PCP car agreement terminated in error by finance company!

debtout

Hello fellow members. A friend is in a difficult situation. She bought a car on PCP, and to cut a long story short, the finance company terminated the contract by mistake. She was behind on payments and had a payment plan in place; however, they still cancelled it without warning. When she challenged this and raised a complaint about it, they fully admitted the error, but also said they couldn't reinstate the cancelled contract. They then sent the case to a firm to arrange a court return of goods order. Where does she stand with all this and what are her rights since the finance company admitted to the error? They now want her to make payment arrangements via this firm, but as I understand it, yes she does owe money and she wants to keep the car, but surely this cancellation is a violation of consumer rights? What are her options in dealing with this situation, any ideas?"

A_Geordie

Can your friend elaborate on what is meant by terminating in error, because that might dictate what rights she does or doesn't have. For example, if they terminated in error but had a legal right to do so anyway, your friend may not have much of a leg to stand on in claiming breach of contract. However, if they terminated the contract without a right to do so, this would be a wrongful termination and your friend should not be required to pay anymore due to their breach. 

When she fell behind on payments, did the company issue a default notice demanding she pay the outstanding balance within so many days? Or did she receive some other kind of letter?

TheComplaintGuy

It definitely sounds like the finance company has made an administrative error here. A PCP agreement can’t just be “terminated” without following the correct process, and if they’ve done this by mistake they have to put things back exactly as they were — including confirming in writing that your credit file won’t be affected.

A few things you should pin them down on:

1. Ask for written confirmation that the termination was issued in error and has been fully reversed.

2. Ask whether the agreement status on their internal system now shows as active, with no arrears or markers.

3. Ask what they’ve reported (if anything) to the credit reference agencies, and request written confirmation that no adverse data will be recorded.

4. Ask whether your monthly instalments and end-of-term options remain unchanged, as per your original contract.

5. If they’ve made multiple conflicting statements so far, request a named person to take ownership so the information is consistent.

You’re right to question this — a mistaken termination can cause knock-on issues later if it isn’t corrected properly. Getting everything in writing now protects you if anything resurfaces further down the line.

If you want to post the exact wording they’ve used when explaining the error, people here can help you work out the strongest next steps. Hope this helps.

debtout

Thank you very much for your repsonse. Yes the finance company fully admitted they cancelled the pcp agreement, sooner than they should have had, and this is all in writing. They also advised the credit score will not be affected, however, they cannot reinstate the cancelled contract and they now want her to deal directly with the firm they have appointed. They are still asking for a payment plan, but in my opinion, if the pcp agreement was cancelled in error, for which they have admitted, then what legal right do they have to demand money? So far they have given her the option to return the car, set up payment plan. Initially they were also saying they would be taking this to court I believe for a return of goods order, where she would have been granted the right to keep the car, based on the a new payment plan. However, if she was then unable to pay, she would have the car taken away. However, I am not sure this can even go to court, as the fault is with the car finance company, who cancelled and admitted their error in writing. My question is what are her legal rights, as she still has the car? 

debtout

A_Geordie said:

Can your friend elaborate on what is meant by terminating in error, because that might dictate what rights she does or doesn't have. For example, if they terminated in error but had a legal right to do so anyway, your friend may not have much of a leg to stand on in claiming breach of contract. However, if they terminated the contract without a right to do so, this would be a wrongful termination and your friend should not be required to pay anymore due to their breach. 

When she fell behind on payments, did the company issue a default notice demanding she pay the outstanding balance within so many days? Or did she receive some other kind of letter?

Hello. They have admitted they terminated in error. They terminated it sooner than they should have done so. They only admitted when they had sent the cancelation and upon a complaint, they then admitted they had cancelled sooner than they should have done so. 

debtout

TheComplaintGuy said:

It definitely sounds like the finance company has made an administrative error here. A PCP agreement can’t just be “terminated” without following the correct process, and if they’ve done this by mistake they have to put things back exactly as they were — including confirming in writing that your credit file won’t be affected.

