Consumer Credit Act Claims
In 2008, the Consumer Credit Act 2006 amended previous legislation and made it possible for consumers to challenge their credit agreements with lenders on the basis of unfairness.
The Office of Fair Trading (OFT) issued guidance in relation to this new legislation which detailed how they expected it to be interpreted in light of other legislation, namely the Enterprise Act.
The guidance does not specify what constitutes an unfair relationship, but rather provides information relating to how the OFT thinks that a court would interpret the unfair relationship test in specified circumstances. This is to allow courts a maximum amount of flexibility to make decisions about unfairness.
Unfair RelationshipsIf a borrower alleges that a credit agreement is unfair, it is the lender's obligation to disprove this claim. Not all cases are similar or the same as one another, and just because one person’s claim has been found to be unfair does not necessarily mean that another person, who signed exactly the same agreement, will have an equal or even a valid claim against a creditor.
Unfair AgreementsBroadly speaking, a credit agreement is unfair if the conditions of the agreement (or a related agreement) are unfair, or the lender has exercised or enforced its rights under the agreement (or an agreement related thereto, e.g. Payment Protection Insurance) in a way which is unfair to the debtor, or if they have acted or omitted to act in a way that is unfair, whether either before or after the agreement was made with the debtor. This last category is the broadest category and may include advertising, making demands for payment not within the terms of the contract and failing to provide clear information.
These types of unfair practices fall into two categories; those that are clauses in the terms and conditions of the agreement and which are, as such, inherently unfair, and the business practices of lenders that are by their nature, and the way in which they treat borrowers, unfair. In some cases, a combination of unfair contract terms and unfair business practices combine to make the overall relationship unfair.