Thanks Slick The COBS link is a goldmine, so cheers for that. I think an action is the order of the day. I'll send a letter to that effect then start proceedings. I'll post any developments here. Thanks again LA

Hi Slick Sadly I have tried (repeatedly) all these things - my letters to BC have been to have the agreement reinstated in full, but I have had no response at all. I know letters are being received as I send them recorded. It is possible that BC will send another DN. However, it is equally possible that BC will record the 8 months 'missed' payments, and this is just as damaging as a default (more so, in fact). This is the problem. I would be able to satisfy any DN that BC served, but would be stuffed should they record the missed payments on my credit file. I have written on numerous occasions regarding my satisfaction of the DN. It has made no difference. I have also spoken with BC customer services and I just get the usual 'we will look into it' type response. I have had a letter from BC to say that it is looking at my complaint, and that it would conclude by end October last year! I have since heard nothing. I do not think I can settle any arrears now as, being a credit card account, I do not know precisely what the arrears are! I could, of course, guess. I am reluctant to do this in case I get the numbers wrong (they are complex) or lose some entitlement later on. The agreement is effectively terminated although I have not received any notices or letters to that effect. I cannot use the card, for example. So, if BC will not engage and will not restore the agreement, then what options are open? My view is that BC simply do not want to continue with the contract. If they did, then they would have done something by now (such as claim money that they are entitled to). Hence, to me, this looks like a repudiatory breach in that BC has restricted credit (without serving notice) and is not performing the contract, and so I should consider rescinding it. Given BC's position I have no other idea of what to do.

Thanks Slick I have a real problem with this approach because BC could easily wake up and say "Oops, sorry, we'll sort it out but did you realise that you are 8 months in arrears and that we have recorded this fact with the CRAs?". That would be a disaster. They could also, instead, serve another DN, as technically I am in arrears. This is why I need to find a 'legal' defence, and claim that the contracted is repudiated by the OC (non-performance, breach of S89, etc) or something similar. I am sure that FOS would eventually agree with me were I to lodge a complaint, but they work so slowly it is hardly worth bothering and, in the meantime, BC could mangle my credit file further. I was thinking of reverting to S102 and sending a notice claiming rescission (due to non-performance) - any thoughts? Cheers LA

Hi Slick That's the odd thing - I do not have use of the credit card (although the account is well within agreed credit limits) and have not received statements. I wasn't able to make contractual payments because I needed the OC to tell me how much to pay, although admittedly I could have estimated the amount and paid that. However, it's not as simple as that because, as I am not receiving any feedback at all from the OC, there is a perceived risk of either losing some/all of the money (ie, it not being credited to my account for some reason) or of losing some 'rights' by making payments (eg, finding that there is no cause for complaint because I effectively continued with the contract as normal). However, I have nevertheless put the money to one side, so can pay if I am asked. A further worry I have is that the OC might suddenly record 8 months of missed payments on my credit file, which would be far worse than the default that is currently there. The letters I have sent to the OC have been to ask for the default to be removed, the account to be reinstated and for a card to be issued. I have also asked for nominal compensation for the recording of the default marker (no amount specified), although this is not a requirement for reinstatement and am not really bothered if they compensate or not. Cheers LA

Hi Slick The DN was satisfied within the given time, so the account was back to normal. However, that was 8 months ago. Since then, nothing has happened at all so I don't know what to do. I have written to BC but all letters are ignored, so need to understand the legalities so can figure out next step. A default was recorded before the DN was served! This is a separate matter that has been passed to the ICO. Cheers LA

Hi folks If a valid, proper S87(1) default notice is satisfied by a defaulting debtor within the stipulated timescale, does anyone know what is supposed to happen afterwards? For example, is the default really considered as not having occured (S89), and do creditors allow the agreement to continue as before, with the debtor given access to credit? If the OC does not consider the breach as "not having occurred", or does not terminate the agreement properly or restrict credit by serving a notice under S98A, then does this amount to contractual or regulatory breach? If so, are any sanctions available, such as rescinding the agreement? This is the current situation on my BC and I'm trying to understand what options are available. TIA LA

Well, Peter Bard will say that your position is hopeless, but I will say that it is not. Your lender has messed up. He needs to wait for remedy (or not) before terminating the agreement. He has removed your entitlement to remedy (an important part of CCA) and prejudged the outcome of any decision you may make. The Act states that a compliant DN must be issued before an agreement can be terminated on breach by the lender, and s89 states that the lender must wait until the expiry date before taking the action set out in the DN. I do not think that this line of reasoning is wrong. It is just that one or two recent cases have given the courts an easy way out. Lastly, I would look to s140 if the lender fails to comply with the Act. LA

Peter The course of action being mooted here is to require that lenders comply fully with the Act, in the same way that they require their customers to. You have seen many examples of lenders refusing to adhere, and of courts condoning that action, to the detriment of the debtor. I am mystified why you deem this discussion and the search for solutions to be so seditious that CAG risks regulation! The bottom line here is that many, myself included, have hit problems and received DNs that cannot possibly be complied with because they do not offer the prescribed timescale or demand sums that are too high to fix the problem. The lender is informed, but refuses to act reasonably. The borrower then loses his entitlements under the Act and faces court, CCJ and all the rest. So I do not understand why this is so unreasonable for you. The basic argument is a mixture of law and reason; that some judges get it wrong and interpret things differently doesn't make it right. I certainly hope you will continue to post as I find your arguments helpful in clarifying the alternative view. LA

