It is increasingly common for consumer finance agreements to be assigned to third parties following execution and the Court has given some useful clarification for creditors in this market.
In the matter of Patricia Jones v Link Financial Limited, the debtor appealed against a decision that Link Financial Limited (“Link”) was entitled to pursue an outstanding balance due from her.
The debtor entered into a regulated credit agreement with a third party finance company. The debtor defaulted with payments due under the agreement and the creditor served all the statutory notices ending in a demand for payment of the full outstanding balance. At this time, the creditor was then entitled to bring proceedings for this balance. The creditor then assigned the debt to Link and the debtor was notified of this assignment.
The Judge found that there had been a valid assignment pursuant to the Law of Property Act 1925 so that Link were entitled to pursue the debtor for the debt.
The debtor appealed this decision on that grounds that Link was not a creditor as defined in the Consumer Credit Act 1974 (“the Act”) as only rights, not duties, had passed by the assignment and that only a creditor as defined under the Act could enforce a regulated consumer credit agreement.
It was held that a legal assignee stood in the shoes of the assignor so that the enforcement of the assignor’s rights under the credit agreement was subject to the performance of duties laid down in the Act and the assignee’s rights were also subject to the Act. Accordingly, the duties stated in Section 189 of the Act had to be performed by the assignee to enforce the assigned rights. These duties were passed by the assignment as it was by reason of the assignment that the assignee became obliged to fulfil them. As a result, a legal assignee could be a creditor as defined by the Act and therefore entitled to enforce the assigned debt.
The second argument fell away due to the above as a even if this conclusion was incorrect, Section 141 of the Act did not preclude an assignee from bringing proceedings to enforce a regulated consumer credit agreement in the ordinary way under Section 135 of the Law of Property Act 1925 County Court jurisdiction or the Court’s general jurisdiction.
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