Incorrect Default

Manjam_2

A question for the credit experts.

I have a read a few posts of users with similar issues. Back in 2016 I took out a contract with O2 and the address that they ran the credit check on was my current address and one previous address. I was living at my current address and had to provide a proof of address as usual, to set up the account. The receipt which I still have, stated my current address, however, I assume down to human error, when they set up the account they put my old address, despite me giving them my current address and that current address being on the actual receipt.

The account fell into arrears which I was not aware of as I was not using the account, and subsequently default. However, all this time, and still till today, O2 had my old address on file and sent any reminders and default notices to my old address.

I am in the process of trying to move, and in doing so I received a rejection from Halifax due to poor credit. Checked my record and then discovered this default which I was not made aware of. I contacted O2 immediately and paid the outstanding amount which was when I discovered their error.

From my research, under the consumer credit act a creditor must inform a debtor in writing of their intention to place an account in default and give them 14 days to pay any outstanding. As they made a mistake in setting up the account, they did not notify my at the correct address and therefore the default was applied in error.

My question is what is the likelihood of this getting turned over? I am aware that I can get the financial ombudsman to investigate if O2 have acted incorrectly.

Any advise is much appreciated. Thanks

[Deleted User]

Undoubtedly.

How did the account fall into arrears? Was a DD not setup to pay the bill each month?

Why do you assume the account was setup with your old address - you would have received welcome letters etc. in the post - if you didn't receive those I would have raised the question from the off

Manjam_2

Well I think the question is not so much why it fell into arrears but more why I wasn’t notified that a default was on the account.

The account in question was a data plan and an iPad which were used at a business and under the WiFi. So even though there was a data plan in use, it wasn’t used. Hence any interruption to the service because of non payment of bills went unnoticed. And we did have a DD set up, but at some point it must have bounced and we didn’t realise.

When speaking to O2 the only address they have on file is my old address which I didn’t live at at the time I set up the account. And I have a receipt from the store with my correct current address printed on it. So clearly they were given my current address at some point when setting it up.

And yes I probably should have received welcome letters, but it’s not something that I was looking out for on a daily basis and the bill was always paid on time so I never had any issue or recourse to be in touch with O2

MEM62

Manjam wrote: »

Well I think the question is not so much why it fell into arrears but more why I wasn’t notified that a default was on the account.

Both questions are relevant. You have a responsibility to ensure that the account is run properly. It wasn't and defaults are one of the consequences.

In respect of the notice, yes, a notice is supposed to be issued prior to the default and no doubt o2 will claim that it was. However, non-receipt of the notice is not grounds for having the default removed so you are, unfortunately, stuck with it unless you are able to persuade O2 to remove as a goodwill gesture because of the address issue.

Manjam_2

I am not disputing the debt, I have paid that. I am disputing the fact that the creditor has a legal obligation to ensure that any default is applied under the correct process. That includes providing notification of a proposed default prior to the default being applied. If they have not provided notification to the correct address because they filed the address incorrectly themselves then they are at fault for not being able to serve the notice of the default, and therefore the default has not been applied correctly. O2 cannot make the excuse that they told me about the default because they sent notification to an old address that I wasn’t even living at when I took out the account. In order for the default to be valid they need to ensure that they provide notice to the address that I have provided them with, which is my current address that is on the receipt that the gave me

[Deleted User]

You would have been emailed as well if you setup an online account

Anyway they don't have to issue a default notice - the T's and C's of the account would state that failure to pay can lead to the account being defaulted etc etc.

Manjam_2

It is written in law under the consumer credit act that a creditor must serve notice to a debtor prior to issuing a termination or a default. Regardless of whether it states it in the terms and conditions does not mean that O2 can ignore what is written in law

Need for default notice.

(1)Service of a notice on the debtor or hirer in accordance with section 88 (a “default notice ”) is necessary before the creditor or owner can become entitled, by reason of any breach by the debtor or hirer of a regulated agreement,—

(a)to terminate the agreement, or

(b)to demand earlier payment of any sum, or

(c)to recover possession of any goods or land, or

(d)to treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred, or

(e)to enforce any security.

(2)Subsection (1) does not prevent the creditor from treating the right to draw upon any credit as restricted or deferred, and taking such steps as may be necessary to make the restriction or deferment effective.

(3)The doing of an act by which a floating charge becomes fixed is not enforcement of a security.

(4)Regulations may provide that subsection (1) is not to apply to agreements described by the regulations.

[F1(5)Subsection (1)(d) does not apply in a case referred to in section 98A(4) (termination or suspension of debtor's right to draw on credit under open-end agreement).]

