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Unfair Term
Regulation 5 of the Unfair Terms in Consumer Contracts Regulations (UTCCR) 1999:
5. – (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.
My view
The term found in every Consumer Credit Agreement and Personal Bank Account contract in the UK – that permits a lending firm to supply some, all, or none of your data in regards to your borrowings to the Credit Reference Agency’s – is Unfair.
Lenders include this term into every contract as it forms a fundamental element of The Lending Code 2009.
See sections 3 “Credit Reference Agency” & section 4 “Credit Assessment” of The Lending Code 2009 http://www.lendingstandardsboard.org...endingcode.pdf
Para 34. “When customers apply for a lending product, subscribers should tell them when they may pass the customer’s details to credit reference agencies (CRAs) and the checks that subscribers may make with them.”
Para35. “Subscribers can give CRAs default information about a customer’s debts if:
• the customer has fallen behind with their payments
• the amount owed is not being disputed by the customer; and
• the customer has not made a proposal that satisfies the subscriber for repaying the debt following the subscriber’s formal demand.”
This means that the lender does not have to pass information about your borrowings – and they don’t always do – because they may do so – and that right is firmly reserved and exercised - in favour of the lender.
Your Rights
You have a right to accurate credit files with the Credit Reference Agency’s as this allows you to get better and more competitive rates. It also allows lenders to conduct proper searches on you to see if you are good risk for the money that they are lending to you.
What is Unfair?
That lenders cannot possibly carry out proper searches in accordance with The Lending Code:
“Before lending any money; granting or increasing an overdraft, or other borrowing, subscribers should assess whether the customer will be able to repay it - For personal customers, this assessment should include consideration of information from CRAs…”
You may have been lent more money than you could actually afford.
Data Controller
The lender is the data controller – not the Credit Reference Agency who only store data on behalf of the data controller (the lender).
Credit Reference Agency – your credit files
The three main CRAs in the UK are Equifax, Experian, and Call Credit – I test anyone to obtain a statutory copy of your credit file from all three CRAs.
- You will find on observation that some lenders do not report your borrowings at all.
- You will find that some lenders report only partial data on your debts.
- Worse still some lenders will report incorrect information – on the amount borrowed, the repayments – such as missed payments, or other things like dates will be wrong.
- And even worse than all of that put together – is that some lenders report to one CRA and not the other two, or to two and not all three.
The Data Protection Act 1998 (section 10)
(1) Subject to subsection (2) an individual is entitled at any time by notice in writing to a data controller to require the data controller at the end of such period as is reasonable in the circumstances to cease, or not to begin, processing, or processing for a specified purpose or in a specified manner, and personal data in respect of which he is the data subject, on the ground that, for specified reasons
(a) the processing of those data or their processing for that purpose or in that manner is causing or is likely to cause substantial damage or substantial distress to him or to another, and
(b) that damage or distress would be unwarranted”
Consumer Credit Act 2006 - section 159 (1)
A consumer can demand that –
A consumer given information under section 158 who considers that an entry in his file is incorrect, and that if it is not corrected he is likely to be prejudiced, may give notice to the agency requiring it either to remove the entry from the file or amend it.
What Does This All Mean?
Simply – you have a right to an accurate credit file.
If a lender has reported inaccurate data about you – then you can ask the lender to correct it.
If the lender refuses then the procedure under UK Law permits you to add a Notice of Correction by notice to the CRA.
This is wrong and if challenged in the courts would render this section of the Consumer Credit Act null and void – why? – the Notice of Correction does not correct the inaccurate data – it is only the data controller – the lender that can do that.
This was tested in CCN Systems v Data Protection Registrar 1991 by use of an example case with fictitious names:
http://www.bailii.org/cgi-bin/markup...method=boolean
In 1985 Mr Simon Jones, a chartered accountant, sold his house to a Mr J Watson. In 1988 Mr Jones applied to a building society for a cheque guarantee card. He was refused a card and informed that a credit reference had been sought from CCN. Mr Jones applied to CCN under section 158 of the Consumer Credit Act 1974 for a copy of his file. Among the information supplied was an entry showing a judgment awarded in 1987 against Mr Watson. The only link between Mr Jones and Mr Watson was that they were respectively vendor and purchaser of a house a few years earlier. Put in another way, the only link between them was that they had at different times lived at the same address. Mr Jones was distressed by this incident.
Section 159 of the Consumer Credit Act entitles a consumer who considers that an entry in his file is incorrect to ask the credit reference agency either to remove the entry from the file or amend it. CCN refused to remove the entry relating to the judgment but agreed to add a notice of correction stating that it did not refer to Mr Jones. They believed it would not have been right to remove the entry since it was an accurate record of the fact of the judgment against Mr Watson. But it appears that there would be nothing to prevent the same judgment surfacing in any future search against Mr Jones, albeit with the notice of correction appended to it. If there were to be other judgments against Mr Watson they too would presumably surface, but without any notice of correction.
CCN Systems v Data Protection Registrar 1991 – Appeal Decision Paragraphs 51 & 52
Para 51 – “The word "fairly" in the first principle is not defined in the Act, and no guidance is given as to its interpretation. In determining its meaning we must have regard to the purpose of the Data Protection Act. It is quite clear, from the Act as a whole and in particular from the data protection principles set out in Schedule 1, that the purpose of the Act is to protect the rights of the individual about whom data is obtained, stored, processed or supplied, rather than those of the data user. The Act was the result of concerns about the use of computer data, concerns voiced in Parliament and in the reports of a number of representative official committees and widely held throughout Europe (hence the Council of Europe's Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data opened for signature on 28 January 1981 referred to in sections 37 and 41 of the Act).”
Para 52 – “In our view, in deciding whether the processing we have described is fair we must give the first and paramount consideration to the interests of the applicant for credit – the "data subject" in the Act's terms. We are not ignoring the consequences for the credit industry of a finding of unfairness, and we sympathise with their problems, but we believe that they will accept that they must carry on their activities in accordance with the principles laid down in the Act of Parliament.”
CCN (the credit reference agency) lost the appeal and data in relation to third parties no longer appears in our credit files.
Further Case Law
Richard Durkin v DSG Retail Ltd & HFC Bank (2008) – in Scotland.
http://www.scotcourts.gov.uk/opinions/A187_04.html This case has subsequently been appealed in January 2010 and we are awaiting the Judgement.
In the original case Mr Durkin was awarded substantial damages when inaccurate and detrimental data was registered against him with the CRA’s, and as a consequence he was unable to raise credit as he otherwise would have been able to if his credit file had not been damaged.
Section 140(a) Consumer Credit Act 2006 – Unfair relationships between creditors and debtors
(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—
(a) any of the terms of the agreement or of any related agreement;
(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
(c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).
Your Three Credit File’s held by the major CRAs
The question is – and this is what I put to the test – is can you on application to the court get an order that the charges you incurred were unlawful because of this Unfair relationship with the lender(s)?
In simple terms – can you:
1.Get the charges and interest removed;
2. Get your files with the CRAs repaired;
3. Get your costs back with interest;
4. And be compensated for the damage this Negligence has caused.
Case Law
I am looking for UK and European Case Law that would assist in this argument – if you know of any please post back.
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