Unfair Relationship under CCA

**Celestine** · 19th September 2012, 21:26:PM

Re: Unfair Relationship under CCA

Unfair relationships

The Consumer Credit Act 1974 enables borrowers to challenge unfair credit agreements in court and obtain redress, if the overall relationship is unfair to the borrower.
This is in addition to consumers being able to take disputes to the Financial Ombudsman Service (FOS). See alternative dispute resolution scheme.
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The introduction of provisions

The provisions were introduced by the Consumer Credit Act 2006. They applied to new agreements from 6 April 2007, and to pre-existing agreements from 6 April 2008. Agreements completed before the new provisions took effect remain subject to the previous extortionate credit bargains provisions.
The 2006 Act also enhanced the right to apply for a time order, which is a court procedure that can give borrowers more time to repay a debt.

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The unfair relationships provisions

Section 140A of the 1974 Act provides that a court may determine that the relationship between a lender and a borrower arising out of a credit agreement (or the agreement taken with any related agreement) is unfair to the borrower because of:

any of the terms of the credit agreement or a related agreement
the way in which the lender has exercised or enforced its rights under the credit agreement or a related agreement, or
any other thing done (or not done) by or on behalf of the lender either before or after the making of the credit agreement or a related agreement.

The courts have a wide range of powers where a credit relationship is found to be unfair, including:

altering the terms of the credit agreement or a related agreement
reducing the amount payable by the borrower
requiring the lender to refund money to the borrower
removing any duty placed on the borrower under the agreement, and
imposing requirements on the lender or an associate.

In addition, where unfair relationships harm the collective interests of consumers, the OFT and other enforcers (including Local Authority Trading Standards services) can take enforcement action under Part 8 of the Enterprise Act 2002.
The OFT has published guidance on Part 8 action and unfair relationships. The guidance was updated in August 2011. See Unfair relationships - Enforcement action under Part 8 of the Enterprise Act 2002 (pdf 440kb).
It is not the role of the OFT to take up complaints on behalf of individual consumers. If a consumer has a complaint against a lender, and considers that the overall relationship is unfair, s/he should speak to a Citizens Advice Bureau or other debt adviser.
Alternatively, if the consumer has pursued the complaint with the lender but is dissatisfied with the outcome, s/he can approach the Financial Ombudsman Service.

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Time orders

Section 129 of the 1974 Act provides that a court can make a time order, giving the consumer more time to repay a debt under a regulated consumer credit or consumer hire agreement, if the court considers it 'just' to do so. In addition, section 136 provides that an agreement may be amended as a consequence of a time order - for example, by reducing the rate of interest or extending the term of the agreement.
The consumer can apply for a time order following receipt of a default notice, or a notice of enforcement action under the Act. The court can also make a time order as part of proceedings brought by the lender for enforcement of the agreement or to recover possession of goods or land (for example, mortgage repossession).
A consumer can also apply for a time order following receipt of an arrears notice, provided that s/he first gives notice to the lender and submits an alternative payment proposal, and at least 14 days elapse before an application is made to the court.
A guide to time orders is available on the National Debtline website.

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Case summaries

These are based on information of which we are aware and so may not be a comprehensive list. We would welcome details of any additional or new judgments as they arise (please emailnicola.balbier@oft.gsi.gov.uk). The case summaries have been based on the judgments themselves, however for copyright reasons the OFT is unable to release copies of the actual judgements. Copies can be obtained by application to the relevant court or a law website. Note also that the summaries have been prepared for guidance only. They should not be relied upon as an accurate expression of the law.

**Celestine** · 19th September 2012, 21:30:PM

Re: Unfair Relationship under CCA

http://www.legalbeagles.info/forums/...B-Guy-Skipwith

**Magrew** · 19th September 2012, 23:18:PM

Re: Unfair Relationship under CCA

It is nice to see such a comprehensive set of related info collated for easy reference. I wish someone had been so helpful for me in past cases.

Good work Cel.

**Guest** · 20th September 2012, 07:46:AM

Re: Unfair Relationship under CCA

HI
I would be very interested to see how this legislation would apply to Pay day loans, particularly in respect to agreements were the repayment period had been extended at the same outlandish interest rates.

The justification for the high rates is that they are only for short term credit.

