Boyo v Lloyds

[Amethyst]

Morally wrong doesn't always mean legally wrong.

https://www.bailii.org/ew/cases/EWHC/QB/2019/2279.pdf

The bank closed a customers accounts ( one in overdraft at the time ) on suspicion of fraudulent activity which was unproven and as a consequence reported a default to the CRAs. The court found they were able and correct to do so as there was an outstanding balance called in but not paid regardless of the circumstances surrounding it.

[Amethyst]

On Default Notice requirement before reporting to CRAs

The Law
Consequences of Not Serving a Default Notice

35. As set out above, it is accepted that the Defendant did not serve a Default Notice on
the Claimant prior to reporting a default to the Credit Reference Agencies. Section 87(1) of the Consumer Credit Act 1974, lists certain actions which a creditor is precluded from taking (by reason of breach) without first serving a Default Notice. It is clear that reporting to a Credit Reference Agencies is not continued within that list of circumstances. Further, in McGuffick v RBS [2009] EWHC 2386(Comm) Flaux J held at Paragraph 82 that reporting to Credit Reference Agencies did not amount to enforcement. He stated:
“I do not consider that either reporting to the CRAs or the related activities referred ... come anywhere near amounting to enforcement if [other] activities are not enforcement. These activities are concerned with reporting to CRAs or other third parties and are not even steps taken prior to enforcement such as threatening proceedings would be.

36. Even if one accepted (which for reasons given earlier in this Judgment I do not) the Defendant’s somewhat pejorative categorisation of reporting to CRAs as being motivated by the desire to pressurise the Claimant into paying the outstanding balance, at its highest that is an attempt by indirect means to persuade the Claimant to pay. If demanding payment directly or through a third party does not amount to enforcement, it is difficult to see how such indirect means could do so even if the Claimant was right as to the relevant motive of the bank”.

37. He concluded at Paragraph 85:
“It follows that, in my judgment the reporting to CRAs and related activities do not constitute enforcement for the purposes of the Consumer Credit Act”.

38. I therefore find that there was no legal requirement upon the Defendant to serve a Default Notice prior to reporting the default to the Credit Reference Agencies.