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Jamie-Law, Solicitor
Category: Law
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Experience:  Solicitor
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Unfair Terms in Consumer Contract Regulations 1999 (because the contract was pre-October 2015) Reg 5(1) the contractual term causes significant imbalance in the parties rights and obligations - defo unfair to charge £20 Default charge for late payments especially when the DPA bundle did not include copy letters chasing late payments and there is no reference to these letters anywhere in the bundle. It is double unfair because the £20 is added to the balance and interest is charged on it.
Under the same regulation 5 there is a "significant imbalance" when this Default charge is applied which is to the detriment of the consumer and benefits the seller to an excessive degree.
Therefore, Regulation 8 provides that an unfair terms shall not be binding upon the consumer.Studio have also breached Unfair Terms in Consumer Regulations 1999 Reg 7
(1) seller shall ensure that any written term of a contract is expressed in plain language
(2) if there is any doubt about the meaning of a written term the interpretation which is most favourable to the consumer shall prevail. Likely to be unfair:terms that allow a trader to keep an unreasonable amount of money as compensation if the consumer doesn't keep to their side of the bargain (such as late payments I would suggest)this term will not be binding on the consumer even if the contract is otherwise valid.Studio also committed an offence under Consumer Protection from Unfair Trading Regulations 2008 through Misleading Ommissions which gives "protection against traders who miss out key information that you need to make an informed decision" of "hides material information in unclear...or untimely manner" I believe these excessive Default charges qualifyAs you rightly point out OFT suggests £12 as reasonable charge - I couldn't find anything specific to mail order credit - it was all about bank charges - but I believe the Consumer Protection (Payments Surcharges) Regulations 2012 protects against excessive "surcharge" which is just another name for Default charge wouldn't you agree?My question is this - Have Cabot International also breached these Regulations (they are also regulated by FCA) by taking enforcement action after they bought this Unfair Contract debt from Studio? The debt they bought is mostly made up of unfair charges amounting to £194.43. Can I make a separate complaint against them?The same can be said about Cabot's solicitors who are also FCA regulated. They admitted at the last hearing that neither they nor their client have any details/documents on this alleged debt. When I suggested that the plaintiff and solicitor may have committed a criminal offence by trying to enforce this debt through the courts if it turns out that the alleged debt is for unsolicited goods the solicitor asked for a 3 month adjournment so they could get the documents which were archived and had never been produced for Cabot when they bought the debt. At that time we had no details of Carmel's Studio account and because of the £343 sum involved we genuinely believed it was either a case of ID theft or for unsolicited goods because she had never ordered mail order goods to this value.I have already raised a complaint to the Ombudsman over Studio's failure/refusal to provide a copy of the Credit Agreement they made with my sister. Should we make similar complaints against Cabot and the Solicitor as outlined above and is this sufficient grounds to seek a general adjournment of this case until Ombudsman has delivered his decision?I will go back to the original question and rate it and once I get your response to this new question I will be sure to add a bonus for the kind and efficient way you have handled my questionsthanks
Are Studio also in trouble for allowing a £100 credit agreement be exceeded on Carmel's account - thanks in part to the extortionate Default and Service charges. How can they sell a credit agreement worth £100 to Cabot for £343?

Hello and thanks for asking for me.

Just to be clear, what is your question about this? Could you number them?

Customer: replied 1 year ago.
I have looked but there is no option to edit the question so I can't go back in and number them.As I said I think Studio have contravened a number of consumer laws but the enforcement action has been taken by Cabot International. What is their legal position considering they have bought an alleged debt of £343 from Studio without first establishing that the debt can be enforced?Without a signed credit agreement Studio could not impose any terms at all on Carmel including demanding minimum payments. And even if she did sign a credit agreement (still waiting to see a copy of this if there is indeed one) for all the reasons I listed before this debt is the result of an agreement with unfair terms which cannot be enforced including the excessive fees of £194.93 debited to Carmel's account. Without these fees her balance would have been £128.42 minus the price of goods which she wanted to return but Studio refused.Furthermore, I am pretty sure that Studio's credit license does not allow them to deliberately encourage Carmel to buy more goods even though she was over her credit limit of £100 and was persistently late in making payments. Thanks in part to the extortionate fees applied to her account the balance reached £110.52 following an order worth £18.98 dated 7th January 2012 and from that point on the balance was continuously over the limit of £100 set by Studio. Despite this Studio fulfilled 4 more orders which took the balance up to £216.41 as at 16.3.2012. With further Default fees and service charges totalling £54.21 the balance had reached £270.62 by 10th May 2012 so that when she made a large payment of £45 trying to catch up on 22nd May it was gobbled up by these unfair charges.So if Studio would not have been able to legally recover these fees is it the case that these fees cannot be recovered by Cabot either?It would be great if I could persuade the Court that Cabot should have checked all this for themselves before buying what is largely a bogus debt from Studio. I am hoping that the Judge will tell Cabot that they have been misled by Studio over this debt and they should seek recourse from them instead of taking enforcement action against me.We haven't been treated by the Court very fairly so far and I would like to know Cabot's legal position under Consumer Credit Law before we attend the next hearing.Thank you so much for your incredible patience.cheers

Well the fact it cant be enforced does not make the actions any less legal. It either an executable agreement or its not.

