No CCA - so can you claim interest back?

[Blossomandebony]

Got an account with MBNA which has a zero balance. Was in difficulty with this account at one time but claimed the charges back and got it under control. During my claim I made a CCA request and it turns out they don't have a copy of a Credit Agreement. Yet when I look through trhe statements I'm now amazed at the extortionate amounts of interest I have paid, especially on cash Transfers / withdrawals. I simply want a Copy of the CCA to check that I actually signed to pay at these high rates of interest. But they don't have one.

 

So, my dilemma is - can I:

 

1. Force MBNA to produce a valid CA through the courts? or

 

2. Claim back the interest I have paid on the account, as they have no proof I agreed to it?

 

Obviously, I agreed to some sort of interest rate when I applied for the card, I just want to check it to see that they have not ripped me off.

 

Any thoughts welcome.

[noomill060]

How do you know MBNA dont have a Credit Agreement? Do you have this in writting from them?

 

If they failed to comply with your s.78 request your first job is to contact your local Trading Standards.

 

Do you still have the card? Did they issue a default notice and default your name to the credit reference agencies?

[Blossomandebony]

Noomill,

 

I don't have proof of them not having a CCA, but they could only send me a copy of the application form when I made my request. It doesn't have the prescribed terms on it, no % rates or repayment terms etc, which is what I wanted to find out.

 

They have never defaulted the account, just heaped charges on it. They have told me there are no negative entries on my credit file from them, which is fair enough, (I insisted on their removal when I claimed the charges back).

 

Cheers

[noomill060]

Do a photocopy and send the copy to Trading Standards. They will force them to provide what other document (if any) they have which they believe contains the Prescribed Terms.

[lookinforinfo]

If the account is now paid off, they are under no legal obligation tp supply

your original credit agreement.

However if you send them an S.A.R - (Subject Access Request), then you should receive all details of the

charges etc imposed-or certainly during the past six years.

[pelham9]

MBNA will not have a proper CCA agreement. They are one of the banks who tried to save money by passing off a hybrid application form as an agreement. The application form does not stand up legally.

 

It is quite a difficult thing to check the interest they have charged. If they only show the %APR on the application this makes life even more difficult because it is an approximation - you need to know the monthly rate to work out the %APR but because of the approximation you cannot derive the monthly rate from the %APR. Note that the %APR for cash advances should be higher than for purchases because the compulsory fee is part of the total cost of borrowing but the underlying monthly rate should be the same.

 

So you need to know the monthly interest rate and exactly how this rate is applied and to what - that is not easy.

 

What I would do is to ask MBNA to send you a breakdown of each interest charge they have made asking them to quote the monthly rate for each one.

 

I am willing to bet that they will have difficulty because the are very reliant on their computers and most of them do not understand what their computers are doing. It is unlikely that they will have tthe facility to get the information from their system direct.

 

If there is no answer to your query and there is no proper CCA agreement I would think you can repudiate the whole loan and certainly be able to get a refund on all interest. At the very least the account will be in dispute so no DCAs, defaults or demands for payment will be available to them until they adequately settle the matter

 

The best place to learn about CCA agreements in practice is the DCA threads (Debt Action Group)- there are a number of MBNA threads.

[Blossomandebony]

Cheers, Pelham9,

 

I think I'll dive in on this one and issue a polite request to MBNA for the whole amount of interest they have charged me since the account was opened, 1999, followed by a county court claim if they don't play ball. I'm thinking of it as an experiment, really, to see how they will react. If it's anything like how they reacted for my three previous claims against them/ A&L, it ill go something like this:

 

No, we're not paying you . . .Yes, that's our final answer . . . We don't owe you a penny . . . yes, take us to court, we're still not paying you . . .

 

And then when the court set a date - Oh, okay we will pay you after all!

 

Lookingforinfo - I have all the statements already as my original claim for charges was way back in 2006. I've done the CCA request once and I know they wouldn't accept another request as the account has been strangely 'closed' by them. The account was closed by them in January, it seems out of some sort of spite for me claiming my charges back. That's partly why I'm so annoyed with them.

