Further hearing in Scottish repossession test cases on pre-action requirements

The court has appointed parties be heard further in the Scottish repossession test cases of RBS plc v. McConnell and NRAM plc v. Millar next week. Sheriff AF Deutsch has given parties an opportunity to be heard on a new point in relation to the Interpretation Act 1978.

Since the Scottish Government's Home Owner and Debtor Protection (Scotland) Act 2010, a lender must now give certain information to a debtor upon entering into 'default' before a repossession action is raised in court. This is known as the 'pre-action requirement' and failure to comply with this requirement can render the court action incompetent.

Many lenders and law firms in Scotland have interpreted 'default' to mean merely a failure to pay sums due under a mortgage, whereas Govan Law Centre has argued that 'default' is a technical term which means the failure to comply with a calling-up notice.

The cases of RBS plc v. McConnell and NRAM plc v. Millar look set to provide clarity on this point. Many repossession actions across Scotland have been continued or sisted (stayed) pending the court's judgment in these cases.

UK consumers should use statutory rights to reduce interest on credit agreements

Financially vulnerable consumers across the UK taken to court for defaulting on high interest credit - including 'second charge' mortgages - are unaware of powerful statutory rights which can help, according to Glasgow's Govan Law Centre. 

Section 136 of the Consumer Credit Act 1974 (CCA) permits the court to amend 'any agreement or security' in making a time order under section 129 of the Act as it considers just, having regard to the means of the debtor.  That includes the right to ask the court to reduce the rate of interest within a consumer credit agreement.

Most consumers are completely unaware of these statutory rights, which are seldom used, which have the scope to help make unmanageable, spiralling debts, manageable and affordable. Govan Law Centre's Mike Dailly said:

"The reason we believe section 136 of the Consumer Credit Act is so important right now is because of the disparity between interest rates in inter-bank lending and the wholesale market, and what UK consumers are being charged in many credit agreements. The Bank of England's base interest rate is 0.5% and the standard variable rates of most UK banks are around 2.5% at present. Yet many consumers will have second mortgages (regulated under the CCA) with interest running at 11 or 12%, or unsecured loan and credit agreements running at 18 to 30% APR".

"To give a typical example, a client facing repossession through default of a second charge mortgage borrowed £96k at 11.2% APR, resulting in monthly interest payments of £873. The client is eligble for some DWP help with housing costs while in receipt of benefits, but there is a major shortfall. If her rate of interest was 2.5% the differential in monthly payments would be a whopping £674 per month. Accordingly, consumers in financial difficulty should be asking the court to reduce or freeze the rate of interest on credit agreements to a fairer level so they can meet their financial obligations".

Consumers can make an application under sections 129 and 136 on the 'time to pay' form that comes with court papers, or as part of any legal defence to proceedings raised by a creditor. Always obtain independent legal advice from a community law centre or other local advice agency or firm of solicitors.

Your money, your rights: new STV Glasgow blog from GLC

GLC has launched a new consumer rights information blog on STV Glasgow to help people in Glasgow become better empowered as consumers, avoid being financially or legally scammed, and save or gain money. The regular consumer rights blog is written by GLC's Principal Solicitor, Mike Dailly, and can be found at STV Glasgow's online site here. Entries will also be posted at one single location on this site for ease of reference, along with some occasional additional extras and tips.

Free know-how on Scottish repossession competency arguments disseminated by GLC

In response to requests, having regard to our public legal education ethos, and considering the wider potential public interest and the need for advisers to consider the potential need to protect the interests of their own clients, Govan Law Centre (GLC) is making its competency arguments in the test cases of NRAM v. Millar and RBS plc v. McConnell publicly available for free (see below).

The decision of Sheriff Deutsch in the said test cases is expected sometime in February 2012, and advisers will need to consider what steps, if any, they may wish to take to safeguard the interests of their own clients pending the outcome of that judgment, and any implications and developments that may arise following thereon.

GLC's arguments are presented in the format of an illustrative set of Defences (known as 'Answers' as repossession procedure in Scotland is now by way of summary application procedure).  Please note the disclaimer, namely that this document contains information only and does not constitute legal advice; you should obtain your own independent qualified legal advice from a Scots law practitioner and must not rely upon this document which is illustrative only.

View as a WEBPAGE or download as a WORD DOCUMENT

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Govanhill citizens' empowerment project

STV Glasgow reports on a groundbreaking project which will help tenants and home owners tackle issues around property factoring and landlord disputes with the help of a DIY kit is to be launched in Govanhill. The project is funded by the Esmée Fairbairn Foundation.

The Public Legal Education Project will be launched in February by the Govan Law Centre as a pilot for one year and will train local people on how they can protect their rights with the help of letter templates, application forms and housing advice. The full story can be read online here.