At what point can a DCA legally terminate an agreement if they are unable to contact you via post?

LochnivarUK

Good afternoon

I am currently in the middle of an ongoing issue with Erudio Student Loans.  I missed deferment on a pre-1998 loan and Erudio subsequently terminated all my agreements and have taken me to court. I complained to the FoS and the investigator did not uphold my complaint. The court case is currently stayed. Recently the investigator from the FoS contacted me again, unprompted, to clarify their decision as I objected to him citing information from unsigned and undated contracts (Erudio are unable to provide the originals) and I contest the original 1996 loan date (they claim I took it out in 1997, but the loan starts 96xxxx, my first term started in Sept 1996. I dispute their date). 



"You have challenged the unsigned documents provided, as you haven’t been provided with these, despite previously raising a SAR, so you are unable to corroborate these against the original paperwork.

 

Please note, businesses do use templated documentation if the original paperwork is unclear or unavailable. With the time that has passed, it isn’t uncommon for documentation not to be available, even more so when the owner of an account is changed. Whilst I appreciate you may not agree with this, I am unable to agree Erudio have done anything wrong here or have acted unreasonably.

 

But even if the original agreement isn’t available, I don’t think it would have altered the position and I will explain my reasoning for this.

 

I understand you moved addresses and Erudio weren’t aware of this. So when Erudio wrote to you on 17 March 2021 enclosing he deferment application. It is the responsibility of the consumer to get in touch with Erudio if the account is to be deferred, and this has to be done annually as it is fair to consider the consumers financial and employment circumstances may have changed. Therefore, deferment may not be accepted if the consumer doesn’t meet the relevant criteria upon receiving the deferment application.

 

Ultimately the deferment application wasn’t completed in time, despite Erudio writing to you before the time had lapsed. The terms and conditions outline that it is the consumers responsibility to update their address, as outlined below:

13. Change of Address

 

If your address changes then within fourteen days of that change you must notify us in writing giving your new address. If you fail to notify us of any change of address we are entitled to charge you with all costs incurred by us in finding your new address.

 

So I don’t think Erudio haven’t done anything wrong here and remain of the same opinion this complaint shouldn’t be upheld. I appreciate this will come as a disappointment, but I hope you understand the reasons for my view.

 

Should you still remain dissatisfied with the outcome reached and have no further information to provide, the complaint can be passed to an Ombudsman for a final decision." 

I responded with:



"Dear Mr XXXXX,

Thank you for your further response and continued interest in the just outcome regarding this matter.  

Can you explain how a change of address can constitute a termination of the agreement when it clearly states in the terms you have cited that only costs can be incurred when finding the new address.  It does not state “failure to notify us of a change of address can lead to the termination of your agreement” nor does it imply it. 

 

13. Change of Address

 

If your address changes then within fourteen days of that change you must notify us in writing giving your new address. If you fail to notify us of any change of address we are entitled to charge you with all costs incurred by us in finding your new address.

 

  Can you explain how the termination of my agreements is reasonable when no attempt to find me was ever made? It was I who eventually updated Erudio and the courts when discovering the case raised against me. 


  According to Erudio, the only costs incurred on the account were for £100 referral fees to <solicitors company name> and the initial court fees of £500. Both of which were added to the account when referred to <solicitors company name> four months before the court claim issue date of January 2023.   

I'd appreciate hearing your view on this before deciding to raise this to the Ombudsman, as from a legal standpoint it does not appear open to interpretation.  

Sincerely,

XXXXXX"


My question is: At what point can Erudio legally terminate a contractual agreement when failing to defer? What is the legal criteria? Can they simply decide to terminate a pre-1998 student loan agreement at any point because you have not deferred?  (We were in Lockdown btw)

In my case I believe they terminated four months before the initial court claim issue date at the beginning of Jan 2023 but have received no formal default notices.   

Erudio cannot have it all ways, on the one hand if they terminated my agreement early, what justification did they have since they made no effort to locate me or incurred any costs according to the claim amount of my case?  On the other hand, if they terminated my agreement as they said, four months before Jan 2023 then the debt itself is written off as it is well over 25 years since 1996.  

Thanks for any input....

kaMelo

LochnivarUK said:

My question is: At what point can Erudio legally terminate a contractual agreement when failing to defer? What is the legal criteria? Can they simply decide to terminate a pre-1998 student loan agreement at any point because you have not deferred?  (We were in Lockdown btw)

In short yes, failing to defer on time is one of the reasons they can default your account. Although they will try to trace you for payment there is no requirement on them to do so, it's your responsibility to keep your address up to date. (Although I appreciate from your other posts this is not that clear cut as to whether you did or didn't keep your address up to date.

