Debt Collection Agencies/Refunds

[labman]

Re: Debt Collection Agencies/Refunds

It is for this very reason that Curlyben suggests (and I agree 100%) ignoring the first letter from a DCA completely. IF (you might be surprised how big an 'if' this is with some DCA's) they get in touch again, send a Prove It letter.

It is clearly important to establish the existence of a debt before you pay it.

Bill, the putting me on the spot re LoPA 1925 is not a problem as such - yes, it covers all debts we're discussing here. However, the law relating to assignments changed recently(ish), so LoPA may not apply to very recent debts. I don't want to muddy waters by going into that here unless you want me to.

[Bill-K]

Re: Debt Collection Agencies/Refunds

It is clearly important to establish the existence of a debt before you pay it.

I'm beginning to see the sense in CurlyBen's advice. Don't take the first step for them. Responding - in any way - to the first letter is a confirmation that they have a fish on the line, so they will then start to try 'reeling us in.' Ignoring it makes sense to me now. Saving the 'Prove It' and 'Who Are You' letters until later is perhaps better.

...the law relating to assignments changed recently(ish), so LoPA may not apply to very recent debts. I don't want to muddy waters by going into that here unless you want me to.

I agree - it's best to be clear on what we have here so far. More recent (European ?) legislation can be tackled as 'post-graduate' issues, methinks.

[dogtired]

Re: Debt Collection Agencies/Refunds

It does look like that what we need is some form of consistency so that we know when pursuing this that we will either get the full amount back or that we will not.
It should be clearer as I know two different cards with same banking group but not treated the same no wonder we get confused!

[labman]

Re: Debt Collection Agencies/Refunds

This may be useful. It was used in a successful case to combat the right off set off when Barclaycard were trying to do so.

You say, "With regards to the debt set-off against your settlement, I am afraid that this is what we have to do in all cases".

I disagree that you HAVE to do this in all cases. You may have chosen to do this but you have no basis in law to do so.

You no longer own the alleged debt and have no right to withhold monies in respect of it. If DCA wish to pursue me for any amount they allege I owe them, that is their prerogative.

The authority for my views is the case of Edlington Properties v. Fenner & Co. Ltd [2005] EWHC 2158 (QB) which affirms this position that the assignor has no right of set-off to a third party (assignee) for a damages claim brought against it post-assignment, as any equitable set-off in this regard is personal in nature and the debt sold is not transferred subject to it.

[jax50]

Re: Debt Collection Agencies/Refunds

that might work with PPI, but not sure when charges which haven't actually been paid are being refunded...it's just part of the 'sum owing'..but I am still trying... though if I can pursuade them the refund offsets the 'amount due' as well as the outstanding balance, from the old DN, i might be onto something..

[di30]

Re: Debt Collection Agencies/Refunds

(Friend) informed me he yesterday made the FOS aware that his account is assigned by absolute with a DCA, and no longer with the collections dept of Lloyds.
Do you think he done the right thing folks?

I always have that feeling if the complaint is being dealt with by the FOS, and despite the debt full assigned (absolute) to a DCA, that the FOS will suggest the refund to be sent to them, yet if it was dealt with directly and resolved with the business in itself it may be a different matter.

I was informed OTR yesterday that a business directly refunded another customer whilst the debt was fully assigned to the DCA, but the feeling I have if dealt with by the FOS, they will still suggest the DCA?

My friend says he does not mind the refund being used towards the debt, but now feels that will be entirely up to him to sort this out directly with the DCA and not the FOS etc....

[labman]

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?

[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.

[di30]

Re: Debt Collection Agencies/Refunds

Thank you Bill and Labman.

will be interesting to know Labman.

Good idea with inviting EXC here too

[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.

[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

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.

[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.

[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.

[labman]

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?