D

**Celestine** · 20th September 2012, 08:24:AM

Re: Unfair Relationship under CCA

Yes, it would be better to see 'fairer' and more realistic contractual terms kick in if the debt is not repaid on time. Sadly, just like the old leasing industry and 'trip' rentals; most money is made when the contract defaults.

**Guest** · 20th September 2012, 08:44:AM

Re: Unfair Relationship under CCA

Hi

Yes and of course where the money lays, it could be argued that the reason these unsafe loans are issued is to generate additional default income.
This is after all the way that loan sharks have always worked. The lend money in the belief that the debtor will not be able to repay in full and on time.

Personally i do not believe that a court would enforce the extended application of interest + default charges, the only slight rationale they present for justifying these interest rates is that it would be cheaper than a short term overdraft or late payment issued by a bank or BS, i think that stretching this over a sustained period would be a bridge to far.
Of course until one of these companies takes someone to court and we get a ruling we will never know.

D

**Amethyst** · 12th November 2014, 12:50:PM

Re: Unfair Relationship under CCA

Supreme Court says decision in Harrison v Blackhorse was wrong ref ICOBS ----- Plevin v Paragon 12/11/2014

http://legalbeagles.info/plevin-resp...-court-appeal/

It's off to Manchester for remedies now.

''41. My conclusion that the non-disclosure of the amount of the commissions made Paragon’s relationship with Mrs Plevin unfair is enough to justify the reopening of the transaction under section 140A. It is, however, the only basis on which the transaction can be reopened. It follows that the appeal must be dismissed, although for reasons different from those given by the Court of Appeal, but that the case must be remitted to the Manchester County Court to decide what if any relief under section 140B should be ordered unless that can be agreed. Paragraph 2 of the Court of Appeal’s order of 17 March 2014, which remitted the case for rehearing generally, will be varied accordingly.''

Read more…
Download Judgment – UKSC_2014_0037_Judgment
Download Press Summary – UKSC_2014_0037_PressSummary

