NHS on a salary of around £18,000 pa on which he was supporting his family, paying £750 per month rent and all the usual household bills. The most glaring thing that came to light was that 2 months ago he signed up for a car hire purchase agreement with Black Horse through Mercedes Benz. I was horrified to discover that he was allowed to sign up to this purchase, committing him to repayments of £288 per month, which he could clearly never have afforded.

However, now I’m digging deeper into his finances I’ve also found that he has credit card debts of around £1,000 and took out a number of payday loans last year totaling, I believe, around £6,000 which he also couldn’t repay so was placed under a debt management plan earlier this year requiring him to repay £120 per month to clear it.

So, at the time he took out the hire purchase agreement he had a low salary, high family outgoings, credit card debts and was under a debt management plan to clear his payday loans.

My son is clearly guilty of stupidity, but aren’t there/shouldn’t there be checks in place on car finance such as this to ensure affordability before gullible people are allowed to sign away money they cannot hope to repay?

Do we have a case for claiming any kind of negligence on the part of either Mercedes Benz or Black Horse for mis-selling the car and its associated finance deal?

At this stage should I be considering bankruptcy, an IVA or similar?

Many thanks in anticipation of your help and advice.

[wales01man]

Re: Mis-selling of car hire purchase finance

This may upset the OP but I presume his son is fairly intelligent to have an 18k job with the NHS and was quite happy to ask for all this credit?No doubt things are getting tight now so to try and get out of paying they are looking for a way out IMO unless we are totally stupid we ask for credit in whatever form because we want something now how many look at the future and think things can change? I like many others got into debt when we were in a situation to pay it off now things have changed I am not looking for a way out trying to blame someone else after all I asked for the money they never forced me to take it if I could I would repay it but as I cant the debt is there.

[TerryR52]

Re: Mis-selling of car hire purchase finance

To Great Dane. Thanks for your response, and I'm not upset or offended by it since in my own case I would also check out any finance I took committed to to ensure I could afford it before signing on the line. However, this is my son and not me and, while I agree that he should have considered his situation much more carefully before signing up for this HP agreement, I also feel that companies providing finance also have a duty of care to their customers and their shareholders that they don't take on bad risks. I used to work in the finance industry so am well aware of the kind of credit checks that are made before loans are agreed and I can't believe that Black Horse carried out appropriate due diligence before granting this finance.

[wales01man]

Re: Mis-selling of car hire purchase finance

Thanks it was never meant to offend glad you saw that, we all have to remember that we ask in most cases they oblige in many because they are lead to believe we can afford it I cannot see any way they can be sure we can afford it I agree there should be responsibly lending but who can prove it wasn't.For the cost of a stamp or 2 it might be worth contacting the lenders to discuss the situation try to get interest stopped and agree a payment plan MOST IMPORTANT look after the children they are more important than the money good luck

[charitynjw]

Re: Mis-selling of car hire purchase finance

Hi TerryR52, & welcome to Legal Beagles.

I too am surprised that the lender allowed this deal to go through; there is, & has been for some years now, a requirement for lenders to observe various Codes of Conduct regarding responsible lending, as well as having to enter onto an OFT register for certain types of credit activities.

That said, borrowers have been known to be rather 'inventive' when applying for credit.

I would suggest that you/your son SAR BH to obtain all the info they hold on this matter, in order to gain a more informed view.

If you undertake this on behalf of your son, BH will probably need his express permission, so that they do not fall foul of the DPA.

[TerryR52]

Re: Mis-selling of car hire purchase finance

Hi Nobby, and many thanks for your prompt response, and agree that I'll need my son to give them permission to talk to me. I'm guessing the kind of information I could ask BH for that may be useful to me is what kind of credit checks they perform before agreeing to finance? Is that correct, are they likely to tell me that, and should I be asking for anything else from them?

