Twelve legal test cases currently in progress at the High Court in Manchester may challenge the right of credit card companies, store card companies, and bank lenders to enforce their debt, if they cannot produce the original documentation relating to the loan agreement.Â
Under the Consumer Credit Act, credit card loan agreements must contain three key pieces of information:
- The amount or limit of credit agreed
- The rate of interest to be charged
- Details covering how the debt is to be repaidÂ
In addition, the original document can be ruled as invalid even if these details were included, if they have now been obscured because the document is illegible.Â
The test cases follow a case in October this year where a debt collection firm failed to enforce its claim on a debt of £6,585 due to an illegible original. The case, which related to a debt on an MBNA credit card, was thrown out, not because the original data had not been correctly logged, but because it was no longer visible on the old and faded document.Â
Where documentation is illegible, it fails to fulfil its function as a record of the terms of the agreement, and the courts are unable to grant an enforcement order to recover the debt.Â
Lenders must also provide documentation to prove that the terms of the agreement were communicated to the borrower at the time, although many lenders have difficulty in doing so due to their own disorganised filing and administrative systems.