 

Cheers

[lookinforinfo]

If you attempt to reclaim all the interest I guess the Court would dismiss your

claim. On what grounds could you reclaim all your interest-you had the loan.

If you are arguing about overcharging interest then you would need to specify

where you think you were charged too much and reclaim that only.

Did you send them an sar prior to reclaiming your bank charges? They should have sent some sort of details about interest rates etc if you did.

[noomill060]

"On what grounds could you reclaim all your interest?"

 

One could argue that as there is no proof of a credit agreement, there is no proof of what the Prescribed Terms were and therefore that there was no agreement to pay interest at any particular rate.

 

However, as the customer repaid the amount borrowed and additional amounts which the creditor erroneously debited as interest, which should (as there is no proof of an agreement complying in form and content, to s.60 and 61 of the Consumer Credit Act 1974) have been paid off the principal balance.

 

The creditor has therefore enriched itself with no legal right to do so.

 

Obviously, no one expects to borrow money for free under a credit agreement regulated by the Consumer Credit Act 1974, but by debiting interest without a properly executed credit agreement, a creditor is commiting a rather serious offence, one which HMRC, the OFT and HM Treasury would be VERY interested in hearing about

[noomill060]

"If you are arguing about overcharging interest then you would need to specify

where you think you were charged too much and reclaim that only."

 

This is just the point. Unless there is evidence of what the interest rate was/is ( this is one of the Prescribed Terms which MUST be included in any credit agreement), we dont know whether we are being overcharged or whatever. As there is no evidence of ANY interest rate being agreed to by both parties it follows that all monies repaid can only be knocked off the amount borrowed, there being no agreement for money to be debited as "interest", so any money thus debited, was debited unlawfully and thus reclaimable.

[lookinforinfo]

I am sorry Noomill060, but I cannot agree with your post. While I do agree that the debt is unenforceable, that is not the same as saying that there is

no proof of a loan.

Pelham may already have had a coup in being able to evade paying a debt

which he does not dispute he owes since he has already reclaimed charges

back from it. But that is a huge leap to claim interest back into the bargain.

 

There is nothing in the Consumer Credit Act that makes provision for the

repayment of interest either. So under which Act should the reclaim of interest may be made?

[noomill060]

pelham didnt have a coup.

 

His creditor was operating outside the law and realised they didnt have a credit agreement, so any attempt to enforce would be slapped down by virtue of s.127(3) CCA 1974.

 

In otherwords, his creditor, by their own greed and foolishness, had made the agreement void from the start.

 

Acts of greed and foolishness should be punished wherever possible and certainly not encouraged by allowing anyone to profit from their foolishness.

 

Greed is good. (Gordon Gheko: Wall Street 1987)

 

But the first rule is "Always cover your back"

 

Second rule: "Always cover your back"

 

Third rule: See above

 

If you dont, you pay the price, as MBNA did. Its called business.

 

There is a branch of law called Equity where disputes of this nature are resolved by natural justice. If interest was charged unlawfully, fraudulently or paid by mistake, natural justice would imply that you arent entitled to keep it.

 

Not having a properly executed credit agreement also contravenes money laundering regs, so the OFT and the Revenue would also take a dim view, were they to be informed.

[noomill060]

Proof of a loan is beside the point.

 

So what? Without an executed credit agreement there was no legal right to charge interest.

 

If a credit company is idiotic enough to issue unenforcable agreements, let them save money and take a risk that no one notices.

 

They take the view that:

 

1) Most people repay their debts

 

2) Most of their customers have more integrity than Banks themselves

 

3) Most people still have a mindless, misjudged and unswerving belief in the integrity of the banks.(and in conjunction with (2), what a great trick to be able to pull off!)

 

4)Most people neither read nor understand what they sign.

 

5)Most people have not read nor understand the CCA 1974.

 

6) The profits made from the credulous, unquestioning sheep, more than outweigh the occasional write off in the event of being rumbled by some knowlegable, pesky customer.

