Test Cases

A consumer credit act 1974 (CCA) agreement must state the amount of credit the amounts of credit, the rate of interest, and the number, amount and frequency of repayments.

If not, it is potentially unenforceable

In 1999 Mrs Wilson borrowed £5,000 and gave her BMW as security. A documentation fee of £250.00 was added to the loan. The agreement stated she had borrowed £5,250.

Mrs Wilson failed to make re-payments .the lender claimed the balance and declared an intention to sell the BMW .
Mrs Wilson applied to the court for a declaration that the agreement was unenforceable because it was wrongly stated that the a loan as £5,250 and not £5,000.

In November 2000 the Court of appeal reluctantly decide that the CCA made the agreement unenforceable.
Mrs Wilson was entitled to recover her BMW and not repay the loan.

BAD NEWS FOR THE LENDER

In May 2001,the court of appeal decided this result was unjust as it gave Mrs Wilson a windfall even though she had not been misled or prejudiced by the flawed agreement.  The court felt the provisions of the CCA, which made the agreement unenforceable, were incompatible with the Human Rights ACT 1998.
That is the lenders right to enjoyment of its property-money.

GOOD NEWS FOR THE LENDERS

This decision was appealed to the House of Lords. In 2003 The House of Lords overruled the Court Of Appeal. It looked at the social policy reasons why the CCA made certain credit agreements unenforceable. It rejected the idea that lenders should be able to rely on the Human Rights Act when they couldn't rely on the CCA.

FAILURE TO COMPLY WITH THE CCA REGULATIONS CAN BE FATAL GREAT NEWS FOR THE CONSUMER

Wilson & others v secretary of state for Trade & Industry (Appellant).

Mrs Wilson pawned her car to First County Trust for a loan of £5,000.The pawnbroker charged an agreed document fee of £250.00, which could be added to the loan.  Mrs Wilson signed a regulated consumer credit agreement, which recorded the loan amount as £5250.00.

On appeal, the Claimant argued that the agreement was unenforceable under the Consumer Credit Act because the £250.00 document fee should have been included as a charge for credit rather than adding to the amount of credit. This argument was upheld in the Claimants favour.

The House of Lords upheld the contention that the agreement was unenforceable, reversing a decision of the court of Appeal relating to the Human Rights Act.  Under section 65 of the Consumer Credit Act 1974 only a court could enforce the agreement and section 127(3) of the Act barred the courts from doing so in this case.

These cases set a legal precedent allowing other breaches of your credit agreements to be progressed through the courts as potentially as unenforceable agreements.