Credit Resolution Services/Harlands

Mashed94

Hi all,

Been having some trouble with CRS/Harlands over a cancelled Direct Debit. I had a rolling monthly contract with Xercise4Less at £19.99 per month which allowed me to cancel my membership with 30 days notice. I completely forgot this and cancelled the Direct Debit without going through their online procedure. I received a letter from Harlands stating that I owed them £19.99 + £25 admin fee. Immediately, realising my mistake, I went through the correct procedure to cancel and emailed Harlands to resolve the issue. As I notified the gym through the correct process inside 30 days of my next payment, I recognise that I owe the gym £39.98, or two monthly installments. I have no issue in paying this. However, Harlands ignored my attempt to resolve the debt over a month ago and have stacked £100 of administration fee's on top of the outstanding £39.98. I am not willing to pay these charges as I believe them to be unfair (2.5x the outstanding debt) and disguised penalty charge.

I have come across the below regulations regarding consumer contracts and, under these, believe these charges may not be enforceable as they exceed Xercise4Less's financial loss from the missed payments and appear to be disguised penalty charges.

From the Office of Fair Trading’s 'Guidance for the Unfair Terms in Consumer Contract Regulations 1999':
Group 5: Financial penalties – paragraph 1(e) of Schedule 2:
5.1 “It is unfair to impose disproportionate sanctions for a breach of contract. A requirement to pay more in compensation for a breach than a reasonable pre-estimate of the loss caused to the supplier is one kind of excessive penalty. Such a requirement will, in any case, normally be void to the extent that it amounts to a penalty under English common law.”

Group 18(a): Allowing the supplier to impose unfair financial burdens
'18.1.3 These objections are less likely to arise if a term is specific and transparent as to what must be paid and in what circumstances. However, as already noted, transparency is not necessarily enough on its own to make a term fair. Fairness requires that the substance of contract terms, not just their form and the way they are used, shows due regard for the legitimate interests of consumers. Therefore, a term may be clear as to what the consumer has to pay, but yet be unfair if it amounts to a 'disguised penalty', that is, a term calculated to make consumers pay excessively for doing something that would normally be a breach of contract.

19.14 The concern of the Regulations is with the 'object or effect' of terms, not their form. A term that has the mechanism of a price term...will not be treated as exempt if it is clearly calculated to produce the same effect as an unfair exclusion clause, penalty, variation clause or other objectionable term.'


Again, I am not disputing the £39.98 owed to Xercise4Less. I just do not believe the penalty charges are enforceable. I would be grateful to hear your thoughts.

Fosterdog

A penalty and an admin fee are two different things. If they are charging an admin fee then it may well be reasonable and it also depends on what terms you agreed to when signing up to the contract.

Mashed94

I wouldn't regard £100 for 3 template letters a reasonable fee. The fact that they've ignored my attempt to contact them leads me to believe their only interest is in ramping up the administration fees, as they have tripled since that time. As the regulations I've shared say, the use of the term administration fees could be argued to be disguised penalties which, even if written into a contract, are deemed unfair by the OFT.

hollydays

Ouch that red hurts my eyes

Fosterdog

Mashed94 wrote: »

I wouldn't regard £100 for 3 template letters a reasonable fee. The fact that they've ignored my attempt to contact them leads me to believe their only interest is in ramping up the administration fees, as they have tripled since that time. As the regulations I've shared say, the use of the term administration fees could be argued to be disguised penalties which, even if written into a contract, are deemed unfair by the OFT.

Some solicitors charge a lot more for a letter, even a template one, in fact they charge £15+ just for relieving a letter on your behalf so maybe £100 for three letters plus the staff time taken in chasing you would be deemed fair. Without seeing an exact breakdown nobody can judge one way or another as we don’t know exactly how much work the6 have done on top of the three letters.

Mashed94

I will ask them again for a breakdown of costs. I think I'll argue that the costs are unfair because they've ignored my attempt to contact them over a month ago. If they'd replied and opened a dialogue, this would have been sorted already. I just don't believe they have any intent to resolve it before the fines hit several £000's.

Fosterdog

Mashed94 wrote: »

I will ask them again for a breakdown of costs. I think I'll argue that the costs are unfair because they've ignored my attempt to contact them over a month ago. If they'd replied and opened a dialogue, this would have been sorted already. I just don't believe they have any intent to resolve it before the fines hit several £000's.

You sent them one email, which it is possible you sent to an incorrect address, or it could have gone to their spam folder. Why didn’t you write them a letter, send a follow up email to chase or make a phone Call? Without hearing back from them most people would assume they didn’t get it so would chase it up rather than just leave it.

Mashed94

I sent the email to the customer service address advertised on their website. I did ring them, twice, but it went straight through to voicemail. Judging by what I've read online, this appears to be quite common.