MSE News: High Court 'closes debt write-off loophole'

Former_MSE_Guy

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

"Consumers who try to wriggle out of their debts based on a technicality have been dealt a blow after one loophole was closed by the High Court, it is claimed ..."

Read the full story:
High Court 'closes debt write-off loophole'

fermi

That judgement is only on what is required to be produced when a request under s78(1) of the Consumer Credit Act is made.

And when it says that:

(6) If the creditor under an agreement fails to comply with subsection (1)—

(a) he is not entitled, while the default continues, to enforce the agreement;

.....it does not deal with the case where the court is asked to make an enforcement order on a debt covered by s127(3), which specifically forbids the court from making such an order unless an ageement containing the prescribed terms was signed by the debtor.

Got to have seen 100's of agreements that fall foul of that here on DFW, and many many more elsewhere.

Maybe that will be closed as well? Who knows? But it hasn't as yet.

The OFT guidance is still pending and who knows what the final version of that will say. Some of that draft guidance has been misquoted as coming from this judge.

esmerellda

(.....and its not a bloomin loophole )

fermi

esmerellda wrote: »

(.....and its not a bloomin loophole )

Correct. Not a loophole at all. Especially not s127(3).

In fact it was deliberately included for this purpose by the person who drew up the Consumer Credit Act. Francis Bennion.

http://www.francisbennion.com/pdfs/fb/2003/2003-061-consumer-credit-1974-s127-3.pdf

Consumer Credit Act 1974 s 127(3)

As the draftsman of the Consumer Credit Act 1974 I would like to thank Dr Richard Lawson for his interesting and well-argued article (30 August 2003) on Wilson v First County Trust Ltd [2003] UKHL 40, [2003] 4 All ER 97.

Dr Lawson may be interested to know that I included the provision in question (section 127(3)) entirely on my own initiative. It seemed right to me that if the creditor company couldn’t be bothered to ensure that all the prescribed particulars were accurately included in the credit agreement it deserved to find it unenforceable, and that the court should not have power to relieve it from this penalty. Nobody queried this, and it went through Parliament without debate. I’m glad the House of Lords has now vindicated my reasoning and confirmed that nobody’s human rights were infringed.

And note where in the judgement referred to above, it was ruled that:

Wilson v First County Trust Ltd [2001] EWCA Civ 633

In effect, the creditor – by failing to ensure that he obtained a document signed by the debtor which contained all the prescribed terms – must (in the light of the provisions in sections 65(1) and 127(3) of the 1974 Act) be taken to have made a voluntary disposition, or gift, of the loan monies to the debtor. The creditor had chosen to part with the monies in circumstances in which it was never entitled to have them repaid;

fermi

In fact, it seems that the people trying to find loopholes are the banks.

Trying desperately to fudge their way out of the mess they have got themselves into by issuing so much credit for so many years without issuing enforceable agreements.

(Better finish having my say for a bit now. :cool:)

~Brock~

fermi wrote: »

Correct. Not a loophole at all. Especially not s127(3).

In fact it was deliberately included for this purpose by the person who drew up the Consumer Credit Act. Francis Bennion.

http://www.francisbennion.com/pdfs/fb/2003/2003-061-consumer-credit-1974-s127-3.pdf

And note where in the judgement referred to above, it was ruled that:

Wilson v First County Trust Ltd [2001] EWCA Civ 633

The Manchester cases were brought by Claims Management Companies and/or their solicitors.

The following quote from Francis Bennion is also interesting.

"This sort of thing was not what was intended by those responsible for the enactment of the CCA. As Judge Mason points out, the Act was introduced to protect the individual who is unsophisticated in financial affairs and contracts with unscrupulous and sophisticated financial institutions. It was not designed to help individuals in the financial services business make money out of financial institutions through exploiting its undoubted technicalities.‘ Well that was rather what I thought too, having I fear created many of the said technicalities."

What I find the most fascinating is Carl Wright, from Cartel, describing this as a 'victory'. Eh?

fermi

~Brock~ wrote: »

The following quote from Francis Bennion is also interesting.

"This sort of thing was not what was intended by those responsible for the enactment of the CCA. As Judge Mason points out, the Act was introduced to protect the individual who is unsophisticated in financial affairs and contracts with unscrupulous and sophisticated financial institutions. It was not designed to help individuals in the financial services business make money out of financial institutions through exploiting its undoubted technicalities.‘ Well that was rather what I thought too, having I fear created many of the said technicalities."

I must admit that I completely agree with that.

I find the claims companies that encourage people to launch these claims against lenders to be abhorrent.

They are profiteering from the greedy, but also from those who are desperately in debt and at the end of their tether.

Also, I think that by bringing those cases they have done the normal debtors who need to use the law to protect themselves a HUGE disservice. :mad:

As for a victory? Nope. All it has really done is confirmed the status quo....

MikeyH

Seriously though, isn't it unseemly for Francis Benninon on the one hand to be saying that the clause is one he included on his own initiative and it went throguh undebated, and on the other hand to be telling us what the intention of the legislators was when they enacted it.

If it wasnt debated then the only clear 'intention' he can talk about was in the eyes of the draughtsman, IE himself, and if the law says somethign that he didnt intend it to say then perhaps he should have draughted it more clearly.

However the effect of s127 has been tested in the Lords, Lord Hoffman noting that it wasn't for the courts to over-rule what the act says. (my paraphrasing)

Numpty_Monkey

fermi wrote: »

(Better finish having my say for a bit now. :cool:)

Keep going mate you know what you are talking about:A:T

never-in-doubt

This is interesting, that MSE even use the incorrect lingo such as 'loophole' and 'debt write off' etc - but ultimately, judge Waksman's decision will be appealed - but this will depend on the further cases set to be adjudged in the new year.

For instance, MBNA ruined 2 cases and this makes 3 - that leaves 5 left which we know contain the argument for PPI and loans and cra reporting.

Even one consumer victory would be good right now - but this is by far the end of the matter, the banks have just been given carte blanche to create documents and this is protected under alternative laws so it may mean we have to look to utilise the CCA along with UTCCR - surely this would be another unfair advantage for the creditor?

I'll hold back on personal comments until after the main verdict and subsequent appeal. :T:T

never-in-doubt

MSE_Guy wrote: »

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

"Consumers who try to wriggle out of their debts based on a technicality have been dealt a blow after one loophole was closed by the High Court, it is claimed ..."

Read the full story:
High Court 'closes debt write-off loophole'

Guy, please do the decent thing and rephrase your comment to the factual version that is

'consumers who seek unenforceability due to unlawful agreements'