Over the last 12 months there has been a significant increase in the amount of people who find themselves in debt. This is due to a number of reasons and matters have not improved with the onset of recession here in the UK. However, in times of doom and gloom there are always companies who re-focus their attentions to try and make money from this type of market environment.

One of the late breeds of financial services gathering momentum is that provided by companies who will look at your existing credit or loan agreements and see if they are valid or invalid. The market as a whole is called the UK unenforceable credit agreements niche and is pretty simple in concept.

Firstly, back in 1974 the UK Government, through its financial regulatory body came up with a set of conditions under which credit card and loan companies had to adhere to in terms of their practices. This was all covered by the Consumer Credit Act 1974. As part of being allowed to trade under this act the lenders had to abide by a very detailed and specific set of criteria. Simple enough you might think!

However, over recent years it’s come to light that a large number of credit card and loan holders were not being taken to court because of non-payment of their loans. In fact some of them were also managing to get their loans completed wiped clean from the slate, meaning they were not paid, or at least only a fraction of the outstanding was payable. Loan types that are exposed to this are; secured loans, unsecured loans, hire purchase, credit cards, store cards.

And in the last year more and more specialist UCA companies are now seeking out credit card or loan applicants who may have an agreement that does not comply with the 1974 CCA and as such is unenforceable.

Here is a list of the primary T&Cs which companies are complying to:

* The lender no longer holds a copy of the credit/loan agreement.
* The exact amount of credit (or credit limit) hasn’t been detailed on the agreement.
* The interest rate has been incorrectly calculated.
* The credit limit has been increased on a credit card without being formally requested.
* The standard charges are not considered to be fair.
* The sale of an adverse credit product where the applicant has a clean credit history.
* A deposit has been paid and it isn’t outlined in the agreement
* No rate of APR is displayed, although some secured loans are variable rate.
* The agreement does not mention a ‘cooling off’ period.
* The agreement has not been signed.
* If the loan is secured, this must be detailed on the agreement.
* A person has been advised that they can only get a loan if they take out Payment Protection Insurance (PPI).

As you can see the credit card and loan companies must follow a straightfoward set of criteria and there is no excuse for them being so slack in ensuring they complied with the 1974 CCA. However, it turns out that there could be potentially 10,000′s of invalid credit agreements, which could in turn cost the lenders millions in lost revenue.

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