Debt Collection Agencies/Refunds

[di30]

Re: Debt Collection Agencies/Refunds

Wow lots of interesting reading here to do , excellent stuff, thank you folks and so happy this thread has taken off well, "Cels" idea .

And welcome back Casper, not seen you in a while, hope all are well, and thank you too for your input.

[jax50]

Re: Debt Collection Agencies/Refunds

Bill-K, Would you say this applied to any refund, not just PPI ? In the same circumstances where an OC remains liable for the original contract and has agreed to refund 'monies' (unfair fees and charges in this case), but insists on 'paying this off the outstanding balance ' with a 3rd party DCA ? That is a DCA with legal assignment (not equitable).

Re: Debt Collection Agencies/Refunds

That's great thanks Bill. Apologies for your friend's sex change! It's funny how us males assume the poster is male.

I agree with her logic in everything above, and indeed in an Equitable Assignment, the right of offset still clearly stands.

My take now is that we ask EXC to question the OFT on this and find their answer, but also question them if they say the OC can pass it on after an Assignment in Absolute as to how, and under what legislation.

Re the Civil Courts I think this is probably, to my mind, more one of those 'theoretical' solutions rather than a 'realistic' solution. Look at Sparkie! That says much about how courts view these things. I think Di had it spot on when she said it is best to try to negotiate with the OC before it gets to this stage. At the end of the day, they've had their money back anyway, so it makes no difference to them whether the money goes to the DCA or as it should, to the claimant. If cards are played right, I can't see them putting up too much of a fight, especially if court is mentioned, as it's all costing them money and time for which they get no gain.

I feel we're getting somewhere. Took a decent Welsh lass to get us here though!

[Bill-K]

Re: Debt Collection Agencies/Refunds

Well, I try not to dodge straight questions, as I'm not a politician, either !!!

Had a response from my 'guru.' She :eyebrows: agrees that this would hardly be seen as a criminal matter, so the borrower could argue - in a civil court - that the original contract was made between the borrower and the OC, and the OC's duties in respect of any PPI refund under that contract still exist. In effect, it could be argued that no contract exists between the OC and the DCA - with regard to any PPI refund.

I guess it also then follows that the DCA has no right to receive any refund from the OC, if I understand this.
In an Equitable assignment, the DCA is acting only as a collection agent for the OC, so the OC then retains the right to 'appropriate' any or all of a PPI refund to offset any arrears. There would be no reason, nor any duty, for the OC to pass this on to the DCA.

Re: Debt Collection Agencies/Refunds

Well answered that man, a true Alpha male, silverback answer! - so I guess the next question which follows logically from the above post is, "What can be done about misappropriation?"

Are you able to ask your friend what remedies are available to us? Let's hope he / she doesn't say the FOS!

[Bill-K]

Re: Debt Collection Agencies/Refunds

I was wondering if you'd take me to task on this, Mr. L. I mentally wrestled with the twists and turns of this, as I have the brain of neither a lawyer nor an accountant, and I'm relieved that you agreed with my understanding of this aspect. The final paragraph was in fact an opinion expressed by my learnéd friend, and I agreed with it - as I understood it.

My understanding of it is that the OC has NO right to pass any of the PPI refund to the DCA. I'm not sure that 'theft' would stick, realistically, but 'misappropriation' seems a fair point to kick the ball from.

Re: Debt Collection Agencies/Refunds

Great Bill thanks,

As you well know from our conversations I'm playing Devil's Advocate here (just putting my horns on!!!)

Given the above, which I have to say is also my understanding of assignments, and a VERY common area of misunderstanding, can I take your final two sentences:

"Thus it appears that - where a PPI refund is made after the Absolute Assignment, the creditor has no “right” to accept the refund because he has passed that right on. He also has no duty to the DCA to pass the refund on to them because that duty remains a duty to the original other party to the contract....."

If this is the case, under what legislation does the creditor claim any right whatsoever to pass the refund to the DCA? Would this not normally be regarded as theft?

[Bill-K]

Re: Debt Collection Agencies/Refunds

So - I guess we need to check out the OFT regs etc., then, now. Ah well.....

Further to the earlier discussion, I recently received some help from a knowledgeable friend, who explained rights and duties to me.
Essentially, rights under a contract are what you can make the other party do; duties are what you yourself have to do.
So - with a loan agreement - the creditor has the right to demand payment and the debtor has the duty to repay. That's simple enough.
The Law of Property Act only assigns the rights under a contract, and it is a common law principle that duties under a contract cannot be assigned (although there are some exceptions to this). If this were not the case we could all sell our debts to someone else, and there was a CMC a while ago that tried to do just that (Amanda & Basil Rankine, I believe). They would offer to buy a debt for a fee of £100 and said the creditor would no longer chase you because they now have to chase the CMC. Common law would not permit this, and the FSA shut them down.

