MIp16-17_1209:MI 12 Jan 24/11/2009 16:30 Page 20
16 | Claims
Unenforceable
claims
Beware ‘get out of jail free’ cards, says Eddie
Goldsmith, senior partner at Goldsmith Williams
here is no doubt that, over the Claims companies Recommendations
T
course of the past decade, we I’m sure you know the type of claims companies So, should you be following the
have become a nation of debt I’m referring to, because some of them have recommendations of Robert Sinclair and say
junkies.By the end of July this been aggressively marketing their services to no to claims management firms or, if there is a
year, total UK personal debt financial advisers. Unfortunately, a number of possibility that your clients could have their
stood at £1,457 billion. On a these claims firms have been basing their debts declared unenforceable, should you be
more meaningful scale, this marketing campaigns on spurious claims, saying referring them to a claims firm?
means that the average household debt, based that 80% of loan agreement are unenforceable, To answer this question, it’s worth
on the number of households who have some that they can get credit card agreements written differentiating between various forms of
form of unsecured loan, is £21,457 and if you off within 6 weeks and even that they guarantee financial claims. Recently, claims for mis-sold
add mortgages into the mix, the number a positive outcome! payment protection insurance have also hit the
jumps to £58,280. Another way of looking at Earlier this year the Ministry of Justice, which headlines, with record-breaking fines being
these statistics is that the average owed by is responsible for regulating claims management levied against a number of leading financial
every UK adult is £30,188, which is 130% of companies, became so concerned with the organisations. The overwhelming majority of
average earnings. situation that it issued a formal warning telling claims for mis-sold PPI are being upheld by
firms not to make misleading claims. It also both the Financial Ombudsman and the
Debt announced that it had shut down 100 firms for Courts and, if you have a client who believes
Unfortunately, however, UK unemployment having misleading sales pitches. More recently, the they may have been mis-sold PPI cover, you
has risen to 2.47 million and most economists Ministry has told the Daily Mail newspaper that should encourage them to have their claim
are in agreement that it will probably top 3 out of 3,000 registered claims management firms, checked.
million before the recession comes to an end. roughly 750 had broken the law by either using Claims for unenforceable loan agreements,
Unemployment and debt are a toxic mix and 1 misleading statistics or failing to tell customers however, are a different story. Claims usually
person every 3.97 minutes is declared that they can pursue claims themselves. relate to the legality of credit contracts
bankrupt or insolvent and, if that is not bad In April, the Solicitors Regulatory Authority drawn-up before April 2007, which is when
enough, 1 person every 11.5 minutes has their also warned lawyers not to take on any cases the Consumer Credit Act 1974 was amended.
property repossessed. which may have been obtained as a consequence In a nutshell, if a credit agreement has not
It is little wonder, therefore, that when of misleading publicity. And Robert Sinclair, been properly drawn-up, then there is a
people find their finances under pressure due Director of the Association of Finance Brokers, possibility that it may be declared
to circumstances which are often beyond their told members at their annual dinner that “claims unenforceable. For example, if a signature is
control, they will grasp at any opportunity to management firms and their irresponsible missing, or if interest has been incorrectly
resolve their problems. Which is why there has advertising are a cancer in our industry”. He went calculated, then your client may have a valid
been a boom in the number of companies on to “urge everyone to stand up to companies claim. However, I emphasise the word ‘may’,
offering to get loan agreements declared that are preying on the vulnerable and charging because it is not necessarily a foregone
unenforceable. large upfront fees”. conclusion.
December 2009 Mortgage Introducer www.mortgageintroducer.com
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