Advice required re defective default notice/unfair relationship

justme2212

Hi all,

I am trying to help my daughter sort out her dire financial state which spiralled out of control due to pay day loans.
We have had a couple of successes with affordability complaints from a Payday Loan Company and a CC.
There is one Payday Loan company who are being so unhelpful.
My daughter made the complaint regarding the unaffordability of the loans provided to her and stated in her letters that upon their final Response, she would then be in a position to discuss affordable repayments etc.
On the day they provided their final response (didn't uphold her complaint) they also sent a Default Notice.
I believe the Default notice is invalid for two reasons,
1. They did not apply the prescribed 14 CLEAR days for remedy, instead quoting the deadline for remedy as 14 days from the date of this letter (18th November 2019)
2. The Default Notice remedy was to pay the full amount, including all interest, as if the loan had gone to full term. They did not give the option to pay the 3months of arrears, nor did they reduce the sum for early settlement.

My daughter wrote to them to make a complaint about the Default Notice (not pointing out the two facts above) but giving them the opportunity to look in to her complaint and provide her with a revised sum and advising them once again, that she awaited their response before making any agreements with them.
She did not receive a reply until Saturday 2 November which stated
"]"If the loan was to be paid in full the full outstanding balance would be £1000, the settlement figure we have supplied is £783.68, our early repayment conditions are detailed in the credit agreement you signed.
As you are aware your account is now in default and in process of being registered on your credit file"

Since then, they sent one of their representatives to our home, who was swiftly sent on his way after being told the account was in dispute and they should not be carrying on with debt collection until such time as they had responded to the complaint.
They have today sent their final response to my daughter's complaint regarding the Default Notice, once again not upholding it, stating they followed all guidelines and also stating that they told her on 24th October that paying the arrears alone would remedy the default and stop a default notice being put on her credit file.
I need advice on how best to move forward with this.
The original complaint regarding the loans being unaffordable is still with the Ombudsman.
Is the Default notice being registered on her credit file proof of termination of the credit agreement ?
Can they issue a second default notice if they realise the first one issued was defective ? I know generally a second default notice cannot be issued once the agreement has been terminated, but what constitutes termination of the agreement ?
I don't want to tip them off to the fact they didn't give the 14 clear days to remedy, nor that they didn't give the correct figure to remedy, but I don't want to advise my daughter on the wrong course of action.
Any advice would be appreciated on how best to handle the debt moving forward, and how to handle the defective default notice.
Do their actions come anywhere under unfair relationship ? They said they sent the representative to "reinstate contact" due to my daughter not contacting them, but she has always responded to any emails/letters etc
Had they provided the correct settlement figure, her brother may have been able to lend her the money to avoid the default entirely, but they didn't give the option to repay the arrears, nor did they provide the reduced settlement figure until such time as the default had already been applied to her account (despite it being requested) I find this very unfair but does it constitute unfair under FCA guidelines ?

Hope to hear from someone soon.
Thanks in advance

[Deleted User]

The best way to get the debt settled is to negotiate the lowest settlement figure she can.

The default will stay on her credit files as she'd defaulted on the account. This terminated the agreement in the sense of interest no longer being charged, but the debt remains liable to repaid. Any error in paperwork can be corrected if you need them to.

Any complain to FOS can take place separately.

justme2212

As I understood it, if the default notice is defective and the agreement was terminated, then the only sum they can lawfully claim is the amount of the arrears at the time of the Default Notice. Thank you for your response, but it doesn't actually answer the questions posed.
I need clear advice on what constitutes termination of a Credit Agreement, the applying of a Default notice ? A letter advising the agreement has been terminated ? Demanding repayment of the full amount due if the loan had run to term ?
I am aware she will still be liable for some sums due, but as they have been absolute morons throughout, I will do all I can to ensure she pays back only what they are entitled to claim lawfully.

Davy_Jones_II

No, she doesn’t owe only the arrears amount, she owes the full amount outstanding at that date.

You seem angry with the company but please remember that it was your daughter who applied for the loan, spent the money and then defaulted on her agreement to repay it on the promised date, so you don’t really get to paint the company as the villains here.

Hopefully you’ve sat her down and explained that she needs to take more responsibility for her own decisions in the future.

Would it not make sense for you to dig her out of this hole for now and then give her some help with budgeting, saving up an emergency fund etc?

sourcrates

justme2212 wrote: »

I believe the Default notice is invalid for two reasons,
1. They did not apply the prescribed 14 CLEAR days for remedy, instead quoting the deadline for remedy as 14 days from the date of this letter (18th November 2019)
2. The Default Notice remedy was to pay the full amount, including all interest, as if the loan had gone to full term. They did not give the option to pay the 3months of arrears, nor did they reduce the sum for early settlement.

Hi,

I would like to address the two points raised above for you if I may.

Point (1) You are correct, the consumer credit act allows 14 clear days for the debtor to comply with the action required in the default notice, that usually runs from the day after you receive it.

Point (2) The purpose of a default notice is to allow the debtor to remedy the breech that has occured, for example, if the account is in arrears, the notice would give them 14 days to rectify that breech, by paying the arrears.

Now this is only possible if the breach is capable of remedy, a breech is only capable of remedy if the agreement still has time to run, so for example, if the original agreement, had it not gone into arrears, still had some months to run before completion, then it would be capable of remedy, but, if the agreement was due to end prior to the default notice being sent, then the breech would not be capable of remedy, so the full balance would become payable.