 

(Well, usually. This is why they are getting all girlie about penalty charges! Some of the sheep are now armed and dangerous, and they dont like it up 'em Captain Mainwaring!)

[gizmo111]

Not having a properly executed credit agreement also contravenes money laundering regs, so the OFT and the Revenue would also take a dim view, were they to be informed.

 

There is no proof that the agreement never existed whilst the debt was in force - this account has been paid and closed, as well as charges being reclaimed.

I can see this being dismissed (even if it was still open) and the OP ending up with costs against her. There is no grounds to claiming back interest paid. All MBNA have to do is go back over the years on their T&C and say this is what we charged and the judge will quite happily rule in their favour.

 

http://www.consumeractiongroup.co.uk/forum/debt-collectors-debt-collection/108949-short-warning-thread.html

[tomterm8]

Unless there is evidence of what the interest rate was/is ( this is one of the Prescribed Terms which MUST be included in any credit agreement), we dont know whether we are being overcharged or whatever.

 

The courts in taking a case in equity would take the position of a reasonable person, who would ask:

 

"Did you know you would be charged interest as a result of taking out the loan"

 

"yes... but"

 

"And you didn't dispute the interest rate when you paid it?"

 

"no... but..."

 

"And you haven't got a copy of the credit agreement, which states the interest rate was lower than they charged?"

 

"No... but..."

 

"Sorry, the court is precluded from issuing an enforcement order by virtue of s 127(3) of the CCA 1974, which excludes the court from issuing an enforcement order for either party in the absence of a signed credit agreement. Here is an order for £7,500 costs, and this is a civil restraint order for your pleasure."

[Blossomandebony]

Mmmm, lots to think about . . .

 

Thanks for all the input, TomTerm, Noomill, Lookingforinfo. I will certainly look into the documents I have while I wait to see what MBNA have to say about producing a copy of the original agreement/ paying back the interest. I will certainly not be going into the Court stage if there is any likelihood of a large award for costs being awarded against me. I have some experience of the courts and would estimate an award for costs would be around the £600 - £700 mark, which is quite a risk.

[Josie8]

The courts in taking a case in equity would take the position of a reasonable person, who would ask:

 

"Did you know you would be charged interest as a result of taking out the loan"

 

"yes... but"

 

"And you didn't dispute the interest rate when you paid it?"

 

"no... but..."

 

"And you haven't got a copy of the credit agreement, which states the interest rate was lower than they charged?"

 

"No... but..."

 

"Sorry, the court is precluded from issuing an enforcement order by virtue of s 127(3) of the CCA 1974, which excludes the court from issuing an enforcement order for either party in the absence of a signed credit agreement. Here is an order for £7,500 costs, and this is a civil restraint order for your pleasure."

 

 

Not quite right

 

Wilson v sec of state for DTI stated that the Creditor is precluded from enforcing the cca but stated that the DEBTOR can enforce the CCA (or lack of it).

 

If the claimant has repaid all capital advanced under the original agreement then on the question of interest I do not see a court saying in equity that she must pay say 30% interest where there is no enforceable agreement. In equity the creditor has had its original money back.

 

In the absence of an enforceable CCa agreement the creditor is not allowed to sidestep the CCA and use ordinary contract law therefore the argument over what they normally charged for interest etc is irrelevant to the deliberations of the court.

 

The court is not allowed to consider the creditors position outside the CCA which because its unenforceable it is unable to use to obtain rights to interest. It would therefore be unequitable to not order a refund of the interest unlawfully charged by the Creditor.

 

In this case the claimant has a copy of the original application form so clearly there has never been any question of a properly executed agreement that has been "mislaid". The creditor has never been in aposition to lawfully charge interest or add any other charges (i.e.cash withdrawals ) etc on this claimants account.

[noomill060]

"Wilson v sec of state for DTI stated that the Creditor is precluded from enforcing the cca but stated that the DEBTOR can enforce the CCA (or lack of it)."

This is a Law Lords ruling, so binding on all lower courts.