A few things you should pin them down on:

1. Ask for written confirmation that the termination was issued in error and has been fully reversed.

2. Ask whether the agreement status on their internal system now shows as active, with no arrears or markers.

3. Ask what they’ve reported (if anything) to the credit reference agencies, and request written confirmation that no adverse data will be recorded.

4. Ask whether your monthly instalments and end-of-term options remain unchanged, as per your original contract.

5. If they’ve made multiple conflicting statements so far, request a named person to take ownership so the information is consistent.

You’re right to question this — a mistaken termination can cause knock-on issues later if it isn’t corrected properly. Getting everything in writing now protects you if anything resurfaces further down the line.

If you want to post the exact wording they’ve used when explaining the error, people here can help you work out the strongest next steps. Hope this helps.

Thank you very much for your repsonse. Yes the finance company fully admitted they cancelled the pcp agreement, sooner than they should have had, and this is all in writing. They also advised the credit score will not be affected, however, they cannot reinstate the cancelled contract and they now want her to deal directly with the firm they have appointed. They are still asking for a payment plan, but in my opinion, if the pcp agreement was cancelled in error, for which they have admitted, then what legal right do they have to demand money? So far they have given her the option to return the car, set up payment plan. Initially they were also saying they would be taking this to court I believe for a return of goods order, where she would have been granted the right to keep the car, based on the a new payment plan. However, if she was then unable to pay, she would have the car taken away. However, I am not sure this can even go to court, as the fault is with the car finance company, who cancelled and admitted their error in writing. My question is what are her legal rights, as she still has the car? 

born_again

debtout said:

TheComplaintGuy said:

It definitely sounds like the finance company has made an administrative error here. A PCP agreement can’t just be “terminated” without following the correct process, and if they’ve done this by mistake they have to put things back exactly as they were — including confirming in writing that your credit file won’t be affected.

A few things you should pin them down on:

1. Ask for written confirmation that the termination was issued in error and has been fully reversed.

2. Ask whether the agreement status on their internal system now shows as active, with no arrears or markers.

3. Ask what they’ve reported (if anything) to the credit reference agencies, and request written confirmation that no adverse data will be recorded.

4. Ask whether your monthly instalments and end-of-term options remain unchanged, as per your original contract.

5. If they’ve made multiple conflicting statements so far, request a named person to take ownership so the information is consistent.

You’re right to question this — a mistaken termination can cause knock-on issues later if it isn’t corrected properly. Getting everything in writing now protects you if anything resurfaces further down the line.

If you want to post the exact wording they’ve used when explaining the error, people here can help you work out the strongest next steps. Hope this helps.

Thank you very much for your repsonse. Yes the finance company fully admitted they cancelled the pcp agreement, sooner than they should have had, and this is all in writing. They also advised the credit score will not be affected, however, they cannot reinstate the cancelled contract and they now want her to deal directly with the firm they have appointed. They are still asking for a payment plan, but in my opinion, if the pcp agreement was cancelled in error, for which they have admitted, then what legal right do they have to demand money? So far they have given her the option to return the car, set up payment plan. Initially they were also saying they would be taking this to court I believe for a return of goods order, where she would have been granted the right to keep the car, based on the a new payment plan. However, if she was then unable to pay, she would have the car taken away. However, I am not sure this can even go to court, as the fault is with the car finance company, who cancelled and admitted their error in writing. My question is what are her legal rights, as she still has the car? 

Credit score is a meaningless figure, other than to the CRS. Given they are already on a payment plan. Their credit history is affected  (history is a matter of fact). Which is what lenders look at.

TBH, even though they have admitted a error, & they can not reinstate it. They do still have the right to go to court & reclaim the car/funds due to the missed payments & a payment plan set up.

littleboo

debtout said:

TheComplaintGuy said:

It definitely sounds like the finance company has made an administrative error here. A PCP agreement can’t just be “terminated” without following the correct process, and if they’ve done this by mistake they have to put things back exactly as they were — including confirming in writing that your credit file won’t be affected.