Once in default the loan is repayable in full and will never be written off, these are the terms agreed to with SLC and Erudio are just enforcing the same terms.   As regards the first loan you took out, it's a slam dunk for Erudio but that doesn't mean I'm suggesting paying it. Mortgage style loans are subject to statute of limitations so can become statute barred. Their court action is currently stayed I'd suggest leaving it that way and radio silence with Erudio, definitely don't defer any more.

But I think that's the wrong thing to focus on, you really need to clarify your dates here. I know you are certain but really you need to be absolutely sure. If your timeline is correct;

First course and first loan started September 1996,
Gap year 1997, 
Started completely new course and second loan was taken September 98.

Then Erudio should not have any contact with you over the loans taken from September 1998. These are Plan 1 loans and irrespective of who owns them they are all administered through SLC. There is no requirement to defer as they operate on deduction from salary for repayment.

There is also the huge disparity in earnings thresholds. Plan 1 loans had an earnings threshold of only £20,195 from April 2022-23 whereas mortgage style loans earnings threshold  was £36,284 from September 2021. I don't know what your employment situation was but assuming you were PAYE, given the Plan 1 low threshold should you have had student loan deductions the last financial year? If yes did it actually happen? Do you have an account with SLC and if so what does that show when you log in?

To sum up, Erudio have documents that make them think you didn't have a break in your education, as such they are treating all loans as mortgage style loans. This is the evidence they're presenting to the ombudsman and the ombudsman is buying their evidence. 
I can only suggest doing all you can to gather evidence to prove this is not the case. Send SLC a SAR to see what information they hold, gather any evidence you possibly can of your time abroad in 1997(although I realise that may be difficult given how long ago it was) This is where I'd focus my attention, if you can demonstrate the date Erudio hold for your first loan is wrong then you remove the second and third loan from their administration so they cannot take action to recover them.


 

LochnivarUK

Brilliant, thanks.  I have proof of Uni dates direct from my university now, along with a statement saying that my courses were separate applications to higher education and the first in no way contributed to the second.  

I have SAR'd both Erudio (to see the date any notices were sent) and the SLC to get contracts.  

This may all be a moot point, as at the 11th hour I have been provided with the following ruling that should reverse the FoS decision in my case.  I would have not pursued the FoS further, as it felt like a fruitless pursuit but thankfully someone jumped on board with the following FoS ruling.  It is identical to my circumstances and apparently, many others.  The person who provided me this reference said their FoS complaint is not online yet but said it helped uphold their complaint and get their account reinstated/written off. For anyone else in this situation this is the FoS decision they used as precedence. 

financial-ombudsman.org.uk/decision/DRN-3629000.pdf.

Again, thank you KaMelo and others for your continued assistance in this issue, 

I will keep this thread updated with what happens in my case, to help anyone else facing change of address / deferment issues with Erudio Student Loans Ltd, especially beginning in 2021.  

kaMelo

https://www.financial-ombudsman.org.uk/decision/DRN-3629000.pdf

That's quite an interesting ruling. The ombudsman has overridden a fundamental point in the terms and conditions, that failing to update an address in a timely manner is a breach of the terms.
To be clear, an ombudsman ruling does not set any precedent, indeed it's not uncommon for very similar cases to have totally different rulings, however it can't hurt your cause to point this ruling out. It also raises another question about Erudion as to whether changing communication channel from email to post, rather than an administrative anomaly, is actually a deliberate tactic on loans close to the age related cancellation. For someone communicating via email for years maybe sending a letter in addition to an email makes sense but it makes no sense to send a deferment notice by letter only. Given Erudio's history I'm struggling to believe this is coincidental.


Anyway, you may want to hold on for your ombudsman ruling before disputing what type of loans the 98 and 99 loans are.
Your write off date on plan 1 loans is when you turn 65 however if, as Erudio maintain, these are classed as mortgage style loans owned by them and the ombudsman in your case rules in a similar way to the case above, then it will be in your interests to let Erudio own the loans as their write off date will be considerably sooner than Plan 1 loans.

LochnivarUK

Agreed, that is my thinking and that of the person who kindly sent me that referenced ruling.  They also sent me their detailed 4 page ruling and FoS reference number which goes into even more detail regarding the communication failings, the disproportionate severity of the consequences for not using alternative communication methods proven to be held by Erudio and the ease at which they can run an address trace.   It's yet to be summarised and published online but I will be providing that too to the Ombudsman.  
It seems there are quite a few cases relating to the 2021 decision to cease email communication, coincidently in time with pre-1998 mortgage style loans reaching their write off dates after 25 years.