Carey v HSBC Bank plc  EWHC 3417 (QB)
February 21 2011
Under Sections 77 to 79 of the CCA, lenders must supply a “true copy” of the credit or loan agreement to the borrowers when requested.
The judgment clarified what constituted a true copy and held that “a creditor can satisfy its duty ……. by providing a reconstituted version of the executed agreement which may be from sources other than the actual signed agreement itself……. The fact that the creditor no longer has the original executed agreement is not therefore, itself a bar to compliance”.
The copy of the agreement must contain the name and address of the borrower as it was at the time it was signed. The creditor can supply the name and address from whatever source it has for those details. It does not have to take them from the executed agreement itself. If the agreement had been subsequently varied by the lender then the lender has to supply a copy of the original agreement as well as the varied terms.
The judgment also stated that if a creditor could not supply a copy of the agreement at all, then this prevents them from using the courts to pursue the debt until they can provide a copy of the agreement, and failure to provide a copy did not mean that there was an unfair relationship between the creditor and the debtor under Section 140A of the CCA.
The OFT subsequently issued guidance on the obligations of creditors under Sections 77 and 78 of the CCA in October 2010. It was concerned that debtors are being misled into thinking that the Sections could be used to get their debts written off. It was also concerned that some creditors appear not to understand the nature and extent of their obligations under the Sections.
The guidance is drafted in two parts. The first part is for the industry and consumer representatives. It contains technical guidance which clarifies the latest OFT and court understanding of the Sections. It outlines the OFT’s view of the standards expected of the industry when dealing with requests for information from debtors and hirers under the Sections. It also outlines the business practices, associated with the enforcement of agreements when the Sections have not been complied with, which the OFT would consider unfair under section 25 of the CCA (that is, the “fitness test”).
The second part of the guidance consists of a plain English version for consumers, and is designed to make them aware that they may be at risk if they try to use the Sections to avoid paying legitimately owed debts.
A draft copy of the OFT’s guidance was referred to in the Carey case.