No	Case name	Date
1	Nicol v Nine Regions (Sheriffdom of North Strathclyde at Greenock)	12 September 2008
Claim: Request for order under section 140B(1)(e) setting aside duties imposed on borrower and repayment of monies paid. Type of agreement: Hire purchase agreement with trust deed (April 2007).
2	Nine Regions v Sadeer (Bromley County Court)	14 November 2008
Claim: Amount claimed was unfair under section 140A, and in particular the APR was too high and unreasonable charges were added. Type of agreement: Loan secured by bill of sale (November 2006) for £880 repayable over 58 weeks at 7 per cent per month (384.4 per cent APR).
3	Khodari v Al Tamimi (High Court of Justice, Queen's Bench Division)	18 December 2008
See also: related appeal case 11 - Al Tamimi v Khodari (appeal)
Claim: The interest charge was manifestly unfair under section 140A(1)(a) and (c) and the money said to be outstanding was irrecoverable. Type of agreement: 18 unsecured loans (April to September 2007) totalling £1,125,000 with interest charged at 10 per cent.
4	Milliken v Betterpace (Cambridge County Court)	23 December 2008
Claim: The creditor was overpaid, failure to register bill of sale, no proper calculation of rate of interest, agreement improperly executed. Type of agreement: Four successive loans secured by bill of sale (2004 to December 2006) with the balance of one loan rolled over into the next.
5	Nine Regions v Singh (Leeds County Court)	14 January 2009
Claim: The interest rate charged was extortionate and unfair, and alleged misrepresentation. Type of agreement: Three successive loans (to November 2007) repayable at 7 per cent per month (213.9 per cent APR).
6	Maple Leaf and another v Rouvroy and another (Queen's Bench Division, Commercial Court)	19 February 2009
Claim: No enforceable agreement, terms were unfair under the UTCCRs and the unfair relationships provisions in section 140A. Type of agreement: Funding agreement (July 2007) for 30 million Euro to finance the purchase of warrants and transfer to a special purpose vehicle.
7	Morrison and Morrison v Betterpace (County Court at Lowestoft)	1 September 2009
Claim: Request for order under section 140B to prevent recovery of vehicle, to discharge sum payable and to alter terms of the agreement. Type of agreement: Two log book loans secured by bill of sale (November 2007 and April 2009), repayable over 58 weeks at 343.4 per cent APR and 485.25 per cent APR.
8	MBNA Europe v Thorius (Newcastle-upon-Tyne County Court)	21 September 2009
Claim: Section 140A unfair relationship relating to selling of payment protection insurance (PPI), unfair terms, failure to disclose commission. Type of agreement: Credit card agreement (July 2002).
9	Shaw v Nine Regions (Clerkenwell and Shoreditch County Court)	23 September 2009
See also: related appeal case 13 - Shaw v Nine Regions (appeal)
Claim: Section 140A unfair relationship because of the terms of the agreement and the way the creditor sought to exercise his rights. Type of agreement: Loan secured by bill of sale (July 2008) for £3,000 repayable over 156 weeks at 119.16 per cent per annum (341.9 per cent APR).
10	McGuffick v Royal Bank of Scotland (High Court of Justice, Queen's Bench Division, Commercial Court)	6 October 2009
Claim: Agreement unenforceable, taking of certain steps or failure to notify credit reference agencies gave rise to an unfair relationship. Type of agreement: Fixed-sum unsecured loan agreement (October 2005) for £17,034 repayable in 60 monthly instalments.
11	Al Tamimi v Khodari (appeal) (Court of Appeal, Civil Division)	8 October 2009
See also: related original judgment case 3 - Khodari v Al Tamimi
Claim: Borrower appealed decision (18 December 2008) on the basis that the judge wrongly declined to accede to the original arguments. Type of agreement: 18 unsecured loans (April to September 2007) totalling £1,125,000 with interest charged at 10 per cent.
12	Patel v Patel (High Court of Justice, Queen's Bench Division)	10 December 2009
Claim: Agreements may not be legally binding, order sought under section 140B to discharge or reduce the sum payable. Type of agreement: Unsecured loans totalling £56,450 (1979-1983), oral agreements, interest charged at 20 per cent per annum, compounded monthly.
13	Shaw v Nine Regions (appeal) (High Court of Justice, Queen's Bench Division)	18 December 2009
See also: related original judgment case 9 - Shaw v Nine Regions
Claim: Borrower appealed decision (23 September 2009) on the basis that the interest rate was unfair and extortionate. Type of agreement: Loan secured by bill of sale (July 2008) for £3,000 repayable over 156 weeks at 119.16 per cent per annum (341.9 per cent APR).
14	Carey v HSBC Bank and other cases (High Court of Justice, Queen's Bench Division, Manchester District Registry Mercantile Court)	23 December 2009
Claim: Preliminary issues including whether breach of section 78(1) of itself gave rise to an unfair relationship. Type of agreement: Credit card agreements (various).
15	Tew, Tew and others v BoS and Barclays (High Court of Justice, Chancery Division)	22 January 2010
Claim: Fairness of terms in shared appreciation mortgages challenged under the UTCCRs and section 140A. Type of agreement: Shared appreciation mortgages (1997 and 1998).
16	Roch v Black Horse (Basildon County Court)	February 2010
No further details
17	Soulsby and Soulsby v FirstPlus and Loans.co.uk (High Court of Justice, Queen's Bench Division, Leeds District Registry Mercantile List)	5 March 2010
