CCA Regulated Agreements: overdrafts, mortgages and a few other bits

[sequenci]

There seems to be a few occasions where people have been confused about the Consumer Credit Act of late so I thought I would help clear some items up!

 

1) Bank Overdrafts:

 

So long as these fit into the monetary limits of the act they ARE regulated. These are classed as Running-Account credit (a bit like a credit card is) and offer a “from time to time” or “on-going” credit facility up to the overdraft limit.

 

2) First Mortgages

 

These are NOT regulated (even if within the monetary limits of the act). There are only a few exceptions, the usual one being where the property has been owned outright and then a debtor has borrowed against the property (so it’s not used towards the initial purchase of the house) before 31.10.04. Anything taken out after that date would be FSA regulated rather than CCA.

 

3) Charge Cards / Gas, Electric, Telephone/Mobile Accounts

 

As these are repayable in one instalment each month they are NOT regulated

 

4) New-Style student loans ( Post Sept 1998 ) are not regulated by the CCA, Old-Style loans ARE regulated

 

There are lots of other unregulated agreements but they are pretty rare, some low-interest rate agreements which are not offered to the public (loans from employers etc) are probably the most common.

 

This is just a brief overview, if anyone needs further clarification on anything please get in touch J

[dori2o]

I have a secured loan with Ge Money. On the agreement it says:

 

Fixed sum Loan Agreement regulated by the Consumer redit Act 1974 secured on- 1 High Street, Hightown, Highland, H1 1HH.

 

This loan was for £10K over 15 years, and was taken out in November 2005.

 

I am due to settle this loan soon due to remortgaging and got a letter from GE about a month ago. There is a discharge fee on there, which I am contesting as it is not mentioned in the T&C's or on the agreement.

 

Also there is an ERC, this is mentioned in the agreement, but, I have been informed by another CAGer that this may not be alowed. He basicaly says

 

One thing i did note from your thread is that your loan was agreed under the 1974 CCA if this is the case then you should not be paying an ERC of 1 months interest have a look at rules 94.95,96,97 and 173 of the act

 

Most residential mortgages are regulated by the FSA, which requires a section in the Key Financial Information given to the customer, and also in the mortgage offer itself, describing whether and when any ERC may be payable, with a least three cash examples showing the range of charges that may apply. For mortgages that are regulated by the Consumer Credit Act (CCA), it is doubtful whether ERCs can be charged at all because of the combining effect of sections 94 and 173(1) CCA.

The last two paragraphs are from an article in the mortgage gazette.

 

Can anyone advise if this is correct.

[sequenci]

Here are your sections:

94 Right to complete payments ahead of time

 

(1) The debtor under a regulated consumer credit agreement is entitled at any time, by notice to the creditor and the payment to the creditor of all amounts payable by the debtor to him under the agreement (less any rebate allowable under section 95), to discharge the debtor's indebtedness under the agreement.

(2) A notice under subsection (1) may embody the exercise by the debtor of any option to purchase goods conferred on him by the agreement, and deal with any other matter arising on, or in relation to, the termination of the agreement.

 

95 Rebate on early settlement

(1) Regulations may provide for the allowance of a rebate of charges for credit to the debtor under a regulated consumer credit agreement where, under section 94, on refinancing, on breach of the agreement, or for any other reason, his indebtedness is discharged or becomes payable before the time fixed by the agreement, or any sum becomes payable by him before the time so fixed.

(2) Regulations under subsection (1) may provide for calculation of the rebate by reference to any sums paid or payable by the debtor or his relative under or in connection with the agreement (whether to the creditor or some other person), including sums under linked transactions and other items in the total charge for credit.

 

96 Effect on linked transactions

 

(1) Where for any reason the indebtedness of the debtor under a regulated consumer credit agreement is discharged before the time fixed by the agreement, he, and any relative of his, shall at the same time be discharged from any liability under a linked transaction, other than a debt which has already become payable.

