Guidance on giving information
21.10.09
This article was written by Greg Standing, partner in Wragge & Co LLP's finance, insolvency, recoveries and sales team and published in the October issue of Motor Finance.
Readers are likely to have seen an increase in requests for information under sections 77(1), 78(1) and 79(1) of the Consumer Credit Act 1974 (the Act).
These requests are often driven by claims management companies on fishing expeditions. The Office of Fair Trading (OFT) has published a draft guidance note to help businesses comply with their duties to give debtors and hirers copy documents and statements of account under the Act.
The requirement under the sections is for the creditor or owner to provide, within the prescribed period after receiving the request in writing and payment of the £1 fee, a copy of the executed agreement (if any) and any documents referred to in it, together with a signed statement of account.
The guidance note should be read for its full effect and suggestions as to best practice but the headlines are set out below.
The creditor or owner includes the party entering into the agreement or anyone to whom the rights and duties under the agreement have passed - for example, if the agreement is assigned to another lender. If the wrong recipient receives it, the request should be passed on to the correct creditor, or the debtor advised accordingly.
The creditor must satisfy itself that a third party making a request on behalf of a debtor has proper authority to obtain the information. If the third party is a solicitor, authority can be assumed. The response must be given to all debtors even if the request comes from one only.
Although the £1 fee may be inadequate to cover the cost of compliance, the creditor cannot ask for more in order to comply.
The information should be sent by second-class post (unless the agreement provides otherwise) to the address given in the request within 12 working days after the request is received.
A true, legible copy of the executed agreement (and of any variations to it) should be provided. That does not necessarily mean a photocopy of the original signed credit agreement.
If necessary, a copy can be reconstituted containing the terms and conditions applicable at the time of the original contract together with all the prescribed information and statements of protection and remedies required by the Consumer Credit (Agreements) Regulations 1983 that were set out in the executed agreement.
The statement of account is to be prepared according to the information to which it is practicable for the creditor or owner to refer at the time of the request, which can include information obtained from third parties.
The statement must be signed by or on behalf or the creditor or owner and is then binding on the creditor or owner. The statement must show certain specified information depending upon whether the agreement is a fixed-sum, running-account or hire agreement.
The sanction for non-compliance with an information request is unenforceability of the agreement for so long as the creditor or owner fails to comply with the duty. The Act makes it clear that enforcement means more than just obtaining a court order.
It includes demanding earlier payment of any sum, recovering possession of any goods or land, treating any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred.
Comment
I have seen a number of lenders who have failed to comply with a request resulting in proceedings having been issued to compel them to comply.
In fact, compliance should not be too onerous for the lender - it is simply a matter of implementing a procedure to deal with a request on a timely basis. If in doubt, lenders should take legal advice on their duties.
For further information about this published aticle, contact Kathryn Hobbs on +44 (0)121 213 2397, Amie Ryalls on +44 (0)121 213 2360 or Rebecca Davies on +44 (0)121 213 2396
This published article may contain information of general interest about current legal issues, but does not give legal advice.
