Consumer Credit Counseling Service DefinitionDefinition of the Consumer Credit Advice Centre
The High Court examines the transfer of consumer credit contracts
Mr Justice Hamblen (sitting at the Supreme Court and on appeal) rendered a judgement in Patricia Jones v Link Financial Limited EWHC 2402 on 22 August 2012. That was an important subject for purchasers (and sellers) of consumer credit agreements: whether the assignor of a claim was a "creditor" within the meaning of the Consumer Credit Act 1974 (the "CCA 1974").
The High Court, in a reasonable and practical ruling, ruled that an assignor under the 1974 CCA is a "creditor" and therefore has the right to assert the arrangement against the borrower. Ms Jones concluded a fixed-rate credit facility with GE Money Consumer Lending Limited ("GE Money") on 1 December 2006 (the "Agreement").
Following initial refunds under the arrangement, Ms Jones was in delay and a reminder was sent on 16 January 2009. Ms Jones did not follow the standard notification and the contract was cancelled by GE Money. As permitted under the Contract, GE Money transferred the Contract to Linkoff Financial Limited ("Link") on 15 June 2009.
The complaint was based on the acceptance that (a) GE Money had fulfilled its CCA 1974 obligation to service claims and give formal notice of defaults and (b) GE Money was authorised (subject to assignment) to initiate legal action against Ms Jones for the amount due under the Agreement.
In Section 189(1) of the CCA 1974, the definition of'creditor' given in Section 189(1) of the CCA 1974 reads as follows:'The individual who grants credit under a consumer credit contract or the individual to whom his transfer of title and obligations under the contract has been effected by delegation or by virtue of statute and in respect of a future consumer credit contract, shall include the potential creditor'.
CCA 1974 Section 189(1) "clearly provides that an assignor may become a creditor"; the line of reasoning presented in the Encyclopedia of Consumer Credit Law, now published by Professor Lomnicka, was right and that "the "obligations" mentioned in Section 189...are those legal obligations under CCA 1974 which the assignor must fulfil in order to assert his transferred interests.
Those obligations are "past by assignment" in the meaning that the assignor is required to perform by virtue of the transfer; it was not necessary to supplement or amend the wording of Section 189(1) of the CCA 1974 in order to arrive at that finding. As a consequence, a transferee of a claim due under a consumer credit contract was the'creditor' within the meaning of the contract.
Since Link was the believer, it was therefore not necessary to rule on the first question posed in the complaint. Not surprisingly, Mr Justice Hamblen rejected the complaint and concluded that a judicial assignor of a due claim under a settled consumer credit arrangement is the lender within the meaning of CCA 1974 Section 189 (1).
As Mr Justice Hamblen quite correctly remarked, coming to any other ruling would have led to an "absurd result" in which neither the transferor nor the transferee could assert the claim. This cannot have been the intentional effect of the CCA in 1974. Therefore, this welcome ruling affirms that, under the 1974 CCA, the tasks of postal transfer and the right to an agent are transferred under a transfer of title.
However, if the transfer is justified, the initial holder remains the "creditor" and is the individual who is obliged to carry out all the functions assigned to the holder under the CCA 1974. Since the definition of "creditor" is similar to the definition of "owner", it must also be concluded that the same point applies to the transfer of a consumer lease (i.e. the transferee under a transfer is the "owner" within the meaning of the CCA 1974).