27th January 2010
The OFT has today published draft guidance for consumers and
industry on the application of sections of the Consumer Credit Act
1974 (the CCA) that allow consumers to request information about
their credit agreements.
The OFT is consulting on guidance because of concerns that some
debtors are being misled into thinking that these sections can be
used to get their debts written off and that some creditors are not
following legal obligations to provide information to
customers.
The draft guidance consists of a document setting out the
technical legal issues for businesses and consumer advisers, and a
simpler version for consumers.
It incorporates the findings of recent High Court cases that
have clarified a number of technical issues. For example, sections
77-79 of the CCA allow a consumer to request a 'true copy' of their
agreement. The High Court ruled that a true copy does not have to
be a photocopy or an exact copy of the original. The lender is
allowed to provide a reconstituted agreement, as long as that
version is accurate and contains all the original information apart
from the few exceptions that the law allows (which include the
signature, signature box and date of signature).
The guidance also makes it clear that if a lender cannot comply
with the sections - making an agreement unenforceable - then it is
restricted in the debt collection activities it can undertake.
Whilst lenders are able to request repayment and to record any
arrears or default with a credit reference agency, the OFT
considers it would be wrong to threaten court action if the lender
knows that it is not possible.
Ray Watson, OFT director of consumer credit, said: 'There has
been a great deal of confusion over the meaning of these sections
with many borrowers being misled into thinking that they can get
their debt written off.
'This guidance is to clarify the legal position and the OFT view
on standards expected of the industry, and to make consumers aware
that they may be at risk if they seek to use these sections to
avoid paying legitimately owed debts.'
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