This article focuses on the issue of repayments on store cards. It will explain how a recent legal decision impacts on the question of how store card debt can be recovered and the implications of this for people with store card debt. Read on if you have ever borrowed on a store card to find out if you actually need to repay the debt!
Store cards debtors: good for the money?
A recent legal decision created a precedent where store card lenders were not allowed to pursue debtors with store card debts in instances where the credit provided was not lent according to the rules and regulations that lenders are subject to including checking the financial status of the applicant and ensuring that relevant terms and conditions have been read and understood by the borrower. This decision particularly impacts people who are given unsolicited credit, such as a credit card or personal loan with an increased spending limit, which has not been requested. Please note that a reputable lender such as the payday loan company like the Wonga brand would never offer an unsolicited payday or personal loan as these are loans that must be applied for with a stringent acceptance process.
This is based on the argument that the unsolicited credit was not explicitly agreed to and therefore the borrower cannot reasonably be bound by the terms and conditions of the store card. Some credit providers are also specifically impacted, for example those who hold a store card issued by M & S. This is because M&S operated a policy where store cards were automatically transformed into credit cards on a complimentary basis. The recipient of the new credit card would not have been required to agree to a fresh set of terms and conditions, and this is the key factor which influenced the case where a debtor was forgiven substantial debt by a county court judge. Credit providers like Santander and Barclays have also been stung by news of the legal precedent which allows a debtor to apply to a court to be released from an agreement to repay borrowing which has been spent. This is because they made a huge acquisition of financial companies in 2009 and it remains unclear whether people affected can claim they did not actually explicitly agree to any fresh terms and conditions attached to borrowing.
This area of the law is in flux however, and the ruling in relation to store credit was only made at the level of county court, which is subject to the higher jurisdiction of the High Court. If you want advice about your store card and whether you are actually required to repay the debts accrued using it, you should contact a professional for up to date advice on the subject. You could also contact the Citizens’ Advice Bureau for free and confidential debt advice.