[noomill060]

A District Judge simply wouldnt be able to say:

 

""Sorry, the court is precluded from issuing an enforcement order by virtue of s 127(3) of the CCA 1974, which excludes the court from issuing an enforcement order for either party in the absence of a signed credit agreement. Here is an order for £7,500 costs, and this is a civil restraint order for your pleasure."

[noomill060]

A District Judge simply wouldnt be able to say:

 

""Sorry, the court is precluded from issuing an enforcement order by virtue of s 127(3) of the CCA 1974, which excludes the court from issuing an enforcement order for either party in the absence of a signed credit agreement. Here is an order for £7,500 costs, and this is a civil restraint order for your pleasure."

 

 

Assuming you drew their attention to this HoL ruling and the fact that although the CCA 2006 repealed s.127(3), it specifically states that this is not retrospective on agreements executed before 6 April 2007.

[noomill060]

A short warning thread

 

This is sound advice.

 

You would be advised to read it and make sure that the advice you read here is actually based on fact rather than misinformed optimistic opinions or the opinions of merchants of doom.

 

I learn more everyday, sometimes I make statements which I later discover to be hogwash, sometimes Im bang on the money.

 

Application forms without prescribed terms are not and never can be a properly executed agreement. They are application forms.

 

An application and a copy of the T&Cs doesnt fulfil the form and content of a properly executed credit agreement. The DTI says so, not me.

[tomterm8]

Assuming you drew their attention to this HoL ruling and the fact that although the CCA 2006 repealed s.127(3), it specifically states that this is not retrospective on agreements executed before 6 April 2007.

 

 

"Wilson v sec of state for DTI stated that the Creditor is precluded from enforcing the cca but stated that the DEBTOR can enforce the CCA (or lack of it)."

 

This is a Law Lords ruling, so binding on all lower courts.

 

 

I presume you mean

Wilson and others v. Secretary of State for Trade and Industry (Appellant)

 

[2003] UKHL 40

 

which states:

 

31. These restrictions on enforcement of a regulated agreement are for the protection of borrowers. They do not deprive a regulated agreement of all legal effect. They do not render a regulated agreement void. A regulated agreement is enforceable by the debtor against the creditor. It seems, for instance, that a borrower may insist on making further drawdowns under a regulated agreement even though the agreement is unenforceable against him. Further, section 173(3) expressly permits consensual enforcement against a borrower. A borrower may consent to the sale of a security or to judgment. Moreover, the creditor is entitled to retain any security lodged until either an application for an enforcement order is dismissed or the court makes a declaration under section 142 that the agreement is not enforceable. That is the effect of sections 113(3) and 106.

 

 

You paid the money consensually (at least within the meaning of the law; you didn't pay it back as the result of an enforcement order), and the court would consider it a case of consensual enforcement. They can't force you to pay any further money, neither can the creditor take any security etc against your will. And I haven't ever stated that they could.

 

But IMHO the court isn't required to order them to repay money paid under the agreement under Wilson, even if the agreement was improperly executed. And I don't believe it will.

[Josie8]

For the payment to be consensual the debtor should have been in knowledge of the fact that they did not have to pay the interest if they didn't want to because the agreement was unenforceable under CCA. "i.e. to be of the same mind as ; oneness of mind ".

 

You could argue that the Lender knew the agreement was unenforceable (after all they are licensed and employ teams of professional lawyers etc) but didn't share that knowledge with the debtor so therefore the debtor did not have the same understanding.

 

Alternatively the debtor may have on occasion been threatened with being defaulted etc if they didn't pay the interest etc - although agreement unenforceable - and then made payment under that compulsion - again not consensual.

 

The Wilson case is clear that the financial penalty for the lender is a consequence of their failure to comply with the law.

 

I find it hard to believe that in a case where clearly there never was an enforceable agreement the court in equity would not allow a refund of monies paid over and above the capital advanced. I t may be different if a creditor has not repaid the money advanced and is at the same time seeking to recover any interest paid on what little they have repaid but those are different circumstances to the case in instance.

that they lose any protection to

[noomill060]

"The Wilson case is clear that the financial penalty for the lender is a consequence of their failure to comply with the law. "

 

Absolutely, this is the reason I said pelham didnt pull off a coup which enabled them to avoid repaying their debt. It was a consequence of an expensive lesson in law learned by their creditors, not simply a lucky break.

