Consumer Credit Act loophole to write-off your debts?

Wednesday, 8th April 2009 11:32 - by Resident IFA

I met a chap on Monday from a company called Cartel Client Review. For any Economics students out there, you may appreciate why I find that an unfortunate name. By the by... Cartel came about as a consequence of the ‘loopholes’ found in the Consumer Credit Act 1974 (CCA). These flaws cover all manner of credit agreements, from credit cards through to unsecured loans to Payment Protection Insurance (PPI) to bank charges to mortgages. I have probably missed something, but you get the picture. A couple of examples of how they might help someone: o Mis-sold PPI. A person had responded to a newspaper advert for a secured loan, the company adding PPI at a cost of nearly £9,000 on the contract...never having spoken to the applicant i.e. an ‘assumed’ sale. o Personal loan 'cooling-off' period ignored. A person arranged a bank loan, the bank depositing the money in their account within hours, thus ignoring the 14-day cancellation period the CCA requires. This is good for people that have contracts, or parts thereof, that were mis-sold to them, but I know some have problems with the concept on moral grounds...the ‘quick buck’ litigiousness of America inexorably creeping into UK culture. I take the view that, in 75% of cases, it will probably be right and proper, the other 25% seeking to exploit the loopholes by submitting dubious claims simply to boost their bank balance. After all, I am sure the Banks and credit houses would soon be after us if we owed them money or did not honour a contract with them. In this light, flawed credit agreements do appear ‘fair game’...especially in the ‘hug a Bank’ climate we live in today! A word of warning: As I understand it, the ‘service’ is on a ‘No-win. No fee.’ basis, but they require £500 up-front, which is refunded on completion of the legal proceedings. They also earn 30% of the settlement amount on a successful case. This is all well and good, especially if the claim is successful and more than the outstanding balance is returned in compensation. But, even if the debt is totally written-off (and no more), this means the claimant will be left with 30% of their original debt and potentially not be able to re-schedule it by borrowing elsewhere....the result of our current straitened credit times. The Devil’s Advocate in me at play! My suggestion? Proceed with caution. Check the regulatory bodies the company is authorised by or subscribes to. Ask for past real-life case studies of successful...and unsuccessful...claims similar to your own. Until next time...