Claim: Mis-selling of payment protection insurance (PPI) giving rise to unfair relationship under section 140A. Type of agreement: Three loans between 2002 and July 2005. The third loan for £95,000 (with PPI of £23,387) was secured on the borrowers' home.
18	Wollerton v Black Horse (Leicester County Court)	26 March 2010
Claim: Debt unenforceable due to mis-selling of payment protection insurance (PPI), terms of PPI placed an unfair and excessive burden. Type of agreement: Fixed-sum unsecured loan agreement (September 2005) for £17,385, plus PPI of £3,601, repayable over five years.
19	Barons Finance v Olubisi (Mayor's and City of London Court)	26 April 2010
Claim: Agreement not properly executed; 'usuriously high' interest rate and exploitation of borrower's vulnerability and lack of understanding. Type of agreement: Secured loan agreement (November 2007) for £2,950 repayable at 3.5 per cent per month.
20	Yates and Lorenzelli v Nemo Personal Finance (Manchester County Court)	14 May 2010
Claim: Unfair relationship; breach of fiduciary duty; part agreement relating to payment protection insurance (PPI) improperly executed. Type of agreement: Secured loan agreement (April 2007) for £60,500, repayable over 20 years, plus £15,468 PPI premium and £2,000 broker's fee.
21	Mannion v Nine Regions (Oxford County Court)	18 May 2010
Claim: Loan agreements unenforceable and bills of sale void, extortionate credit bargains or unfair relationship. Type of agreement: Two loan agreements secured by bills of sale (October 2006 and January 2007) with the second loan refinancing the first.
22	Harrison and Harrison v Black Horse Limited (Worcester County Court)
See also related appeal: case 25Harrison and Harrison v Black Horse Limitedand 27 Harrison and Another v Black Horse Limited
Claim: Unfair relationship, breach of statutory duty under the Financial Services and Markets Act 2000 and the Insurance Conduct of Business rules, and negligence Type of agreement: Two loan agreements, (July 2003 and July 2006) for £46,000 plus £11,000 PPI and £60,000 plus £10,200 PPI, with the second loan refinancing the first.
23	Black Horse v Speak and Speak (High Court of Justice, Queen's Bench Division, Manchester District Registry Mercantile Court)	21 July 2010
Claim: Agreement unenforceable due to payment protection insurance (PPI); creditor's conduct gave rise to unfair relationship. Type of agreement: Loan agreement (October 2006) for £5,000 plus PPI costing £2,012, repayable over 62 months.
24	Vernalls v Black Horse (HHJ Haris QC)	4 Nov 2010
No further details
25	Harrison and Harrison v Black Horse Limited (High Court of Justice, Queen's Bench Division, Mercantile Court)	1 Dec 2010
See also related original judgment: case 22 Harrison and Harrison v Black Horse Limited and 27 Harrison and Another v Black Horse Limited
Claim: Unfair relationship, breach of statutory duty under the Financial Services and Markets Act 2000 and the Insurance Conduct of Business rules, and negligence Type of agreement: Two loan agreements, (July 2003 and July 2006) for £46,000 plus £11,000 PPI and £60,000 plus £10,200 PPI, with the second loan refinancing the first.
26	Barnes & Barnes v Black Horse Limited (High Court of Justice, Queen's Bench Division, Mercantile Court)	31 May 2010
Claim: Breach of fiduciary duty, negligence, breach of contract, unenforceability of the agreements and an unfair relationship under section 140A of the Consumer Credit Act. Type of agreement: Three unsecured loan agreements, (July 2002, October 2003 and June 2004) for £2,000 plus £563 PPI, £4,500 plus £2,021.48 PPI and outstanding balance plus £2,694.48 PPI, with each subsequent loan refinancing the previous loan.
27	Harrison and Another v Black Horse Limited (Court of Appeal) See also related original judgment: case 22 Harrison and Harrison v Black Horse Limited and appeal: case 25 Harrison and Harrison v Black Horse Limited	13 Oct 2011
Claim: Unfair relationship under sections 140A and B of the Consumer Credit Act on the grounds of failure by the lender to disclose to the borrower that it would receive from the insurer a large commission upon the sale of payment protection insurance (PPI). Type of agreement: Secured loan agreement dated July 2003 for £46,000 plus PPI at £11,500. Re-financed in July 2006 by a loan of £60,000 repayable over 23 years plus PPI at £10,200 (over 5 years).
28	Bevin v Datum Finance Ltd (High Court of Justice, Chancery Division)	15 Dec 2011
Claim: Application to appeal a decision in the Bournemouth County Court on 5 July 2011, refusing to set aside a statutory demand. This was on the basis that the arrangements were unfair, and therefore reviewable under s.140A-C of the Consumer Credit Act, on the grounds of the monthly interest rate of 1.25% per annum, its compounding, and the penalty rate of 3% and its compounding. Type of agreement: Facility letters dated 3 May 2007 (up to £1.4 million) and 30 November 2007 (up to £900,000) to fund the acquisition of properties.
29	Rahman v HSBC Bank	17 Jan 2012
Claim: The appointment by HSBC Bank Plc of receivers was invalid, and the relationship between the claimants (members of the Rahman Group) and the Bank was unfair within section 140A of the Consumer Credit Act. Type of agreement: Secured overdraft facilities and term loans to members of the Rahman Group from 1998 totalling £7.2 million to enable them to acquire and/or refurbish properties.
30	Snailham & Elliott v Black Horse
No further details
31	Kerry v Black Horse
No further details
32	Morris v Black Horse
No further details
33	Slavin v Black Horse
34	Smith v Black Horse

Unfair Relationship under CCA

Unfair Relationship under CCA

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