Court ruling 'helpful for credit laws'

09/10/2009

Law firm Eversheds has welcomed a Commercial Court decision, which it said would help in the ongoing crackdown on misleading claims from debt management companies.

The court ruled against Phillip McGuffick, a debtor who had claimed that a £17,000 loan from his bank, RBS, was legally unenforceable under the Consumer Credit Act.

However, the court found that debtors involved in legal proceedings of this nature are nevertheless still liable for monies owed to creditors.

The Ministry of Justice has recently cancelled at least 100 claims management firms for publishing misleading promotional material suggesting that legal loopholes in the Act could be used to wipe out an individual's debts.

In particular, unrealistic claims of the debtor's chances of success are often found to be used in the adverts.

Commenting on the RBS case, Eversheds suggested that the decision would be valuable in clarifying the law.

"This judgment will be invaluable to all lenders who are currently dealing with challenges to the enforceability of credit agreements," a statement from the firm added.

Tags; Housing Debt and Bills, Credit Card Lifestyle,

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