Loan Write-off

Consumer Credit Act (CCA) Claims

The Consumer Credit Act 1974 was introduced by Government to legislate all finance agreements below £25,000. It was designed to protect consumers and to impose Regulations on lenders to produce documentation in a uniformed manner.

Any finance agreement must be fully understandable, the purpose of which is intended to ensure the consumers understand exactly what they are borrowing and what it will cost them.

If a lender fails to comply with certain features or retain pertinent information relating to the loan, the penalty imposed by the Act is severe resulting in the loan contract becoming unenforceable by the Courts which allows a borrower to walk away from his obligation under the contract.

Put simply, the loan becomes void and nothing further is payable under the contract.

Where can we help?

If you were given misleading advice when purchasing Payment Protection Insurance when applying for a loan, it is possible that the loan could be rendered irredeemably unenforceable because of this misrepresentation. If you are clear in your recollection that words to the following effect were said during the application process it is possible to we can get your loan written off:-

• You were told that you would not get the loan unless the Payment Protection Insurance was taken at the same time.
• That the Payment Protection Insurance was a mandatory part of the loan.
• That taking the Payment Protection Insurance will result in a favourable outcome in the loan application.
• That taking the Payment Protection Insurance will result in a better chance of you getting the loan.

If any of the above apply – please contact us and we will, for free, make an assessment as to whether you circumstance match the criteria for making a claim.

A Loan Write-off Example

Mr & Mrs X approached a financial broker in October 2006 for a secured loan in the sum of £17,500.00 order that they were able to consolidate other borrowings at that time. The loan application was successful with X bank providing the funding to the customer.

During the course of the application process Mr & Mrs X undertook when the loan was sold, they were told explicitly, by the broker, that would not get the loan unless they agreed to take out an insurance policy (Payment Protection Insurance policy – value £1,465.00 with this sum added to the original loan). This insurance is sold to protect customers in the event that they lose their job or are made redundant or were unable to work through illness.

At the time of the loan application Mr & Mrs X were both medically retired and were receiving state benefits.

Whilst Mr & Mrs X explained that they had no need for the insurance cover given their employment status, the advisor insisted the insurance policy formed a mandatory part of the loan and therefore if it wasn't taken at the time they would not be successful in getting the loan they were looking for.

This assertion was in fact misleading/untrue as the insurance was never a mandatory part of the loan. Indeed the insurance was worthless addition to the loan given Mr & Mrs Xs' circumstances, as they would never be able to make a successful claim under the policy. It is more likely that the broker was only interested in receiving his generous commission for the sale of the insurance was often amounts to 50% or the original premium (£1,465.00).

Why could a loan be written off in these circumstances?

All finance agreements of this kind are regulated by the Consumer Credit Act 1974 which specifies how lenders or brokers are required to act when dealing with consumers. Within the Act are certain penalties the Courts can impose if the Rules are not adhered to.

In the example mentioned above it is possible that we can force the lender to write off the loan because the client was induced into the loan/contract by virtue of a lie/misrepresentation.