Momentum Network / CCK

[Main man]

Credit Card Killer could 'harm' borrowers

Alan O'Sullivan, This is Money
23 October 2009, 10:33am
Reader comments (4) | Chat | Vote

A tribunal has criticised the practices of 'debt buying' firm Credit Card Killer for potentially causing serious harm to indebted borrowers.
Stubborn: Basil and Amanda Rankine continue to trade against the regulator's wishes.





The Credit Card Killer business, set up by a couple featured in a BBC documentary last year, Basil and Amanda Rankine, aims to free customers of their debt by simply buying it off them and wriggling out of repaying the lender through legal challenges.

The parent company, Momentum Ltd, continues to trade despite having its authority to deal in the claims industry stripped by the industry regulator, the Ministry of Justice, earlier this year.
The Rankines are appealing this in November, but also claim they instead operate in the 'unregulated debt industry', not the 'claims industry'.
However, they failed in a Claims Management Services Tribunal court case in August to have their authorisation reinstated until the hearing takes place.
These tribunal papers, now available on the MoJ website, show how the presiding judge at the tribunal, Sir Stephen Oliver QC, criticised Credit Card Killer for having 'the potential to cause serious harm to a large number of consumers'.
He highlighted that customers may continue to be pursued by their creditors and suffer legal costs and bankruptcy despite parting with hundreds of pounds to avail of Credit Card Killer's services.
The Rankines had bought £3m worth of debt in the first two months of trading between February and April earlier this year, earning them in excess of £300,000 in fees, according to the papers. They also state debts purchased by the company could have risen to £10m by July.
They were defended in their legal challenge by Oliver Mishcon, grandson of Lord Mishcon, founder of the high profile law firm Mishcon de Reya.
Credit Card Killer charges clients a flat fee of £450 plus 10% of the outstanding debt for a loan agreement, in return for 'buying' it off them for a nominal payment of £1. There is a further charge of £350 plus 10% for additional agreements.
It says it will accept debts up to £75,000, which would earn the company almost £8,000 in fees if it all came from one agreement, such as a secured loan.
The business continues to trade despite having its website shut down by the MoJ, an act the Rankines labelled 'unlawful harassment' and 'terrorisation' in a letter to This is Money.
They have since set up a new website. They are also seeking £3.3m in damages from the regulator and threaten legal action if it is not paid this month.
The MoJ declined to comment on Credit Card Killer specifically.
Instead, it issued a general warning against claims management firms operating without authorisation. It said: 'Any business that is providing regulated claims management services without authorisation or exemption is committing a criminal offence under the Compensation Act 2006.
'The claims management regulator takes such offences very seriously and where there is clear evidence of unauthorised trading within the scope of the Act will seek to exercise its powers to take injunctive action and bring prosecutions.'

The Rankines argue their business is not engaged in a regulated activity and is therefore out of the scope of the regulator's authority. They argue controversially that contract law does not apply in their case, claiming anyone can allegedly get out of a contract by refusing to repay a loan: once out of contract, they can sell their debts to whomever they wish.
The tribunal says there is a 'prima facie case' for the MoJ's view that the firm is carrying on a 'claims management business' and falls under its auspices. The MOJ also argues the company's advertising is misleading.
The OFT warned consumers earlier this year not to be taken in by businesses claiming to help them become debt free by 'buying' or 'selling on' their debts.
It said this was due to 'a significant increase in the number of adverts on the internet and in newspapers from debt and claims management companies that misleadingly state they can take over liability for debts or write off debts by purchasing consumers' credit agreements.'
Do you think it is fair for people to escape repaying their debts? Let us know in the comment box below. Also read a lawyer's opinion on whether buying and selling debt is even possible...


http://www.tribunals.gov.uk/finance/...ntumOliver.pdf

[Amethyst]

Re: Momentum Network / CCK

Yes I saw they had started putting their site back together while back. Most contracts have in them a no transfer unless agreed by the creditor, and I presume that Rankine feels he can get this overturned as unfair (as in same contracts the banks have the right to transfer without any permission or even knowlege from the consumer).... so if he fights that term and succeeds then it would be possible to sell your debts to third partes.

(my very basic unlearned thoughts anyway)

Otherwise I think there may be a trip to Brazil and a few thousand debt stricken consumers a few hundred quid down and some extra hassle and more arrears built up by the time this gets sorted out.