(2) Subsection (1) does not apply to a linked transaction which is itself an agreement providing the debtor or his relative with credit.

(3) Regulations may exclude linked transactions of the prescribed description from the operation of subsection (1).

 

 

97 Duty to give information

 

(1) The creditor under a regulated consumer credit agreement, within the prescribed period after he has received a request in writing to that effect from the debtor, shall give the debtor a statement in the prescribed form indicating, according to the information to which it is practicable for him to refer, the amount of the payment required to discharge the debtor's indebtedness under the agreement, together with the prescribed particulars showing how the amount is arrived at.

(2) Subsection (1) does not apply to a request made less than one month after a previous request under that subsection relating to the same agreement was complied with.

(3) If the creditor fails to comply with subsection (1)—

(a) he is not entitled, while the default continues, to enforce the agreement; and

(b) if the default continues for one month he commits an offence.

 

173 Contracting-out forbidden

 

(1) A term contained in a regulated agreement or linked transaction, or in any other agreement relating to an actual or prospective regulated agreement or linked transaction, is void if, and to the extent that, it is inconsistent with a provision for the protection of the debtor or hirer or his relative or any surety contained in this Act or in any regulation made under this Act.

(2) Where a provision specifies the duty or liability of the debtor or hirer or his relative or any surety in certain circumstances, a term is inconsistent with that provision if it purports to impose, directly or indirectly, an additional duty or liability on him in those circumstances.

(3) Notwithstanding subsection (1), a provision of this Act under which a thing may be done in relation to any person on an order of the court or the [OFT] only shall not be taken to prevent its being done at any time with that person's consent given at that time, but the refusal of such consent shall not give rise to any liability.

[dori2o]

Ok, read it and re-read it and re-read it, but still don't get it.

 

Can anyone advise if the information I have been given is correct.

[Finlay07]

1) Bank Overdrafts:

 

So long as these fit into the monetary limits of the act they ARE regulated. These are classed as Running-Account credit (a bit like a credit card is) and offer a “from time to time” or “on-going” credit facility up to the overdraft limit.

 

 

 

I need to qoute the Act to a DCA(1st Credit) who are now saying that my alleged debt is not covered by the CCA as it is a bank account (load of rubbish by the way).

 

Where could I find the section of the act that applies.

 

Regards

 

F

[Bullet51]

I'm in the same position as Finlay07 - my DCA refuse to adhere to my CCA request on the grounds that the debt is not of the type covered by the Act (it's an overdraft on a bank account).

 

Anyone with a template letter, or a link to a template letter, which relates to this situation is cordially invited to help me out!

[sequenci]

you guys need some section 10 in your lives, overdrafts are running-account credit

 

10 Running-account credit and fixed-sum credit

 

(1) For the purposes of this Act—

(a) running-account credit is a facility under a personal [consumer] credit agreement whereby the debtor is enabled to receive from time to time (whether in his own person, or by another person) from the creditor or a third party cash, goods and services (or any of them) to an amount or value such that, taking into account payments made by or to the credit of the debtor, the credit limit (if any) is not at any time exceeded; and

(b) fixed-sum credit is any other facility under a personal [consumer] credit agreement whereby the debtor is enabled to receive credit (whether in one amount or by instalments).

 

 

 

(2) In relation to running-account credit, “credit limit” means, as respects any period, the maximum debit balance which, under the credit agreement, is allowed to stand on the account during that period, disregarding any term of the agreement allowing that maximum to be exceeded merely temporarily.

(3) For the purposes of section 8(2) [paragraph (a) of section 16B(1)], running-account credit shall be taken not to exceed the amount specified in that subsection [paragraph] (“the specified amount”) if—

(a) the credit limit does not exceed the specified amount; or

(b) whether or not there is a credit limit, and if there is, notwithstanding that it exceeds the specified amount,—

(i) the debtor is not enabled to draw at any one time an amount which, so far as (having regard to section 9(4)) it represents credit, exceeds the specified amount, or

(ii) the agreement provides that, if the debit balance rises above a given amount (not exceeding the specified amount), the rate of the total charge for credit increases or any other condition favouring the creditor or his associate comes into operation, or

(iii) at the time the agreement is made it is probable, having regard to the terms of the agreement and any other relevant considerations, that the debit balance will not at any time rise above the specified amount.