A few things you should pin them down on:

1. Ask for written confirmation that the termination was issued in error and has been fully reversed.

2. Ask whether the agreement status on their internal system now shows as active, with no arrears or markers.

3. Ask what they’ve reported (if anything) to the credit reference agencies, and request written confirmation that no adverse data will be recorded.

4. Ask whether your monthly instalments and end-of-term options remain unchanged, as per your original contract.

5. If they’ve made multiple conflicting statements so far, request a named person to take ownership so the information is consistent.

You’re right to question this — a mistaken termination can cause knock-on issues later if it isn’t corrected properly. Getting everything in writing now protects you if anything resurfaces further down the line.

If you want to post the exact wording they’ve used when explaining the error, people here can help you work out the strongest next steps. Hope this helps.

Thank you very much for your repsonse. Yes the finance company fully admitted they cancelled the pcp agreement, sooner than they should have had, and this is all in writing. They also advised the credit score will not be affected, however, they cannot reinstate the cancelled contract and they now want her to deal directly with the firm they have appointed. They are still asking for a payment plan, but in my opinion, if the pcp agreement was cancelled in error, for which they have admitted, then what legal right do they have to demand money? So far they have given her the option to return the car, set up payment plan. Initially they were also saying they would be taking this to court I believe for a return of goods order, where she would have been granted the right to keep the car, based on the a new payment plan. However, if she was then unable to pay, she would have the car taken away. However, I am not sure this can even go to court, as the fault is with the car finance company, who cancelled and admitted their error in writing. My question is what are her legal rights, as she still has the car? 

What do you mean by this? If your friend wants to keep the car, then some payment will continue to be due. The question is how that looks given what the finance company have said/done

debtout

littleboo said:

debtout said:

TheComplaintGuy said:

It definitely sounds like the finance company has made an administrative error here. A PCP agreement can’t just be “terminated” without following the correct process, and if they’ve done this by mistake they have to put things back exactly as they were — including confirming in writing that your credit file won’t be affected.

A few things you should pin them down on:

1. Ask for written confirmation that the termination was issued in error and has been fully reversed.

2. Ask whether the agreement status on their internal system now shows as active, with no arrears or markers.

3. Ask what they’ve reported (if anything) to the credit reference agencies, and request written confirmation that no adverse data will be recorded.

4. Ask whether your monthly instalments and end-of-term options remain unchanged, as per your original contract.

5. If they’ve made multiple conflicting statements so far, request a named person to take ownership so the information is consistent.

You’re right to question this — a mistaken termination can cause knock-on issues later if it isn’t corrected properly. Getting everything in writing now protects you if anything resurfaces further down the line.

If you want to post the exact wording they’ve used when explaining the error, people here can help you work out the strongest next steps. Hope this helps.

Thank you very much for your repsonse. Yes the finance company fully admitted they cancelled the pcp agreement, sooner than they should have had, and this is all in writing. They also advised the credit score will not be affected, however, they cannot reinstate the cancelled contract and they now want her to deal directly with the firm they have appointed. They are still asking for a payment plan, but in my opinion, if the pcp agreement was cancelled in error, for which they have admitted, then what legal right do they have to demand money? So far they have given her the option to return the car, set up payment plan. Initially they were also saying they would be taking this to court I believe for a return of goods order, where she would have been granted the right to keep the car, based on the a new payment plan. However, if she was then unable to pay, she would have the car taken away. However, I am not sure this can even go to court, as the fault is with the car finance company, who cancelled and admitted their error in writing. My question is what are her legal rights, as she still has the car? 

What do you mean by this? If your friend wants to keep the car, then some payment will continue to be due. The question is how that looks given what the finance company have said/done

Hello yes the payments will need to be made, however, what rights do they have to enforce this, since they canceled the initial agreement by error? 

MattMattMattUK

debtout said:

littleboo said:

debtout said:

TheComplaintGuy said:

It definitely sounds like the finance company has made an administrative error here. A PCP agreement can’t just be “terminated” without following the correct process, and if they’ve done this by mistake they have to put things back exactly as they were — including confirming in writing that your credit file won’t be affected.

