Credit Files, Mobile Phone Contracts and The Consumer Credit Act

mrcopping

Dear fellow MSE forum users,

This is my first post please so be gentle with me!

I wanted to know if anybody had any dealing or experience with mobile phone companies, and adverse credit reference agency information.

My scenario...

I took out a service with Vodafone for a sim-only service back in 2011, when this service came to an end in 2012 the final bill was not issued to me in the usual manner of online billing, and payment wasn't taken by Direct Debit. Instead, it was (apparently) posted to me for a one-off payment, and this is the Vodafone process according to them.

I had no knowledge of this and didn't receive this final bill, actually what I did receive was a debt collection agency letter chasing payment, which was promptly paid once I had obtained the backup to support the agency claim that money was outstanding. The backup was the final Vodafone bill, dated some months prior.

I had thought that was the end of it until last Summer when I applied for a Mortgage and was declined! Turns out a 'Default' account status had been placed on my Credit Reference Agency file!

I have tried, unsuccessfully, on numerous occasions to obtain evidence as to how and when they sent me the bill, and notified me that it was outstanding or in fact in in Default, and Vodafone have been unable to provide me with this information.

I have contacted Vodafone about this and complained and got nowhere - they said they couldn't find my account initially, and then eventually wouldn't actually let me complain without paying a fee to obtain information about myself (subject access request?). I asked them clearly if this request would include a copy of the Default Notice, to which they said no! I then contacted Experian to try and have the details removed or at least a Notice of Correction to explain the circumstances placed on my file, they refused to do it. So I decided to raise a complaint with the Telecomms Ombudsman, they have astoundingly replied today and said that none of the rules of the Consumer Credit Act apply to Vodafone but that Vodafone are still able to contact Credit Reference Agencies with adverse information. So basically Vodafone don't have to follow the due process of the Consumer Credit Act, but can still affect your Consumer Credit File.

I'm totally baffled about how a company is able to avoid the normal rules on a technicality but yet the impact of their actions can be exactly what the rules are in place to govern.

Grateful to anybody if they can share their experiences or solutions?

Thank in advance.

Mike

National_Debtline

Hi Mrcopping, welcome to MSE.

The Consumer Credit Act doesn't apply to mobile phone contracts because you are not actually given any credit (it is a contract of service). That means that you only have the rights that are outlined in the terms and conditions of what you have signed. Within the small print it is extremely likely that you have given permission for them to report information to the credit reference agencies.

The credit reference agencies will only remove incorrect data and at the moment the default appears to be correct because there was money outstanding and not paid in accordance with the contract. In order to challenge the default you need to gather more evidence to strengthen your complaint because at the moment you seemed to be locked in a battle of "he said, she said".

I think a Subject Access Request may help you on this occasion - it is a request for data under the Data Protection Act (it does cost £10 and they have 40days to reply) but you can ask for as much information as you want. For example, you could ask for a copy of the contract and cancellation procedure (did you follow this correctly?), details of where in the contract it allows them to report information to the credit agencies, copy of their policy about closing accounts and sending paper bills rather than electronic ones, the personal contact information/ address they had for you in 2012 when the contract ended, etc.

If you have more evidence you may be able to go back to the Telecoms Ombudsman and ask them to look at it again. If the default remains then you can put a Notice of Correction on your credit file which is a short explanation to give the default more context. Good Luck,


Laura
@natdebtline

mrcopping

Hi Laura,

Thanks so much for your prompt and detailed reply.

In essence, what you're saying is that the Consumer Credit Act doesn't apply to Vodafone in my instance because they did not provide me with credit. However, because of a clause in their Terms and Conditions, they are able to share payment history records with Credit Reference Agencies, despite having not actually provided me with credit! Furthermore, none of the very important rules/safeguards would apply in terms of how Vodafone should act, what records they should keep, and what procedures they should follow. For example, perhaps actually notifying me that I owed money to them before 'defaulting' the account.

This seems grossly unfair, the implication of a credit history is exactly that, a history of all of your credit. If the Vodafone relationship was not one of a Lender and Creditor, how on earth should they be able to impact upon a person's credit history! And why should they not have to follow any protocols in this regard.

I've read online quite a few cases of this over the last 24 hours, with many people experiencing the same problem.

I wonder if the legend that is Martin Lewis himself would consider looking into the rules surrounding this and seeing if there is a way it can be challenged. Naturally it won't help me but might help others in future.

All the best,

Mike

fermi

mrcopping wrote: »

In essence, what you're saying is that the Consumer Credit Act doesn't apply to Vodafone in my instance because they did not provide me with credit.

Phone contracts are not regulated agreements under the Consumer Credit Act 1974.

You are also making the common mistake of thinking that recording a default on your credit file has anything to do with the Consumer Credit Act in a legal or procedural sense. It does not.

The word 'default' is used in several different contexts to mean different things.

There are two types of 'default', or things people commonly call a 'default'

(a) - A default notice issued under s87 of the Consumer Credit Act - which is a letter sent to you.

(b) - A default on your credit file, which is recorded by a creditor when they believe the relationship between you and it has broken down.

Those 2 can be close in date in many cases, but they are technically and legally different things.

(b) applies to phone contracts. (a) does not.

Also, on a credit file 'credit' is wider that just credit granted under the CCA1974, but can include where goods and services are supplied in advance and then billed and paid for later. i.e. payment under a phone contract monthly for services received.

fermi

This is what the ICO has to say on this.

CRA Default on a credit file Vs default under the CCA

I was not sent any default notices, should the default on my credit reference file be removed?

In most cases, the answer will be ‘no’, provided that adequate fair processing information was provided when the account was originally opened.

It may help to explain that a “default” on an individual’s credit file does not mean that an individual has been defaulted under the Consumer Credit Act; essentially, the same word is being used to describe two slightly different things (which can obviously lead to some confusion). Instead, a “default” on a credit file simply means the lender considers the relationship between itself and the individual to have broken down.

Therefore, whilst it may be a requirement of the Consumer Credit Act to issue default notices, there is no DPA obligation on a lender to issue a default notice to individuals before marking an account as being in default on their credit file. Although we advise that it is good practice to issue a notice, lenders will often have provided individuals with fair processing information about defaults and notices in the terms and conditions when the account was opened. Provided this was the case, then it is likely to satisfy the “fairness” aspects of the first principle.