I hope I have explained that as clearly as possible, it does depend on the dates of the agreement and when it was supposed to end, just to add, there is no penalty within the CCA for an invalid default notice, another one can be sent if applicable, its not a reason for non payment, its a technical breech if anything, nothing more.

[Deleted User]

OP you may not want to hear this but; I wouldn't be too worried about your DD credit file as with a history of borrowing from pay day lenders will make other lenders run a mile anyway, you seem to know quite a lot on the subject in retrospect, shame that you couldn't have perhaps given her some good advice before she borrowed from them not after.?
Trust me i'm not trying to be harsh and I do have some sympathy

justme2212

@ Davy Jones 11 .Thanks for your very unhelpful response. Financial Conduct Authority exist to ensure that Financial Companies conduct themselves according to the rules, where one fails to do so, they are liable for punishment. So yes, I am angry at the Company as they have done absolutely nothing to assist my daughter, which they ARE supposed to do.Next time you wish to provide "advice" please ensure you know what you are talking about, IF the Company in question have terminated the agreement on the back of a defective Default Notice then the whole amount is NOT collectable as you state, only the arrears accumulated at the time are collectable. I came here for advice, not a lecture !

justme2212

venison wrote: »

OP you may not want to hear this but; I wouldn't be too worried about your DD credit file as with a history of borrowing from pay day lenders will make other lenders run a mile anyway, you seem to know quite a lot on the subject in retrospect, shame that you couldn't have perhaps given her some good advice before she borrowed from them not after.?
Trust me i'm not trying to be harsh and I do have some sympathy

Unfortunately I wasn't in the Country and was unaware until it was too late, but thanks for taking the time to respond. However, no one seems able to answer the actual questions posed.

justme2212

sourcrates wrote: »

Hi,

I would like to address the two points raised above for you if I may.

Point (1) You are correct, the consumer credit act allows 14 clear days for the debtor to comply with the action required in the default notice, that usually runs from the day after you receive it.

Point (2) The purpose of a default notice is to allow the debtor to remedy the breech that has occured, for example, if the account is in arrears, the notice would give them 14 days to rectify that breech, by paying the arrears.

Now this is only possible if the breach is capable of remedy, a breech is only capable of remedy if the agreement still has time to run, so for example, if the original agreement, had it not gone into arrears, still had some months to run before completion, then it would be capable of remedy, but, if the agreement was due to end prior to the default notice being sent, then the breech would not be capable of remedy, so the full balance would become payable.

I hope I have explained that as clearly as possible, it does depend on the dates of the agreement and when it was supposed to end, just to add, there is no penalty within the CCA for an invalid default notice, another one can be sent if applicable, its not a reason for non payment, its a technical breech if anything, nothing more.

Thank you for addressing the actual questions posed. The agreement was not due to end until July 2020, so it still had plenty of time left to run but they claimed the full amount was the only remedy. Does this in effect terminate the agreement ? I have read that a second "valid" default notice can only be sent IF the agreement has not been terminated. I am trying to establish what constitutes termination of the agreement. I am not trying to get her off repaying, but if they are at fault, then I want to ensure she only has to pay exactly what is due under FCA rules and guidelines. From what I have read, if the agreement has been terminated, they cannot issue another default notice and can only claim the arrears outstanding at the date of the default notice ? The area I am trying to clarify is if, by demanding the full amount as remedy, are they in effect terminating the agreement ?
Thank you so much for your reply, it is the only helpful one so far.

justme2212

Jsacker wrote: »

Sourcrates did a good job to address your questions. I would just add to this part and say that I've been to the ombusdman in the past and one of the remedies involved requesting the lender to remove any adverse information they had recorded on my credit file. I have no idea what this would look like in terms of removing a default entirely but if your daughter's complaint is upheld by the ombudsman it could be worth asking for removal of the default on her file as one part of the remedy? It could also be upheld even if the affordability complaint part isn't.

Thank you so much for your response. The affordability complaint is currently with the Ombudsman and I am lead to believe that if they uphold my daughter's complaint, the adverse information is removed. My concern is how and when to bring the unfair relationship/ defective default notice to the Ombudsman. If the Loan company haven't yet in effect terminated the agreement, they will just issue a new default notice, though I guess, this in effect would give her the opportunity to pay the arrears and avoid a default at all,assuming they do not claim the full amount as remedy again.

sourcrates

justme2212 wrote: »

Thank you for addressing the actual
questions posed. The agreement was not due to end until July 2020, so it still had plenty of time left to run but they claimed the full amount was the only remedy. Does this in effect terminate the agreement ? I have read that a second "valid" default notice can only be sent IF the agreement has not been terminated. I am trying to establish what constitutes termination of the agreement. I am not trying to get her off repaying, but if they are at fault, then I want to ensure she only has to pay exactly what is due under FCA rules and guidelines. From what I have read, if the agreement has been terminated, they cannot issue another default notice and can only claim the arrears outstanding at the date of the default notice ? The area I am trying to clarify is if, by demanding the full amount as remedy, are they in effect terminating the agreement ?
Thank you so much for your reply, it is the only helpful one so far.

You may be aware that the majority of the consumer credit act is made up of guidelines, rather than set in stone rules, creditors can interpret these parts in different ways.
I have had more success, on behalf of different clients, negotiating settlement offers with payday loan companies, by concentrating on their particular circumstances rather than challenging legislation.

A complaint worded correctly can easily result in the removal of all interest in return for payment of the original cash loan.

There’s more than one way to skin a cat.