The BBC report that the OFT has issued guidelines to lenders and borrowers about when their loans and other credit may, and may not be enforced. The guidelines come in the wake of OFT fears that some debtors may be misled into their ability to have debts written off.

The OFT draft guidance focuses on rules laid down by the Consumer Credit Act and draws on recent rulings by Judge Waksman at the High Court in Manchester. In his ruling the judge ruled that it was acceptable for lenders to produce reconstituted copies of original loan agreements which contain all the original information, apart from the few exceptions that the law allows (which include the signature, signature box and date of signature for the purposes of providing the borrower with information about their debts when challenged to provide a copy of an alleged debtor’s credit agreement.

The OFT believe some debtors are being misled into believing their credit agreement is unenforceable and can have debts legally written off if certain information is missing from the agreement. Debtors have typically sought to challenge their lenders to meet strict criteria as led out in the Consumer Credit Act. One such clause challenges lender to produce a ‘true copy’ of the loan agreement – ie. one that has been signed by the debtor. It is argued that if a signature, date or terms of credit aren’t present then the agreement could be deemed unlawful.

However, the judge also stated that the agreement should contain the borrower’s name and address at the time of signing, while in the case of an amended agreement the lender should provide copies of both the original and amended agreements.

While Cashzilla doesn’t advocate debt avoidance, it can’t help but feel there is a fatal flaw here in that ownership of debt can surely only be determined by the presence of a signature, otherwise it can only be implied? If a reconstituted credit agreement can be considered legal in absentia of a debtor’s true signature, what safeguards does the average person have in these times of identity theft against any enforcement action where a fraudulent credit agreement exists?

As usual the law will give the benefit of the doubt to the lender, leaving innocent peoples’ financial affairs in tatters and that’s wrong. Cashzilla wonders if the Judge and Office of Fair Trading have thought of the implications of giving Identity theft a green light?

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3. UK consumers regaining control of runaway levels of personal debt

The report, which looked into borrowing through personal loans, hire purchase agreements, credit cards and overdrafts across 16 European countries, indicated that the UK had an “insatiable appetite for credit”, with UK residents owing on average £3,175 compared with the average European who owes the lesser sum of just £1,558 in unsecured debt.

Check out the BBC for more details, but don’t say that you hadn’t been warned by this little personalfinanosaurus before.

Related personalfinanosaurus posts:

1. UK consumers regaining control of runaway levels of personal debt

The new measures will allow students to apply for their loans and grants online at the same time whilst they also complete their college applications.  Prospective students will additionally provide information on the various forms of financial support that are available
across the majority of course ranges and online financial calculators. 

The minister has also pledged to deliver faster loan and grant decisions as well as quicker payments, although you may be forgiven for viewing this last part with a touch of cynicism.

The existing Student Loans Company is due to be reformed  in order to meet these new challenges and processing. 

The minister stated, “As well as clearer information, faster decisions, timely payments and
accurate repayments, the transformed service intends to provide
taxpayers with better value for money by generating savings from
delivery processes to be spent on other priorities.”

Another change that has been proposed is the implementation of loan repayment collection directly through the tax
system, rather than through the existing channels. 

Can anyone else foresee another benefits agency payment style disaster in the offing?

Just me being cynical again then. 

Related personalfinanosaurus posts:

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