Hadnt seen tribunal transcripts so will have a nice nosey at them later

[Amethyst]

Re: Momentum Network / CCK

claiming anyone can allegedly get out of a contract by refusing to repay a loan: once out of contract, they can sell their debts to whomever they wish.

Doesnt that kind of ruin their s127(3) argument as well though?

[Curlyben]

Re: Momentum Network / CCK

Well you all know how I feel about this shady practice.

The whole site is massive false advertising and making promises they can't possibly keep.
I wonder where the initial £3m figure came from.
I just hope these are debts they have "bought" and they get royally shafted in court.
Would be even better if there own Amex action is used against them, would be pure irony or another metal

If only it was that easy.
They are trying to use repudiation, from commercial contracts, in this I believe, but CCA regulates these agreements, NOT normal contract law.

The sooner they fall, and hard, the better..

[Amethyst]

Re: Momentum Network / CCK

Understanding repudiatory breach | The In-House Lawyer

[Amethyst]

Re: Momentum Network / CCK

16. We infer that in addition to the financial damage that members of the public may sustain if the cancellation is suspended, the individual clients concerned, many of whom may already be coping with significant debt, face the prospect of being pursued for payment by lenders concerned; and this may well result in legal costs, bankruptcy orders and damage to their credit ratings. For those reasons we think that the Credit Card Killer activity has the potential to cause serious harm to a large number of consumers.
17. We recognise that the cancellation of authorisation would effectively sterilise Momentum’s business so far as it relates to the Credit Card Killer activity. Does that consequence outweigh the need to protect consumers who might consider buying and using the Credit Card Killer “facility” offered by Momentum? We think not.
18. Momentum has provided us with no evidence that the effects of cancellation on it or its directors will be severe. Mr Rankine has asserted that the application is having “a catastrophic effect” on Momentum’s business but his witness statement does not expand on this. Nor does any documentation demonstrate that, apart from a standstill on the Credit Card Killer activity, hardship is being suffered by Momentum’s directors or staff. In this connection we note that Momentum has recently issued a number of releases in which it states that it is trading and continuing “business as usual”. Consequently it must still be earning substantial fees.
19. We think that the balance of considerations favours maintaining the cancellation pending the outcome of the substantive appeal. The damage that may be caused by cancelling the suspension pending the outcome of the appeal is, we think, far greater than the damage that might be caused by allowing it to remain in force.
5
20. For those reasons we dismiss Momentum’s application.

http://www.tribunals.gov.uk/finance/...ntumOliver.pdf

[Curlyben]

Re: Momentum Network / CCK

Shame, or NOT

[hunter_01]

Re: Momentum Network / CCK

We're all entitled to our opinion & i have no issues with that at all. Research, facts and knowledge backed up by comprehensive legal and documentary evidence are key when attempting to promote your opinion.
I am an impartial observer and I have studied the Rankine's concept in great detail along with the current situation in regards to unenforceable credit agreements and ofcourse the actions of the regulators. I have also read the comments within this thread and I must say I disagree with the comments posted in regards to Momentum Network ltd and Mr & Mrs Rankine.

All of the opinions within this thread thus far have been based or formulated as a result of the actions and statements of the Ministry of Justice. I'd like to share my opinions with everyone If I may. Firstly I'd like to make it abundantly clear that the industry in regards to CLAIMS for unenforceable credit agreements is legally and fundamentaly flawed. As a consequence the Ministry of Justice will be and should be held accountable for regulating an industry for a cause of action that does not exist. The ministry of justice will have to answer some serious questions in regards to regualting an industry that is and has ripped off consumers for over two years. Hundreds of Thousands of people have handed over cash to these claims companies for them to pursue a cause of action that does not exist.
The legal facts are abundantly clear. You CANNOT issue a CLAIM against a lender in the courts in order to seek a declaration of unenforceabilty from the judge. The judge has no power to make such a declaration.
This was outlined by HH Judge Simon Brown QC in Rankine vs others in 2008.
Seeking a declaration of unenforceability is a legal DEFENCE to a claim issued by the lender !!
A debtor has no casue of action to issue a claim of unenforceability against a lender as the judge has no power to issue a declaration in these circumstances.
HH Judge Simon Brown QC confirmed how section 127 of the Act was to be applied. If a lender issues a claim against a debtor it is then and ONLY then that the debtor can seek a declaration of unenforcability by way of an APPLICATION to the court.(Not claim)
Claims in regards to unenforceability has been one of the biggest scams in legal history & the MOJ will be held responsible for regualting these companies & allowing this indusrty to trade. I genuinely hope I've managed to clarify the facts. The MOJ are an absolute disgrace. They have absolutely no understanding of the legalities in regards to unenforceability. They do however continue to regulate the industry and have not even bothered to read the appropriate case law. The general public may be forgiven for not researching the facts however the regulators cannot seek immunity from this.