A few things you should pin them down on:

1. Ask for written confirmation that the termination was issued in error and has been fully reversed.

2. Ask whether the agreement status on their internal system now shows as active, with no arrears or markers.

3. Ask what they’ve reported (if anything) to the credit reference agencies, and request written confirmation that no adverse data will be recorded.

4. Ask whether your monthly instalments and end-of-term options remain unchanged, as per your original contract.

5. If they’ve made multiple conflicting statements so far, request a named person to take ownership so the information is consistent.

You’re right to question this — a mistaken termination can cause knock-on issues later if it isn’t corrected properly. Getting everything in writing now protects you if anything resurfaces further down the line.

If you want to post the exact wording they’ve used when explaining the error, people here can help you work out the strongest next steps. Hope this helps.

Thank you very much for your repsonse. Yes the finance company fully admitted they cancelled the pcp agreement, sooner than they should have had, and this is all in writing. They also advised the credit score will not be affected, however, they cannot reinstate the cancelled contract and they now want her to deal directly with the firm they have appointed. They are still asking for a payment plan, but in my opinion, if the pcp agreement was cancelled in error, for which they have admitted, then what legal right do they have to demand money? So far they have given her the option to return the car, set up payment plan. Initially they were also saying they would be taking this to court I believe for a return of goods order, where she would have been granted the right to keep the car, based on the a new payment plan. However, if she was then unable to pay, she would have the car taken away. However, I am not sure this can even go to court, as the fault is with the car finance company, who cancelled and admitted their error in writing. My question is what are her legal rights, as she still has the car? 

What do you mean by this? If your friend wants to keep the car, then some payment will continue to be due. The question is how that looks given what the finance company have said/done

Hello yes the payments will need to be made, however, what rights do they have to enforce this, since they canceled the initial agreement by error? 

Again, it depends on the specifics in the contract. If they were within their rights to cancel the contract because of the missed payments then it is irrelevant if they did it in error or not. Unfortunately your friend will need to read the terms and conditions in detail to be sure what, if any rights they have. 

A_Geordie

debtout said:

Hello. They have admitted they terminated in error. They terminated it sooner than they should have done so. They only admitted when they had sent the cancelation and upon a complaint, they then admitted they had cancelled sooner than they should have done so. 

Unfortunately, you haven't fully answered the question, but regardless of that I would strongly suggest that your friend seeks legal advice from a law firm with specialist knowledge of consumer credit. She may be able to get free legal advice/representation if she has legal expenses insurance. 

It would also be sensible for her to write to the law firm and tell them that she is seeking to obtain legal advice and will respond in due course, but the initial view is that the creditor has unlawfully terminated the agreement contrary to the Consumer Credit Act 1974 and she reserves all rights.

Due to the wrongful termination, your friend may have a range of remedies available such as: 

(1) accept the wrongful termination and pay no more.

(2) Same as #1 but also claim damages for repudiatory breach which would represent the loss had the contract been fully performed up to and including ownership of the car. In other words, your friend would be asking a court to hand ownership of the car to your friend without payment of the remainder of the instalments. This is because the court will not allow the party that breached the contract, to benefit from their own breach.  

(3) An application to the court for a time order in accordance with the CCA to reinstate the agreement and monthly instalments. Not sure anyone in their right mind would select this option, but it's an option. 

Your friend should be extremely cautious about agreeing a repayment plan with a view to continuing use of the car. You cannot reinstate the contract that has been terminated unless you make an application for a time order. You can set up a new contract but that contract would be subject to the CCA and the same documentation would need to be signed by you and the creditor. 

If your friend agreed to a repayment plan to continue using the car as suggested by the law firm, there is a real risk that she is admitting liability for the remaining balance of the contract amount and the creditor had a right to terminate the agreement.

To repeat, she would be wise to get legal advice from a specialist law firm as to her options.