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ANOTHER VICTORY FOR CREDIT CARD CUSTOMERS!


MBNA LOSES CASE AGAINST BORROWER


A decision by a county court judge could mean thousands of borrowers being able to wipe out their debts.


Judge Jacqueline Smart at South Shields county court has decided that the MBNA credit card company cannot demand the repayment of a customer's credit card debt.


It tried to force Mrs Lynne Thorius to repay the £8,000 she owed on her card.


But the Judge decided there had been an unfair relationship between Mrs Thorius and MBNA because of the way she had been sold payment protection insurance.


'Massive ramifications'


Mrs Thorius's case was pursued on her behalf by a claims management firm who said:


“This will have massive ramifications for consumers up and down the country."

The Barrister handling the case said: “ This case is likely to affect many thousands of individuals within England and Wales ”


'Secret commission'


The credit card in question was branded with the logo of Sunderland football club and was sold to Mrs Thorius in the club's shop in 2002.


The PPI policy was strongly recommended by MBNA to her at the same time, to pay off her account if she fell ill or was made redundant.


But, critically, she had not been told that MBNA would be receiving regular commission payments from the insurance provider.


Judge Smart agreed with the argument of Mrs Thorius's barrister that this "secret" commission meant the credit card deal was unfair and therefore in breach of the Consumer Credit Act.


This point could potentially undermine many other agreements where PPI has been sold by the lender alongside a loan.


These include car finance deals, other personal loans and even mortgages.


"This practice is believed to be widespread and formed part of the Competition Commission's decision to prohibit the co-sale of PPI with credit in its report published on 29/1/09," her solicitors noted.


"This point is likely to affect many thousands of individuals within England and Wales," they added.


No original signed agreement documents provided


Besides the PPI issue, the main ground on which Judge Smart said Mrs Thorius's credit card debt was unrecoverable was because MBNA could not provide a copy of the original signed loan agreement, which is a strict requirement of the Consumer Credit Act 1974.


The Judge ordered the company either to repay Mrs Thorius's PPI premiums and interest, or the value of the commissions it had received which so far has been undisclosed.


The PPI premiums, which rose each month as the credit card debts increased, amounted to £2,500 over the time the card had been in use.


This ruling appears to open up a new and genuine line of attack for claims firms.


Leave to appeal rejected


MBNA applied for leave to appeal, which was rejected, but it may now apply directly to a higher court for permission to appeal.


Or it may be able to appeal if it can find the original loan documentation!