Consumer credit and Consumer Protection

Question 1

what was the prouder committee?

Answer 1

it was tasked with the job to examine the consumer protection landscape in the UK, what is the state of the law and what can be done in terms of reforms.
they said that there was not enough. they had 2 recommendations

1. for the government to introduce the leading and securities act.
2. and to introduce the consumer sale and loan act.

instead they focused on the latter and made the consumer credit act 1974.

Question 2

what is the main statute that we will be looking at?

Answer 2

The Consumer credit act 1974.

the financial services and markets act 2000

Question 3

what case illustrates why we should have the consumer credit act 1974?

Answer 3

wnodchester Lease Management Services Ltd v Swain & Co
court held that the consumer credit act was made to protect individuals when contracting with large financial organisations they are at a disadvantage through contract terms.

Question 4

what is credit? where does it show this?

Answer 4

S9 (1) of the consumer credit act 1974

Question 5

which case showed gym membership is not credit?

Answer 5

OFT v Ashbourne Management Services LTD

in a scenario question, we need to understand what credit is, so whether something has been bought using credit.

Question 6

what are the two types of credit?

Answer 6

these are Lender credit where transactions involve a loan of money where the loan is not associated with a particular purchase. so like loans from a bank and finance houses. (you can use this to purchase anything)

Vendor Credit is where credit is supplied by the seller to buyer or hirer to finance a transaction, you must use this for a particular transaction.

Question 7

what are the different types of vendor credit?

Answer 7

Higher purchase, conditional sale, and credit sale,

Question 8

what is a higher purchase?

Answer 8

agreement other than a condition sale under which goods are hired in return for periodical payments by the person to whom they are hired to.
property does not transfer automatically eventually you might be able to own it.

this is vendor credit

Question 9

what is a conditional sale?

Answer 9

upon final sale after many different payments the property passes to the buyer.

this is vendor credit

Question 10

what is credit sale agreement?

Answer 10

property passes to he buyer immediately. even though payments are made at different times, the property passes at the first payment even though they are still paying in instalments.

this is vendor credit.

Question 11

what is check trading?

Answer 11

the Crowder report explains what it is.
a check issued by the check trader and purchased by the consumer which entitles him to buy goods of a wide variety of shops. the consumer pays a nominal sum weekly.

Question 12

are credit cards a form of credit?

Answer 12

yes they are

there is a contract between the retailer and credit card company
the credit card company and the credit holder and retailer and card holder.

Question 13

what is a consumer credit agreement? where can we find the definition?

Answer 13

consumer credit act 1974 S8

Question 14

what is a running account and fixed sum credit? where is this seen?

Answer 14

this is seen in s 10 of the consumer credit act 1974

no need to inform the person what you will use the money for

Question 15

what is restricted-use agreement and unrestricted use credit?

Answer 15

seen in s11(1) of the consumer credit act 1974

can only use the money for a certain purpose.

Question 16

what is a consumer hire agreement? where do we d=find this and how is it different to that of the hire purchase agreement.

Answer 16

s15 of the act.

Question 17

who is protected under the act? where do we find the answer?

Answer 17

seen in s189 of the act

basically any individual.

Question 18

where can we find the protections?

Answer 18

S19 FSMA
S55B FSMA.

NO person can given credit unless they are an authorised person or an exempt person

Question 19

What are regulated activities?

Answer 19

FSMA S22-
regulated if an activity which is an activity of a specified kind which is carried on by way of business and relates to an investment of a specified kind.

these are a type of contract.

Question 20

which case shows that a financial agreement is a contract?

Answer 20

Brophy v HSBC Bank

by signing the application form and returning it to HSBC he offered to be bound by the form.

Question 21

what happens if not enough information is given to the debtor?

Answer 21

if this information is not given then this may be unfair for the debtor. s55(2) of the act demonstrates that the agreement will only then be enforceable through an order of the court.
this can be done before a contract has been concluded and so a request can be made to ask what has been agreed so far.

(might appear in a problem question)

Question 22

what must the creditor provide for the debtor?

Answer 22

adequate information to place the debtor in a position to assess whether the agreement is good for them.

must give the debtor an opportunity to ask questions about the agreement.

details about how to ask the creditor further information and explanation

therefore more info is needed.

