logbook loans under threat of extinction

lemonjelly

The Consumer Minister Kevin Brennan MP announced plans to outlaw the use of bills of sale for consumer lending.

Bills of sale are typically used for 'logbook' loans which are secured against the value of the consumer's car. The number of registered bills of sale has risen over recent years with nearly 40,000 being made between April 2008 and March 2009. This is equivalent to appproximately £30 million in consumer lending. The Office of Fair Trading (OFT) has reported that more than 1,000 consumers have complained about problems with these loans. Complaints relate to the lack of protections available to people if they fall into arrears, unfair collection practices, the complex and confusing nature of the language used in the agreements and the excessively high cost of the loans.
Consumer Minister Kevin Brennan said: "These bills of sale are archaic and allow vulnerable peoples' goods to be seized without a court order. They were developed in the days of Charles Dickens and don't meet 21st Century consumer standards. They can encourage people to slip even further into debt rather than taking control of their finances. We must consider all the options but it seems they don't fit easily into a modern consumer regime which should allow honest businesses to thrive and offer adequate protection for consumers."

The Government's consultation paper on the issue seeks views on the following options: -

• Banning the use of bills of sale for consumer lending
• Introducing a voluntary code of practice or other non-statutory regulations
• A targeted reform of bills of sale legislation

The consultation paper is available on the BIS website.

I regularly experience clients with logbook loans. The lenders are only just above loan sharks imo.

nomoneytoday

Where does the Rt Hon MP think people will go instead?

cabbage

just above loan sharks - not in my opinion, they are on the same level if not worse. The charges are horrendous too.

Worst people I have ever had to deal with professionally. Its about time something was done. I know watchdog were looking to do a story on them and the OFT was gathering evidence.

If its the end of them, it can't come too soon for me.

lemonjelly

nomoneytoday wrote: »

Where does the Rt Hon MP think people will go instead?

I think this is part of the issue.

Thing is, there are much cheaper, & better sources of credit to be had. It is knowing about them.

However if you feel this is a valuable & neccessary source of credit, feed this back via the consultation.

Personally, I'd rather see a dramatic increase in the use of, & services provided by a credit union in local areas.

tomterm8

lemonjelly wrote: »

. Complaints relate to the lack of protections available to people if they fall into arrears, unfair collection practices, the complex and confusing nature of the language used in the agreements and the excessively high cost of the loans.

...
I regularly experience clients with logbook loans. The lenders are only just above loan sharks imo.

The thing is, the bill of sale acts were actually meant to protect consumers at the time, by making these bill of sales enforceable only on contracts of very high value, equivalent to a good house. I think bill of sales should be amended, firstly to revise the language used so it is comprehensible, and secondly to adjust the act to include the effect of inflation since it was brought in. They make a lot of sence as commercial loans, but are arbitary as far as consumers are concerned.

Luc1

BoS is so outdated.. its got so many people in to trouble - including myself!

I brought a car, but the car was secured by a Bill of Sale.
So 3rd parties are getting screwed over, even if you brought the car and it was cleared of finance. As long as the BoS is registered, then they can take the car with out any notification.