MSE News: OFT warning over 'debt write-off' claims

Former_MSE_Guy · 27 January 2010 at 3:32PM

This is the discussion thread for the following MSE News Story:

"Consumers have been warned to disregard misleading adverts stating you can write off debt using legislative loopholes ..."

Read the full story:
OFT warning over 'debt write-off' claims

immoral_angeluk · 27 January 2010 at 3:36PM

I'm so glad that finally the OFT have stepped in over this. So many times have I seen, on here and with my clients, people falsely believeing they can magically have their debts written off with CCA requests, completely ignoring the fact that the test case has pretty much ruled it out except in exceptional circumstances. I truly believe these claims have done more harm than good, causing people who ran up the debt to falsely believe they've got a magical get out clause and concentrating on that, rather than dealing with the debt properly nd compunding the problem.

fermi · 27 January 2010 at 3:55PM

OFT publishes section 77-79 guidance

"The Office of Fair Trading (OFT) today said lenders and collectors must not threaten legal action if they have failed to fulfill debtor requests for information.

The OFT took the controversial step of disagreeing with the courts on the issue in its draft guidance for the industry on sections 77-79 of the Consumer Credit Act 1974 (CCA), published today.

They also said creditors and debt buyers must notify debtors that they are not allowed to enforce.

Sections 77-79, which allow consumers to request information about their credit agreements, have been reviewed by the OFT because of concerns that some debtors are being misled into thinking that these sections can be used as a loophole to get their debts written off and some creditors do not seem to understand their obligations.

The OFT said the sections do allow a consumer to request a 'true copy' of their agreement but it agrees with the High Court that this does not have to be a photocopy or an exact copy of the original. A copy of the debtor’s signature is also not required to fulfill the obligation.

If the creditor fails to provide the information the debt is unenforceable, but the OFT emphasised that this does not mean it is written off.

As such, lenders can pass the account to third parties to collect and can notify credit reference agencies of the arrears.

However, the OFT disagreed with elements of the Royal Bank of Scotland versus McGuffick court case, which said threatening legal action does not constitute enforcement.

While acknowledging the case, it said: "A creditor should in no way mislead a debtor as to the enforceability of the agreement. To do so would be an unfair of improper business practice and would be highly relevant to the creditor’s or owner’s fitness to hold a licence."

It added: "No communications or requests for payment should in any way threaten court action or other enforcement of the debt where the creditor or owner is aware that it cannot or will not be entitled to enforce."

The OFT then went further, insisting that communications with the debtor should in fact make it clear that the debt is unenforceable. "

http://www.oft.gov.uk/shared_oft/consultations/OFT1175con.pdf

fermi · 27 January 2010 at 4:07PM

I should note however, that this has no bearing whatsoever on agreements that may be irredeemably unenforceable under s127(3) of the CCA1974.

The OFT is only referring to cases where the agreement may be temporarily unenforceable due to non-compliance with s77-79.

The two situations should not be confused, as has seemed to be the case in some poorer quality media reports and suspect journalism.

never-in-doubt · 27 January 2010 at 5:20PM

fermi wrote: »

The two situations should not be confused, as has seemed to be the case in some poorer quality media reports and suspect journalism.

Thanks Fermi - you don't mean the MSE lot as well do you? They seem to just copy whatever the BBC say at the moment, maybe they need to look at employing people like us that actually understand what has been written instead of journalists that dont have a clue (no offence Guy)....

never-in-doubt · 27 January 2010 at 5:23PM

immoral_angeluk wrote: »

I'm so glad that finally the OFT have stepped in over this. So many times have I seen, on here and with my clients, people falsely believeing they can magically have their debts written off with CCA requests, completely ignoring the fact that the test case has pretty much ruled it out except in exceptional circumstances. I truly believe these claims have done more harm than good, causing people who ran up the debt to falsely believe they've got a magical get out clause and concentrating on that, rather than dealing with the debt properly nd compunding the problem.

Can I point out, if you have clients then they ought to leave and leave fast cos you like most others have been suckered into this false claim that the 'so called loophole' has been closed - it has not!

It is not a false belief at all, it is quite true that you can have a debt made unenforceable if the lender does not comply. What part of that don't you grasp exactly and we'll no doubt spell it out for you?

pepe2008 · 27 January 2010 at 5:39PM

Still a loophole big enough to drive my truck through!....and at 44tonnes and 65ft long tis' a big hole:D

And this 'repopulate an Agreement with information the Creditor originally had ( ie the Application Form ) is also rubbish!' Does that mean that I can 'repopulate' a Letter from the Creditor, using words that have appeared on other letters from them to me, to say that they have written the Loan off?

DarkConvict · 27 January 2010 at 5:51PM

While acknowledging the case, it said: "A creditor should in no way mislead a debtor as to the enforceability of the agreement. To do so would be an unfair of improper business practice and would be highly relevant to the creditor’s or owner’s fitness to hold a licence."

It added: "No communications or requests for payment should in any way threaten court action or other enforcement of the debt where the creditor or owner is aware that it cannot or will not be entitled to enforce."

That is a good statement. SO many times a bank has sent a reply saying it is enforceable when it is clearly not. There is now a ruling that can be stated in a return reply.

"Where an agreement has been "varied" (eg, where the interest rate has risen), a copy of the original and the varied terms must be produced.

Also since most of the time, the interest rate changes, they still need the original copy!

martinjohn · 27 January 2010 at 6:00PM

if they can reconstiute / repopulate a document with what SHOULD of been on the agreement, they can they not just make it up.... how can that stand up in court,,,

never-in-doubt · 27 January 2010 at 6:06PM

martinjohn wrote: »

if they can reconstiute / repopulate a document with what SHOULD of been on the agreement, they can they not just make it up.... how can that stand up in court,,,

It cannot stand up in court that is the whole point of this argument!

martinjohn · 27 January 2010 at 6:11PM

why is the OFT saying that they can supply you with a recreated fairtale agreement, and saying this suffices as long as its accurate,,, isnt it your word against theres in which case i think we know who wins.... they do?

MSE News: OFT warning over 'debt write-off' claims

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