Debt claims put on hold for test case
Thousands of consumers attempting to reclaim money from unenforceable loans through the courts will have to wait until a number of test cases are resolved in London.
An estimated 100,000 claims have been made against loan companies, banks and credit card providers after a change in the Consumer Credit Act (CCA) in 1997 allowed customers to challenge 'unfair' credit agreements and cancel the debt.
Claims companies all over the country have emerged to help customers get their debt written off but often charge a large upfront fee with no guarantee the debt will be unenforceable.
The Office of Fair Trading (OFT) has warned customers to be wary of these firms and now the courts are preparing to hear a few carefully selected test cases in London to decide how to proceed with the thousands of claims pending in courts across the country.
While the test cases make their way through the courts, all other cases will be put on hold.
Last year, the Ministry of Justice warned many claims companies are misleading consumers, suggesting as many as 80 per cent of loans are unenforceable.
The OFT has also said it will take enforcement action against licensed claims management businesses who engage in unfair business practices by deliberately misleading vulnerable consumers about the services they offer.
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