Annotations: Help about Annotation
Amendments (Textual)
F1
S. 87(5) inserted (1.2.2011) by The Consumer Credit (EU Directive) Regulations 2010 (S.I. 2010/1010), regs. 37, 99(1) (with regs. 100, 101)
Modifications etc. (not altering text)
C1
S. 87 applied (1.11.2009) by The Payment Services Regulations 2009 (S.I. 2009/209), regs. 1(2)(c), 52(d) (with reg. 3)
C2
S. 87 excluded (E.W.S.) (15.7.2014) by The Financial Services and Markets Act 2000 (Regulated Activities) (Green Deal) (Amendment) Order 2014 (S.I. 2014/1850), arts. 1(2), 12(3) (with art. 1(3))
88 Contents and effect of default notice.

(1)The default notice must be in the prescribed form and specify—

(a)the nature of the alleged breach;

(b)if the breach is capable of remedy, what action is required to remedy it and the date before which that action is to be taken;

(c)if the breach is not capable of remedy, the sum (if any) required to be paid as compensation for the breach, and the date before which it is to be paid.

(2)A date specified under subsection (1) must not be less than [F214] days after the date of service of the default notice, and the creditor or owner shall not take action such as is mentioned in section 87(1) before the date so specified or (if no requirement is made under subsection (1)) before those [F214] days have elapsed.

(3)The default notice must not treat as a breach failure to comply with a provision of the agreement which becomes operative only on breach of some other provision, but if the breach of that other provision is not duly remedied or compensation demanded under subsection (1) is not duly paid, or (where no requirement is made under subsection (1)) if the [F214] days mentioned in subsection (2) have elapsed, the creditor or owner may treat the failure as a breach and section 87(1) shall not apply to it.

(4)The default notice must contain information in the prescribed terms about the consequences of failure to comply with it [F3and any other prescribed matters relating to the agreement].

[F4(4A)The default notice must also include a copy of the current default information sheet under section 86A.]

(5)A default notice making a requirement under subsection (1) may include a provision for the taking of action such as is mentioned in section 87(1) at any time after the restriction imposed by subsection (2) will cease, together with a statement that the provision will be ineffective if the breach is duly remedied or the compensation duly paid.

spadoosh

Fair play on actually reading up on this a bit.

Unfortunately i share similar views as the others in that i dont think this default notice has been incorrectly applied.

You admit the debt and defulats relate to that debt. So its justifiable. Youre taking the process route and thats fair enough. What youre neglecting though is that there is duties on both sides.

It could be a simple typo that has meant correspondence has gone elsewhere but ultimately its your responsibility to make sure the account is being handled properly. This means you need to carry out due dilligence. Things like making sure bills are being paid, your information is correct and up to date.

I just dont see you being absolved from this default because of failure of process because of what in essence will be a 5 second mistake by an employee one which you presumably had at least 12 months to find and correct.

You cant expect a company to have to adhere to every tiny little protocol whilst absolving yourself of your contractual commitments which is to ensure your details are maintained correctly.


I had a defulat removed. It was basically due to fraud, whilst i couldve gone the Financial Ombudsman route (it was black and white, the credit account was given to a 17 year old) it wouldve involved dropping someone else in it ( a relative) so i took the bargaining approach. "Ill settle the debt, you delete the default on my credit report, ill wait till ive had the letter agreeing until i make payment" worked a treat.

Right now, theyve got no reason at all to accommodate you. They will happily send you to the FO and point to them sending out a default notice to an address which you accepted by not altering.

By all means try and try and try to get it removed, i would be doing because as youve found out it hugely effects your ability to borrow money, for the next 6 years too. I just think youll be extremely hard pushed to find that youve not at least contributed (by not doing anything) to the situation youre in.

Good luck with it.

[Deleted User]

They are not required to issue a default notice:

https://forums.moneysavingexpert.com/discussion/5413033/default-notice-not-received

https://forums.moneysavingexpert.com/discussion/3172602/ico-scor-principles-for-the-reporting-of-arrears-arrangements-and-defaults

https://forums.moneysavingexpert.com/discussion/5467957/no-default-notice-any-advice

PixelPound

Manjam wrote: »

It is written in law under the consumer credit act that a creditor must serve notice to a debtor prior to issuing a termination or a default. Regardless of whether it states it in the terms and conditions does not mean that O2 can ignore what is written in law

There is one tiny winy itty bitty problem - it's highly probable O2 contact isn't covered by the CCA, its a service agreement and not a credit agreement, so quoting the CCA has no relevance. The exception to this would be if it was an O2 refresh account as they are credit for the mobile handsets.

Manjam_2

The account that defaulted was credit for an iPad, not a default on a data plan or call plan, so the credit agreement signed was for the purchase of the hardware, which presumably is covered under the CCA?