[tomterm8]

For the payment to be consensual the debtor should have been in knowledge of the fact that they did not have to pay the interest if they didn't want to because the agreement was unenforceable under CCA. "i.e. to be of the same mind as ; oneness of mind ".

 

You could argue that the Lender knew the agreement was unenforceable (after all they are licensed and employ teams of professional lawyers etc) but didn't share that knowledge with the debtor so therefore the debtor did not have the same understanding.

 

Any sane lender would state that at the time they lent you substantial amounts of money, and demanded payments, they believed the agreement was enforceable. Prove otherwise.

 

Alternatively the debtor may have on occasion been threatened with being defaulted etc if they didn't pay the interest etc - although agreement unenforceable - and then made payment under that compulsion - again not consensual.

 

The fact that the consumer wasn't aware that the agreement was unenforceable by law is not relevant, since both parties can claim that they were not aware of this fact.

 

Both parties came to a consensual arrangement (a contract) which, while not enforceable by the creditor, was not and is not void by law. Your payments were made according to that contract. No breach of equity can be proved, in my opinion, and a claim founded in equity is likely to fail on the principals of unjust enrichment and that you do not, in my view, come to the claim with clean hands.

 

You have every legal right not to pay future monies. However, although equity is trumped by your statutory rights, excercising these rights in a manor the court considers unfair will bar you coming to equity. I would submit, retaining all rights under the agreement, while seeking to deprive the creditor of all benefits to the agreement, including payments it has already recieved and which it rightly relies on (and a defence of reliance is very effective in equity) would be unfair.

 

i maintain that any court, considering a claim in equity for the return of monies paid to the other party in a contract, where that party has provided the benefit of that contract is unlikely to award such a claim.

 

The fact that it subsequently turns out the contract was unenforceable except by court order, or consentual arrangement, is not in my view of substantial interest to the court in a case founded on equity since it was the intention of both parties that it would be enforceable and the defendant has not acted other than in accord with the terms of that agreement, which is not void by law.

 

At the time you paid the money, you paid it in accord with a consentual arrangement, and did not do so under any threat of unlawful or illegal activity. That makes the payments consentual, in my opinion.

 

The Wilson case is clear that the financial penalty for the lender is a consequence of their failure to comply with the law.

 

Did the court in wilson actually return any money paid by wilson? If not, why not? And if not, is it actually part of the ratio of the case that it should do so? In my view, the case is distinguishable, except that it states that the agreement was not void. Payments made according to the agreement were not, therefore, unlawful.

 

The law is not so clearly in your favour as I would hope it would be.

 

I find it hard to believe that in a case where clearly there never was an enforceable agreement the court in equity would not allow a refund of monies paid over and above the capital advanced. I t may be different if a creditor has not repaid the money advanced and is at the same time seeking to recover any interest paid on what little they have repaid but those are different circumstances to the case in instance.

that they lose any protection to

 

 

 

 

Again, in what way has the creditor breached it's duties according to the original agreement? In equity both parties have behaved properly, in my view.

 

The basic maxim in these cases is that, if the court can't seperate the facts, and statute law remains silent, then unless a grevous unfairness has resulted the court will allow the estate to fall as it will. It did this in wilson; the creditor couldn't force wilson to pay any more money, and was required by statute law to return the security, but it certainly didn't require the creditor to return any monies paid under the agreement.

 

Neither am i aware of any basis in the statute law, in common law, or in equity for it to do so. This is despite my reading well over 100 unjust enrichment cases in order to find a cause of action on this basis.

 

If you want to take legal action, do so. I wish you good luck. Frankly, if you win I'll be quite happy to swallow my pride, since I'll get a load of money back myself. But you are taking a risk, and it is only fair to make you aware of the size of the risk.