The issue in Jones -v- Link was that she contended that link could not enforce the debt because they were not the creditor under the agreement - and only the creditor can enforce a regulated agreement as per the CCA s.8. Her argument was that Link could only become the creditor if they were assigned both the rights and duties under the agreement - as per the CCA s.189 (definitions). But - since duties cannot not be assigned under the LoPA (or for that matter in common law) Link could not be the creditor.
The judge agreed that this was sound logic, and commented that if true it would be a real problem for consumer credit debt collection, as assigned debts would of necessity fall into an unenforceable “black hole”.
However the problem here was that the duties referred to in CCA s.189 were not the duties under the contract, but duties under Statute (ie., the CCA itself) - such as the duty to issue a Default Notice, and to send copy agreements if requested, etc. These duties can be transferred if the Act says they can.
So the assignee in an Absolute Assignment can become the creditor and can enforce the debt.
Therefore, when an account is Assigned Absolutely to a DCA, then all rights under the agreement go with it but not the contractual duties - only the Statutory duties.

Thus it appears that - where a PPI refund is made after the Absolute Assignment, the creditor has no “right” to accept the refund because he has passed that right on. He also has no duty to the DCA to pass the refund on to them because that duty remains a duty to the original other party to the contract - the borrower.

[EXC]

Re: Debt Collection Agencies/Refunds

With the DISP APP you quoted, although it appears in DISP, it really is the OFT's jurisdiction where arrears are concerned and probably why DISP doesn't cover the issue any further.

[EXC]

Re: Debt Collection Agencies/Refunds

Thanks for that EXC - much appreciated. The FSA have this in the PPI Redress Handbook in PS 10/12:So - if we're just dealing with the OC, then I guess they have that right, and it seems reasonable to me.

The complications arise where the debt has since been assigned to a DCA, and the arrears are then (arguably) either their duty to collect (equitable assignment), or their right to collect (absolute assignment). We'll try and get a set of scenarios listed as you have requested.

Ok thanks. I don't have much to do with the OFT these days so most of my old contacts will probably be obsolete now but I do talk with the personal current account guys who are pretty responsive (Beagles still have 'stakeholder' status) so I'm sure they can give us access to the relevant department.

[Bill-K]

Re: Debt Collection Agencies/Refunds

Thanks for that EXC - much appreciated. The FSA have this in the PPI Redress Handbook in PS 10/12:

DISP APP 3.9.1 Where the complainant’s loan or credit card is in arrears the firm may, if it has the contractual right to do so, make a payment to reduce the associated loan or credit card balance, if the complainant accepts the firm’s offer of redress. The firm should act fairly and reasonably in deciding whether to make such a payment.

So - if we're just dealing with the OC, then I guess they have that right, and it seems reasonable to me.

The complications arise where the debt has since been assigned to a DCA, and the arrears are then (arguably) either their duty to collect (equitable assignment), or their right to collect (absolute assignment). We'll try and get a set of scenarios listed as you have requested.

[EXC]

Re: Debt Collection Agencies/Refunds

I believe EXC made some posts to that effect in Di's epic PPI thread here, where someone had lost a PPI claim in court. It may have been to do with the burden of proof being on the claimant to prove mis-selling, as opposed to the FOS requiring the lender to prove otherwise. I've PM'd EXC and invited him to post here.

There is indeed a burden of proof on the claimant to the court (as opposed to the FOS) but that's only one of the reasons why litigating PPI complaints doesn't usually work.

In short, most PPI mis-selling occured during the ICOBs era and ICOBs regulations were the applicable actionable laws which governed the sale of insurance. The problem is that they were written before insurance mis-selling came about and as such were not designed with that mischief in mind.

Examples of the uselessness of ICOBs in respect of PPI mis-selling was highlighted by Justice Ousley in the BBA v FSA test case judgment. This is just one of them:

''There is no specific ICOB rule which prohibits the selling of a PPI policy to someone who can never claim under it, even where the seller knows that to be the case.''

On the burden of proof, unlike the FOS, ducumentative evidence in court is king. In all the case studies I've read where a claimant alleged that the seller said that the provision of a loan was dependant on buying a PPI policy, all the seller had to do was produce a document that was provided to the claimant at or around the time of the sale which stated (even if it was in the small print) that the policy was optional and/or that the policy could be cancelled at any time.

This is a typical example http://www.wragge.com/analysis_8770.asp

Back on to the topic of the thread, Celestine spoke to me the other day about this and I think we could possibly quite easily find out the answer to the central question of whether PPI compensation can go against a debt assigned to a third party by simply asking the relevant authority - the OFT.

I suspect that there are several scenarios which we'd want answers to so if Di & the rest of you could put together a list I'd be happy to try and get some clarification that, hopefully, we could quote.

[di30]

Re: Debt Collection Agencies/Refunds

Thank you Bill and Labman.

will be interesting to know Labman.

Good idea with inviting EXC here too

[Bill-K]

Re: Debt Collection Agencies/Refunds

I believe EXC made some posts to that effect in Di's epic PPI thread here, where someone had lost a PPI claim in court. It may have been to do with the burden of proof being on the claimant to prove mis-selling, as opposed to the FOS requiring the lender to prove otherwise. I've PM'd EXC and invited him to post here.

Re: Debt Collection Agencies/Refunds

I agree Di. I think it's best to fight it with the business itself.

Going back to Something Bill said ages ago, why does EXC think court is not a good route to take? Are we able to find out?