So we've now managed to establish how incompetent the MOJ actually are. Lets now turn our attention towards Momentum Network Ltd and their debt buying concept.

The fundamental conecpt the Rankine's are using is contract law. Contrary to what one of the posts within this thread stated....Consumer credit agreements are regualted by the CCA however this is all under the umbrella of Contract Law. A consumer credit agreement is a contract and nothing more.

Its important to try and remove from your mind that money has changed hands. If you replaced the money with lets say oranges the same prinicples of contract law would still apply. Just because money has changed hands does not make any difference to the situation.

As one of our honourable freinds has pointed out in an earlier post ....there are often clauses written in to a consumer credit contract which read "you are not allowed to sell/assign any of your rights or obligations under this contract"

Question 1...Why is that clause there?
No bank or person with any common sense would include clauses needlesly. Clearly there must be a need for the clause.
Question 2....If the clause was not written in to the contract the would that not mean you could sell the debt?
Answer .....Well yes other wise whats the need for the clause if you can't sell it anyway?

By putting the clause within the contract the lender has given you a huge hint.
The fundamentals of contract law permit you as an individual to contract with whomever you wish. People create law by contracting with each other.

Rights under contract are not legal priviliges vested in statute.

The rankine's have uncovered a way out of debt. Termination of contract relieves both parties of any contractual obligations...again thats a fundamental priniciple of contact law....termination is absolute.
A debtor has a right to terminate a consumer credit agreement....section 98 of the CCA.
Once the agreement is terminated the debtor has a liabilty for the debt.
Its at this stage that a debtor can contract with any company to sell the debt and assign the liability over to them.
The transfer of liability is a well established legal practice employed by insurers and solicitors. Legal documents are drafted on a daily basis that include and openly state that if a specific event happens all or a specified liability will be covered, removed or fulfilled with the intention or effect of a contractual promise to take on that liability and remove it from the person it should fall upon. In most cases the liability would be a court judgement costs order.

The courts and the lenders have no choice but to accept that a legally vaild contract is then in place between the debtor and the Rankine's.
I have studied everything in great detail and I can not see how the banks could possibly challenge this. For me it is watertight.
The regulators can shout and scream all they want. They are regulating something that does not exist. On the other hand debt purchase is a legal and an established principle and debt purchasing companies do not need to be regulated by the MOJ.

[Amethyst]

Re: Momentum Network / CCK

All of the opinions within this thread thus far have been based or formulated as a result of the actions and statements of the Ministry of Justice

I disagree entirely with that statement. If you have a read of some other threads relating to CCK and the Rankines you should see that we are as impartial as you are. Actually I think I mentioned the clauses about transferring debt earlier in this thread.

Actions speak louder than words.

[hunter_01]

Re: Momentum Network / CCK

I retract my statement in regards to the all the previous opinions within the thread being purely formulated on the actions and statements of the MOJ.

I'm sure some of the opinions were based on their own research by the individuals.

Thank you Amethyst for the reference to clauses within the contracts. Its an extremely good & important fact that you cited.

In the post that I wrote I wanted to highlight the facts that at this very moment the MOJ are aiding and abetting in one of the biggest scams in legal history with relation to claims for unenforceability.

I also wanted to bring an educated well researched view on the Rankine's debt purhcase business model.
I hope I've managed to do that.

[Curlyben]

Re: Momentum Network / CCK

A debtor has a right to terminate a consumer credit agreement....section 98 of the CCA.

Would you care to re-evaluate this statement ?

98. Duty to give notice of termination (non-default cases).

Refers to the requirements of notice from the CREDITOR beofre termination of an agreement.

