Yesterday a hearing took place in the County Court that many may overlook as being the norm, a debt purchaser lost its case and failed to recover any money. Indeed a very regular occurrence in our world.
However, while this was a County Court decision, it does have the potential to unlock doors for consumers. Why? well heres the thing.
In this case, we had a consumer who had an overdraft with their bank account. The bank had acted entirely unreasonably and had created a cycle of debt which the consumer couldnt escape from. The charges were in our view unfair (yes were aware of the UKSC ruling on bankcharges) however while bank charges can be challenged post OFT v Abbey, i had always been of the view that there was scope under the Consumer Credit Act 1974 to challenge assignees such as debt purchasers and to seek the return of those charges from them even though the debtor never paid the debt purchaser the charges in the first place.
Cue s140A Consumer Credit Act 1974. Overdrafts are clearly credit. They are clearly within the scope of s140A if the relationship has been made unfair as a result of any of the points in s140A.
The case yesterday brought before the Court the question as to whether the previous creditors conduct in creating that cycle of debt among other things was sufficient to cause an unfair relationship.
The Court concluded yes it was, and whats more the Creditor was ordered to repaid the monies to the Defendant with interest.
It seems a door has been opened, albeit ajar at present, but it seems there may well be scope to seek redress with bankcharges under the Consumer Credit Act as well as using the arguments deployed in Oliver Foster Burnell v Lloyds TSB bank plc.