[charitynjw]

Re: Mis-selling of car hire purchase finance

IMO, rather than forewarning them, SAR them for all the info they have on your son's agreement.

This should gain you a lot of case-specific 'back-office' info, from which you may be able to make some logical deductions.

[TerryR52]

Re: Mis-selling of car hire purchase finance

Ah, in that case, I need to ask a dumb question. What's SAR please? (I made the naïve assumption it just meant Send A Request, lol)

[charitynjw]

Re: Mis-selling of car hire purchase finance

There you go!

http://www.legalbeagles.info/forums/...ur-information

Btw, how did you do that 'dotty' thing over the 'i' in naive?

[TerryR52]

Re: Mis-selling of car hire purchase finance

Brilliant, thanks Nobby, very much appreciate your help

[Guest]

Re: Mis-selling of car hire purchase finance

The European directive implemented new requirements for pre-contractual checks to be made before an agreement was taken out some reading here


An obligation on the lender to check the creditworthiness of a consumer before offering or increasing credit (Article 8 CCD)

Lenders are now required to assess a consumer's creditworthiness on the basis of "sufficient information" before concluding a credit agreement. They also have to do this before there is any "significant increase" in the total amount of credit.
Previously, there was no specific requirement to check creditworthiness, though there were (and remain) provisions relating to irresponsible lending. The new regulations do not specify what checks should be made, and lenders are left to determine the appropriate methods in each set of circumstances. Guidance on what may be required can be found on the Office of Fair Trading's website in it's response on "Irresponsible Lending - OFT Guidance for Creditors", March 2010 (updated February 2011).
Requirements concerning credit reference databases (Article 9 CCD)

There is no obligation on lenders to carry out checks with credit reference agencies, although in many cases this will be an appropriate part of checking creditworthiness as outlined earlier. However, where a consumer's application is rejected as a result of a database search, lenders must advise them immediately of the search results and at no charge, providing details of the database consulted.

More reading here

2 GENERAL PRINCIPLES OF FAIR BUSINESS PRACTICE 2.1 In the OFT's view there are a number of overarching principles of
consumer protection and fair business practice which apply to all
consumer credit lending.
2.2 In general terms, creditors should:
• not use misleading or oppressive behaviour when
advertising, selling, or seeking to enforce a credit
agreement
• make a reasonable assessment of whether a borrower
can afford to meet repayments in a sustainable manner
• explain the key features of the credit agreement to
enable the borrower to make an informed choice
• monitor the borrower's repayment record during the

and

http://oft.gov.uk/shared_oft/busines...al/oft1107.pdf

4.1 In the OFT's view, all assessments of affordability should involve
a consideration of the potential for the credit commitment to
adversely impact on the borrower's financial situation, taking
account of information that the creditor is aware of at the time
the credit is granted. The extent and scope of any assessment of
affordability, in any particular circumstance, should be dependent
upon- and proportionate to- a number of factors (see paragraph
4.10 of this guidance document).

course of the agreement, offering assistance where
borrowers appear to be experiencing difficulty and
• treat borrowers fairly and with forbearance if they
experience difficulties.

[charitynjw]

Re: Mis-selling of car hire purchase finance

No probs, Terry.

Remember to get proof of postage. (either recorded, or, on request, the PO will give you a free cert of postage).

About that 'dotty' thing? (Post #9)

[TerryR52]

Re: Mis-selling of car hire purchase finance

Ah yes, sorry Nobby, forgot to respond to that bit. I wish I could say it was a really clever technique I'd used but when I typed in naïve the spell check put the double dot in automatically. Given the subject of this original posting I really wish I could have looked smarter than that, lol.

[TerryR52]

Re: Mis-selling of car hire purchase finance

Andy, thanks a lot for all that information. Those extracts and the links to the OFT regs are really useful and give me another great thread to follow up on. I like the thought I now have routes through both the organisation that granted the finance and an independent government based body to ensure fair play. Fantastic, thank you !