[Amethyst]

Re: Momentum Network / CCK

at this very moment the MOJ are aiding and abetting in one of the biggest scams in legal history with relation to claims for unenforceability.

Thats a big statement to make. And one I don't agree with in this context.

The Ministry of Justice Claims Regulation may have erred in your opinion in the action they took against Momentum, however they were backed up by the Tribunal with some rather damning statements.

Unenforceability is not a new thing. Despite what the CMCs and press would have us believe. It has been the case since the CCA was drafted by Bennion in the 70's.

I am sure you have read in depth the very high profile cases, particularly those surrounding Mrs Wilson, and of course you will know the Rankines case.

The CMCs are pulling people in with false promises, and we all know that. The MOJ have a very difficult job monitoring and 'policing' (for want of a better word) the industry as many of the arguments being put forward are not yet tested in court. It is fact that certain agreements are iredeemably unenforceable and cannot be enforced either in or out of court, and that has been tested and proven, as much by the retraction of 127(3) as by high court judgments.

When the MOJ visit various CMCs to check compliance with the compensation act 2006, they are met, it seems, with a massive reluctance to provide evidence of concluded cases. Whether by negoitation with creditors to get a fairer deal for consumers (which is the route we tend to go on this site) or by declarations of unenforceability - which is the somewhat pie in the sky promise made by many CMCs to get the consumers to part with large upfront fees. We already know the Regulator work closely with one of the largest companies who offer to wipe debts for people and very very few judgments come back as evidence that they acheive what they set out to (actually I dont think any have in court as yet and hopefully this is what the test cases will sort out - but of course then there is certainty and business for such companies will drop off rapidly as people can take it on themselves)

The moral issues completely aside, we are dealing with the law when discussing these cases. We have to be realistic too.

CCK is no different. They have no evidence nor has their method of purchasing debt off a consumer been tested in court (as far as I am aware).

Now surely, if they were in this for the good of the people and to use the law to get fairness for consumers, they would have pushed a case into court to be tested.

Personally I havent seen any evidence of the issues the MOJ and Tribunal spoke of (people continuing to be chased)- I think the selling by debtors of debt to third parties needs looking at properly and the law clarifying - but in the meantime people like CCK are taking large upfront fees from vulnerable, struggling consumers with more pie in the sky promises which they, CCK, have not tested.

Basically to go back to the part of your post I quoted

at this very moment the MOJ are aiding and abetting in one of the biggest scams in legal history with relation to claims for unenforceability.

If they allowed CCK to continue unchallenged I am very sure they would be accused of the same in relation to debt purchasers by the unenforceability camp. And tbh the unenforceability camp has rather a lot more going for it.

Apologies for a bit of a ramble, please answer Curlys questions first as they are rather more concise, and then maybe we can discuss the actual legalities and whether this is kind of on the right lines,

Most contracts have in them a no transfer unless agreed by the creditor, and I presume that Rankine feels he can get this overturned as unfair (as in same contracts the banks have the right to transfer without any permission or even knowlege from the consumer).... so if he fights that term and succeeds then it would be possible to sell your debts to third partes.

[hunter_01]

Re: Momentum Network / CCK

Thank you curlyben for your question in regards to section 98 of the CCA

You're quite right in stating that the section deals with Notice from the creditor prior to termination.

If you read section you'll find that within the section it reads

but so applies notwithstanding that, under the agreement, any
party is entitled to terminate it before the end of the period so specified

I hope this is sufficient evidence for you in regards to the termination right of a debtor.

Whether a bank argues to the contrary is inconsequential. It is incumbent upon every lender to terminate an agreement prior to court action.
As soon as the lender terminates which he must do any contract that the debtor has with a third party is intantly binding and is then law.

Lenders must terminate prior to court action. It is within the lacuna period (the time between termination & court action) that a debtor can sell his debt.

[Curlyben]

Re: Momentum Network / CCK

I see where you are coming from here, but on reading the whole section again I still believe it's misguided, especially in relation to credit cards as there is no formal duration of the agreement. Also this section SPECIFICALLY deals with NON-DEFAULT cases.
So ANY default would render this complete line of reasoning invalid.
Also there are other conditions are set out in s99

(1) The creditor or owner is not entitled to terminate a regulated agreement except by or after giving the debtor or hirer not less than seven days' notice of the termination.
(2) Subsection (1) applies only where—

(a) a period for the duration of the agreement is specified in the agreement, and
(b) that period has not ended when the creditor or owner does an act mentioned in subsection (1),
but so applies notwithstanding that, under the agreement, any party is entitled to terminate it before the end of the period so specified.

