Ever Had Credit? Check Your Agreements - They Could Be Worth Pounds To You
Legislation introduced in 2006 has made it possible for all existing credit agreements to be reviewed to ensure that they are fair and reasonable. If deemed not to be fair, then it could be possible to have the debt cancelled or amended leading to a saving of many thousands of pounds for borrowers.
All credit agreements up to a loan amount of £15,000 (£25,000 in recent years) are regulated by the Consumer Credit Act 1974 (CCA). This act, and the various amendments to it over the years, lays down strict criteria as to the form and substance of contracts used to advance money to consumers. Business users (limited companies) do not get protection under the CCA.
Loan agreements covered include all forms of lending: secured loans, unsecured loans, credit and store cards, consolidation loans and hire purchase.
In order to check whether your agreements are correct, you will need to supply a copy (or an original) to a qualified solicitor. There are many agencies and firms that offer a credit agreement checking service and each has a similar offering. The Consumer Credit Bureau can also advise on whether you may have a case for your agreement to be reviewed for accuracy.
It may be getting your agreement details checked if you are in arrears or have had your debt sold to a debt management company that is now chasing you for payment. There is a possibility that they may not have complete original records of your account and may be unable to adequately prove your liability.
Items that are checked relate to a number of key areas.
The Annual Percentage Rate of interest charged on the agreement must concur with that you were quoted at the time you applied. In addition, the stated rate on the document must be within 0.1% below and 1% above the true rate charged on the agreement. If there is a discrepancy, you may be eligible for at least a rebate of interest charges.
They will also check the nature of the agreement and whether it was appropriate for the loan and circumstances that existed when you signed for the loan. Different cancellation rights exist for agreements signed on trade premises to those entered into not on trade premises.
Since the scope of the CCA is broad, there are a number of provisions relating to the type and amount of information that must be provided to the borrower. These relate to notices issued and timescales under which copies must be provided. Equally, all documents that were presented for signature must have been fully completed and contain all the necessary terms – therefore a comparison of the relevant copies and other information will highlight any deficiencies. If you do not have copies, they will be obtained from your lender on your behalf. You may have to pay a small fee for each application to a lender for copy documentation.
However, due to the rapid increase in companies offering credit checking services and the dubious and unproven results, the Ministry of Justice and the Office of Fair Trading are warning consumers to think carefully before considering this as a route to challenging and clearing debt. Their principle concern is to warn consumers to take appropriate and independent advice before parting with cash to companies that claim to be able to write off debts due to inaccurate or faulty documentation. Whilst there are companies that offer free checking services, many require an upfront payment of a fee which may or may not be refundable in the event that a claim could be justified.
Any agreement found to be non compliant with the Act, then the agreement may be declared unenforceable by a court. However, many lenders have been operating under the CCA since they were first introduced and it could be hard to establish that their procedures or documentation is at fault.
Your first action is to complain directly to the lender. They have a responsibility to respond to your query within a specified time and, if you do not get a satisfactory response, you have the right to apply to the Alternative Dispute Resolution process run by the Office of Fair Trading. The procedure is straightforward and detailed and should lead to a case being considered in a fair manner.
Whichever route you choose to take, there are free services out there and you should not part with money until you are sure what you will get in return.