[tifo]

some good useful points

[Finlay07]

Cheers sequenci. Appreciated.

[pugsley]

I've been told recently that my overdraft isn't regulated under the cca and that it is in the consumer credit agreements long thread (dependant on the poster). That thread is just too long now and is getting tangled.

 

definatively which of the above is correct

 

can I send a cca request to smile bank for my 2000 overdraft or not?

 

 

confused:confused:

 

thanks

 

p.s I have exceeded it and it has been cancelled back to 0

[rory32]

Pugsley,

I would agree with sequenci that they are covered under section 10.

Send smile a CCA request.

[pugsley]

ok thanks

 

 

should I quote different sections of the CCA on the cca request other than the one in the templates on this site?

 

reword, is the standard cca request the one I send?

[rory32]

Pugsley just thought I would back up why I agree with sequenci with a few facts.

 

From the Consumer Credit Act 1974:

 

Facts. The manager of the C Bank agrees orally with D (an individual) to open a current account in D’s name. Nothing is said about overdraft facilities. After maintaining the account in credit for some weeks, D draws a cheque in favour of E for an amount exceeding D’s credit balance by £20. E presents the cheque and the Bank pay it.

Analysis. In drawing the cheque D, by implication, requests the Bank to grant him an overdraft of £20 on its usual terms as to interest and other charges. In deciding to honour the cheque, the Bank by implication accept the offer. This constitutes a regulated small consumer credit agreement for unrestricted-use, fixed-sum credit. It is a debtor-creditor agreement, and falls within section 74(1)(b) if covered by a determination under section 74(3).

 

Facts. F (an individual) has had a current account with the G Bank for many years. Although usually in credit, the account has been allowed by the Bank to become overdrawn from time to time. The maximum such overdraft has been is about £1,000. No explicit agreement has ever been made about overdraft facilities. Now, with a credit balance of £500, F draws a cheque for £1,300

 

Analysis. It might well be held that the agreement with F (express or implied) under which the Bank operate his account includes an implied term giving him the right to overdraft facilities up to say £1,000. If so, the agreement is a regulated consumer credit agreement for unrestricted-use, running-account credit. It is a debtor-creditor agreement, and falls within section 74(1)(b) if covered by a direction under section 74(3). It is also a multiple agreement, part of which (i.e. the part not dealing with the overdraft), as referred to in section 18(1)(a), falls within a category of agreement not mentioned in this Act.

 

Facts. Under an oral agreement made on 10th January, X (an individual) has an overdraft on his current account at the Y bank with a credit limit of £100. On 15th February, when his overdraft stands at £90, X draws a cheque for £25. It is the first time that X has exceeded his credit limit, and on 16th February the bank honours the cheque.

Analysis. The agreement of 10th January is a consumer credit agreement for running-account credit. The agreement of 15th-16th February varies the earlier agreement by adding a term allowing the credit limit to be exceeded merely temporarily. By section 82(2) the later agreement is deemed to revoke the earlier agreement and reproduce the combined effect of the two agreements. By section 82(4), Part V of this Act (except section 56) does not apply to the later agreement. By section 18(5), a term allowing a merely temporary excess over the credit limit is not to be treated as a separate agreement, or as providing fixed-sum credit. The whole of the £115 owed to the bank by X on 16th February is therefore running-account credit.

 

Facts. The G Bank grants H (an individual) an unlimited overdraft, with an increased rate of interest on so much of any debit balance as exceeds £2,000.

Analysis. Although the overdraft purports to be unlimited, the stipulation for increased interest above £2,000 brings the agreement within section 10(3)(b)(ii) and it is a consumer credit agreement.

 

 

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