Question 23

which section shows that both the debtor and the creditor need to sign the agreement?

which one shows that there is a duty to supply a copy of the agreement?

Answer 23

consumer credit agreement act 1974

s61- sign

S61-A- TO give a copy.

Question 24

which section shows that a debtor can withdraw from the agreement?

Answer 24

s57- can apply before they have signed the agreement.

S66A allows the debtor to come out of the agreement for no reason and must give this notice before 14 days of when the agreement was signed.

you must give back any money which was given to you.

Question 25

what happens during the course of the agreement?

Answer 25

There is a right to information. seen in part 5 s 75

77, 77A, 77B, 78, 78A, 79, 97, 97A.

Question 26

what is the effect of non compliance of S77?

Answer 26

S77 (4) (a) he may not enforce the agreement.

Question 27

which statute do we refer to which tells us about the variation of insurance?

Answer 27

this is seen in s78 of the consumer credit act 1974

must contain the name and address of the debtor. seen in Carey v HSBC Bank.

Question 28

which section do we look to early payment?

Answer 28

S97(1) Consumer Credit Act 1974

early payment is allowed under s 97 (1)

also S97 A.

Question 29

Where do we find connected lender liability?

Answer 29

S75 CCA 1974

debtor can bring a claim to the creditor and to the supplier for the breach. so there are 2 different venues for redress.

Question 30

what was the case for connected lender liability?

what happened here?

Answer 30

Darken v DSG

He paid £50 deposit, signed a credit agreement given to him by the sales assistant the sales assistant has signed it.
this was a credit sale. property passed to him on the first payment.

this was a debtor creditor supplier agreement.

he found there was no internal modem and wanted to cancel the contract. is he allowed to cancel the contract? yes within 14 day period.

they said his credit would be affected

related back to s75(1) of the act.

Question 31

does this apply to foreign transactions? based on S75?

Answer 31

yes you have this right.

cruder report- law makers would have envisioned this to happen.

creditors would be in the best position to give back the money from the supplier.

OFT v Loyds TSB Bank

Question 32

which sections in the act allow early payment from the debtor?

which section allows the termination of something from the creditor?

which section shows that you cannot contract out of these requirements?

Answer 32

this is seen in s94 of the act

seen in s98(1)

seen in s173 of the act.

Question 33

which case outlines where a debtor has breached a hire purchase agreement? where the debtor has paid more than one third through s90 of the act

Answer 33

kassam v Chartered Trust.

the contract shall not be terminated

Question 34

what is an enforcement order from the court?

which case backs this up?

Answer 34

that an agreement may be properly executed.

rankin v American Express Services Europe Ltd
it is to help people the interests of consumers and debtors who do not understand the technicalities of transactions.

Question 35

what is a time order?

Answer 35

payment of the debtor or hirer of any sum owed. seen in s 129 of the act.

Question 36

what is a transfer order in relation to a hire purchase or a conditional sale agreement? s 133

Answer 36

can make a transfer order to transfer the e.g 3 microphones out of 14 that have already been paid for. the remaining goes back to the creditor. might be difficult for a car. what would the debtor do? they would need the whole car. so only where applicable

Question 37

unfair relationships

case for this?

Answer 37

s140A

Harrison v Black Horse- relationship was not unfair. the fact that they disclosed something.

Question 38

which case showed that harrison V black was wrongly decided?

Answer 38

Plevin v Paragon Personal Finance
non disclosure of commissions payable out of the PPI insurance made her relationship with Paragon unfair.
was this done or not done by Paragon? even there was no duty owed, the fairness or unfairness may be expected of the conduct through the creditor and so ICOBS rules demonstrated what the standard was. ICOBS impose rules on insurers. S140 does nt impose an obligation. must be determined whether the relationship is unfair.
was held the relationship was unfair in S140 FOR anything done or not done by the creditor.

Question 39

case which showed a breach of s78 which did not give rise to an unfair relationship within the meaning of s 140

Answer 39

Carey v HSBC

Question 40

parties had been family friends had made borrows of 56 thousand pounds

Answer 40

Patel v Partel- paid more than what was borrowed. there were different insurance rates calmed. eventually it was 6 million which was needed paid. However, they did not tell them how much money needs to be paid and did not give them regular updates on transactions. was unfair under s140 of the act. was then reduced to 2 hundred thousand pounds.