Haha, thank you Frett, how I wish you were a high court judge!! Whether this washes in court I don't know so let's keep the posts coming and I hope that Peter will continue to present his views too which I think are valuable. LA

Peter, this is not correct. If the lender states an intent to record the default on the debtor's credit file within his defective DN (that cannot be complied with due to its defects), then the lender breaches the 1998 DPA because the accuracy of his data recording is wrong. He places the debtor in a situation he cannot get out of, and wrongly records the false outcome of his actions. Also, the ICO's own guidelines (at para 35) state; If a borrower fully meets the terms set out in a notice of intention to file a default, it follows that the lender should not file the default. (see http://www.ico.gov.uk/upload/documents/library/data_protection/detailed_specialist_guides/default_tgn_version_v3%20%20doc.pdf) You are wrong when you say that ICO guidelines have nothing to do with CCA. CCA, at ss 147(2), 157, 158, 159 and 160, all cover CRAs. The ICO regulates CRAs by enforcing the DPA. To say that DPA and CCA are separate is just twaddle. Lastly, the DPA principle of fairness and accuracy should prevent a lender from recording a default before the debtor remedies. Lenders must comply with DPA as they must with CCA. LA

Here, the OC terminates on breach, which requires a compliant DN. Section 89 gives entitlement to the debtor to remedy the breach as though it had not occurred. If the OC fails to honour that entitlement, he is therefore in breach. The debtor can terminate at any time, but monies due must be paid. The liabilities are defined by contract and the Act; refer to s87(1)(b) here, as we discuss invalid (ie, non-compliant) DNs. The only sums due are the arrears less the debtor's costs. It is set out in the Act to which both parties agreed. The creditor has no entitlement to recover unpaid amounts where s88 is not complied with. This is clearly stated at s87. It really is very simple Peter. LA

The problem as I see it is that if the courts start making judgements in favour of lenders where the DN is defective then it offers them an opportunity to close credit agreements and collect their money early. This might be a very attractive scenario for them if they are strapped for cash or do not believe that the debtor will toe the line or continue to perform the contract. The argument in Brandon that Amex took no action until after the 14 days plus service seems disingenuous because how would Brandon know that it was 'OK' to clear the arrears after the timescale on the DN? Had he tried to do so, Amex may have told him to get stuffed. In fact, I'm utterly certain that that is indeed what they would have done, the defective DN being an opportunity for them to recoup everything in one hit. LA

We don't know, for all the reasons raised above. If the judge allows the lender to do that, then you should ask him on what basis the agreement is no longer 'terminated', why you no longer have entitlement under s89 and ask that the lender now provides proof that the relationship (as modified by the court's instruction to the lender) between you both is fair under s140. You could also say that you do not agree to reinstatement of the contract, it having been ended by both parties. Just because the lender was not entitled to terminate it he is equally not entitled to reinstate it without your agreement. LA

As for termination by the OC where his DN is non-compliant, it is clear that he is not entitled to end the agreement in the same way that we are not entitled to travel at more than 70mph on the motorways. However, the OC does terminate the agreement, just as we sometimes go faster than 70mph. He faces no specific sanction due to s170, but he has nevertheless terminated the agreement. For a court to say that he hasn't and that he must now resurrect the agreement is a bit like being told that we won't be fined for our speeding offence but we must remake the journey from start to finish while travelling within the speed limit. Clearly a wholly farcical scenario. If a court finds that he wasn't entitled to end the agreement, then clearly he is not entitled to seek sums unpaid. As for reviving the agreement in order to issue a new DN, CCA prevents this because it would remove the debtor's entitlement to the provision at s89 (as well as causing issues under s140). The question here would be; why does the lender have an entitlement reinstated but the debtor has one removed? I just fail to see why the courts and the credit industry are running around trying to find loophopes in something that is fairly clear and designed to protect consumers. It is simplicity itself for creditors to get their documentation in order and comply with the Act, and it is up to the creditors to decide whether to terminate the agreement. That they fail to comply with the Act and choose to terminate is entirely their choice; the consumer can not be expected to pay for their mistakes and abuse of regulations. LA

Where an OC chooses to terminate the agreement following service of a defective DN, I'm now wondering whether his demands for the full balance constitute a penalty and so would be unenforceable under UTCCR 1999. I cannot get around the fact that s87(1)(b) absolutely requires a fully-compliant DN to be issued first. For the OC to excuse himself from this subsection and claim the full balance as it was prior to the DN, it is a penalty placed on the debtor and which is outside of CCA. The balance due is not owed. That is ruled out by non-compliance with s88 and is clearly stated at s87(1)(b). Monies are, however, owed, and these are whatever should have been paid up to termination (less the debtor's own costs). If the full balance cannot be owed due to s87(1)(b), then the OC must be seeking the difference between the outstanding balance prior to the DN and the arrears as a penalty. Any thoughts anyone...? LA