Hi there(posted 7386 days ago)I have come across a number of Welcome secured agreements over the last year or so that do not comply with the Consumer Credit Act formal requirements and are, as a result, totally unenforceable.
I will try to summarise in a nutshell, although it is a complicated bit of law.
All fixed-sum CCA agreements must contain a term stating the 'amount of credit'. The amount of credit must not contain any charges which are 'credit charges' under the Act and its regulations. If credit charges are included in the 'amount of credit', the figure is wrong and incorrectly stated.
In some Welcome secured agreements, there is no term using the words 'amount of credit' - instead the phrase used is 'total amount of loan'. This is probably allowed.
In these agreements the 'total amount of loan' includes 'acceptance fees' and 'MIG fees'. These are charges for credit.
Where, as above, these charges are incorrectly included in/aggregated into the 'amount of credit' or the 'total amount of loan', the amount is mistated and wrong.
This means that the agreement lacks what the Act calls a 'prescribed term', and the result is that the agreement is totally unenforceable under s127(3) CCA.
In these cases, there is a defence to any claim brought by the lender. If the lender doesn't take proceedings, a borrower can apply to court for a declaration of unenforceability (s142 CCA) (legal help is needed for this).
In both of these situations, where the agreement held to be enforceable, so is the security. The lender must release the security and remove any land registry entry.
I hope this makes some sense - it's technical stuff.
All Welcome unsecured agreements that I have seen are correctly drawn up and enforceable, except for a single one that I came across last week.
Also, I have recently seen a Welcome secured agreement dating from mid 2003 that is correctly drawn up and set out, and therefore enforceable, but I don't know if all local offices use the same standard documentation.
Look out for 'accepatnce' fees and 'MIG fees' that come above 'total amount of loan' in the box containing all the figures, and are added into it.
Any queries, please email me or post.
All the best
Guy