They can reconstruct the agreement, the law and the case of RBS v McGuffik allows this.

They are entitled to charge interest and late fees of £12 each.

The debt can only be assigned if the terms allow it and the notice of assignment was sent.

Can I clarify anything for you about this today please?

Customer: replied 1 year ago.
Well, without the original signed agreement how can it be established whether "service charge" and "default sum" (the exact wording on the Transaction List they sent her) were prescribed terms of the agreement?As to being able to reconstruct the agreement Studio would have to be able to show that they used computerised data to do this if the archive search does not produce the original. If this data exists it was not included in the DPA bundle they give her
Furthermore, if a Late Payment Fee (the Default Sum) is to be applied then Studio should have sent her letters and statements showing these additional debits to her account. No such letters or statements were in the DPA bundle.As to this debt being assigned without the agreement we don't know if the terms allow it. And no Notice of Assignment was sent to Carmel according to the bundle. In fact there is a very strange document in the bundle entitled "Account Arrears Activity" The document is incomplete because the first line is17.5.2013 : Action "Cancelled" but the action itself must have been on the proceeding page. I assume this page showed the Arrears Activity from October 2011 but request for missing page has been ignored by Studio.
Also on 17.5.2013 : Action "Ext Agency" meaning debt collector but again there are no letters in the bundle warning Carmel that this action is being taken.There are then 10 transactions all on the same date 18.2.2014 where decision to pass it to external debt collector was then reversed. The 10th transaction is EXT but there is no correspondence on this in the bundle.The next transaction is 13.8.2015 "SET" - this is the date when it was assigned to Cabot who obviously bought the debt in good faith.When we knew that other side were going to ask Studio for credit agreement etc, Carmel made her own DPA so that we would have a true record of the data stored by Studio and documents could not then be manufactured and produced in court.So my question is the same, if the credit agreement does not comply with Consumer Credit law and cannot be enforced by Studio then surely Cabot cannot seek to enforce it in Court? Even though they bought this grossly inflated debt in good faith it is surely a case of buyer beware and Cabot should now seek restitution from Studio rather than pursue Carmel in Court.I am now working on putting a Defence together but want to seek an adjournment so that she can ask the Ombudsman to rule on whether this credit agreement was fair or whether it was "improperly executed" and/or is an "Extortionate Credit Bargain" (Wilson v First County Trust 2003). The DPA bundle shows that Studio made no attempt to resolve this but just kept adding "service charge" and "Default sums" each month. In the absence of any real "dispute" Carmel was unaware of these charges mounting up and lost the opportunity to complain to the Ombudsman over their conduct. She would like to exercise this right now because if Ombudsman agrees with Carmel then Studio will have to reimburse Cabot rather than continue with these proceedings. We are going to make this complaint to Ombudsman tomorrow then seek an adjournment.So I need to know what Cabot's position is and whether they can enforce an agreement which Studio did not attempt to enforce themselves before selling the debt on, presumably because there is no signed agreement or it is missing the terms re intrest and late payment charges.Sorry for banging on - I really do owe you a bonus.thanks

They can only enforce the agreement if it says it can be assigned and you had a notice of assignment.

That is the only way it can be enforced. However just because there may be a breach with Studio does not make the card issuer automatically liable in terms of enforcement.

You would need to file a defence also under S.75 of the CCA if Studio breached it then they are liable too

Does that clarify?

Customer: replied 1 year ago.
I don't understand what you mean "does not make the card issuer automatically liable in terms of enforcement" who are you referring to?
I understand about the assignmentIs there any duty on Cabot to establish that the debt they bought from Studio was a genuine credit debt that can be enforced?If there is no legal basis to the assignment of this debt surely that is a matter for Cabot to take up with Studio since they must have bought the debt in good faith.I will look up S75 of the CCA as you suggest.thanks

No there is no duty on Cabot.

Yes Cabot can take it up with Studio

Does that clarify?

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Customer: replied 1 year ago.
sorry for delay - have been having trouble with my broadband. I have one last question but am going to post it as new one so I can rate this answer now. Thanks so much for your help.