Clarity needed on the status of true copies in Scotland

25 January 2010

Last year saw lenders battling in the English courts against a significant volume of legal challenges to the enforceability of Consumer Credit Act-regulated loans.

A Scottish Act of Sederunt in November 2009 under Sheriff Court Rules contained an attempt to deal with one of the common bases for challenge - the inability to provide a copy of the regulated agreement in Scotland.

This became law on November 30 but last-minute representations being drafted to remove the requirement for a copy of the regulated agreement to be attached to every court action.

The Sheriff Court Rules Council then created a sub-committee to discuss the matter and come up with a way forward.

In early January it mooted as a possible solution the inclusion of a provision requiring a true copy of a regulated agreement to be lodged in the court process when a request by a debtor for time to pay is opposed by a lender.

The lender would be required to do this within seven days of the date fixed for the hearing on the application and at the same time intimate a copy to the debtor.

While this would be a significant victory for lenders there does not appear to be any clarity on precisely what a true copy means.

Judge Waksman issued a lender-friendly judgement - essentially a copy needs to be honest and accurate

Attentive readers will be familiar with the judgement from the High Court of Justice in Manchester just before Christmas in the case of Carey versus HSBC.

In that case Judge Waksman issued a lender-friendly judgement on many levels.

In particular, and after some fairly technical analysis, he stated that “a creditor can satisfy his duty under Section 78 of the 1983 consumer credit regulations by providing a reconstituted version of the executed agreement which may be from sources other than the actual signed agreement itself”.

In other words, a lender may reconstitute a copy from sources other than the original.

For example, it can use its separate records of the details of the debtor, the type of card provided and what terms and conditions would have applied at the time the debtor signed the agreement.

Essentially, in the words of one of the instructed counsel, all that is needed is for a copy to be honest and accurate.

This judgement was positive for lenders in England and although not binding in Scotland it may be helpful in live cases. The council is now seeking views on a proposed solution.

It would be beneficial to lenders if the council can be convinced, in the context of the legal challenges faced in England, to grab this opportunity with both hands.

It should unambiguously legislate on what will be required in Scotland and define what a true copy means in this context.

ROB ABERDEIN
LENDER SERVICES PARTNER
ABERDEIN CONSIDINE & COMPANY

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