(3) A notice under subsection (1) is ineffective if not in the prescribed form.
(4) Subsection (1) does not prevent a creditor from treating the right to draw on any credit as restricted or deferred and taking such steps as may be necessary to make the restriction or deferment effective.
(5) Regulations may provide that subsection (1) is not to apply to agreements described
by the regulations.
(6) Subsection (1) does not apply to the termination of a regulated agreement by reason of any breach by the debtor or hirer of the agreement.

You are basically referring to novation here.
The reliance on this single, extremely narrow, reference is certainly misguided, although legal.

What case law is relied upon to confirm and enhance this premise ?

[hunter_01]

Re: Momentum Network / CCK

Thanks for your post curlyben

Section 98 is NOT intended to deal with the entitlement of a creditor or owner’s rights to terminate an agreement. Section 98 of the Act deals with the obligation of a creditor to provide a notice of termination to a debtor prior to termination of an agreement.

Within section 98 it is clear that the Act irrevocably permits either party to a regulated agreement to terminate it before the end of the period so specified.

You have quite rightly pointed out that the section deals with cases of non-default and you have set in bold the relevant subsection which reads:

(6) Subsection (1) does not apply to the termination of a regulated agreement by reason of any breach by the debtor or hirer of the agreement.

with that in mind you have concluded that if a debtor is in breach of a contract (i.e. in arrears) then pursuant to Section 98(6) of the Act the debtor is not entitled to terminate the agreement.
This is wholly incorrect.
Subsection 1 outlines the fact that a creditor must give 7 days NOTICE of termination. Consequently the affect of section 98(b)(6) is that if the agreement is in arrears then it is NOT incumbent upon the creditor to provide 7 Days notice prior to termination.
Its foolhardy & wholly incorrect to attempt to claim that section 98(b) (6) diminishes a debtors right to terminate an agreement if the debtor is in arrears.
Section 98(b)(6) has only one effect. If the debtor is in arrears then pursuant to that section of the Act the creditor does not have to provide 7 days notice of termination.
As I mentioned earlier Section 98 is NOT intended to deal with the entitlement of a creditor or owner’s rights to terminate an agreement. Section 98 of the Act deals with the obligation of a creditor to provide a notice of termination to a debtor prior to termination of an agreement. The difference could be argued as trivial however in the context of application it is absolutely crucial.


Your final comments read as follows:
"You are basically referring to novation here.
The reliance on this single, extremely narrow, reference is certainly misguided, although legal.

What case law is relied upon to confirm and enhance this premise ?"

The Rankine concept is certainly not Novation. When carrying out my research I myself came to the initial conclusion of Novation. But this is not correct.

Novation is a mechanism whereby one party can transfer all its obligations under a contract and all its benefits arising from that contract to a third party. The third party effectively replaces the original party as a party to the contract.
For a contract to be novated all parties to the contract must be an agreement. Cleraly under novation you would need the consent of the creditor.

Novation is only applicable if the contract is live. Under the Rankine concept they Terminate the contract. Therefore the debtor is no longer under contract & is immediatley relieved of any contractual obligations.

Termination of the contract side steps contract law. The issue of termination is central to the sale of the debt. As soon as the contract is terminated the debtor can freely contract with whomever they so wish.

In regards to:

"The reliance on this single, extremely narrow, reference is certainly misguided, although legal.

What case law is relied upon to confirm and enhance this premise ?"

I disagree. The debtor does not have to rely upon any legislation to benefit from the effects of the termination of the contract at all. The debtor can rely upon the lender to do this for him.

Termination rights of the debtor are ultimately inconsequential as the lender is forbidden to seek redress in the courts in regards to the total balance and legal costs unless they terminate the contract. Thats a legal Fact.

Prior to any court action the lender must terminate the contract and any contract a debtor has with Momentum Network Ltd will become instantly legally binding. Failure for the lender to acknowledge and accept that a legally binding contract is then in place will be tantamount to repudiation.