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Citizens Advice response to consultation on Bills of Sale

22 December 2009

Citizens Advice Chief Executive, David Harker said:

“Bills of sale date back to Victorian times and have no place in a 21st century consumer credit market based on principles of fair trading. There is no consumer protection and people can end up in serious debt and risk losing their car and even their home when they borrow money this way. It’s high time they were banned.

“CAB advisers have seen cases where borrowers have been subject to unfair or misleading sales practices, with lenders failing to ensure borrowers clearly understand the terms of the agreement before they sign up to it, and failing to check they can afford the repayments.

“Missed payments can lead to aggressive debt collection tactics, and problems with bills of sale debts do not end with repossession. Bureaux have seen cases where lenders pursue shortfalls after sale aggressively, including putting people’s homes at risk through the use of charging orders – a second chance at securing a previously secured debt.

“We would urge anyone tempted to take out such a loan to think very carefully about doing so.  Anyone already having problems with a bill of sale agreement should contact us as soon as possible for free, independent advice.”

Bill of sale lenders target people with poor credit records, offering high cost loans with a car or other vehicle used as security.  Interest rates can be well over 600% APR - higher than those charged by doorstep lenders.

Bill of sale agreements – of which some 33,000 were made last year -effectively pass over ownership of goods, such as a car, to the creditor.  As long as payments are maintained, the borrower can keep the goods, but if the borrower defaults, the creditor can repossess the goods without a court order.

Notes to editors

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality. For online advice and information see New windowwww.adviceguide.org.uk
  3. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 7.1 million problems from April 2010 to March 2011. For full 2010/2011 service statistics see: www.citizensadvice.org.uk/press_statistics
  4. Out of 22 national charities, the Citizens Advice service is ranked by the general public as being the most helpful, approachable, professional, informative, effective / cost effective, reputable and accountable. (nfpSynergy’s Brand Attributes survey, May 2010).
  5. Most Citizens Advice service staff are trained volunteers, working at around 3,300 service outlets across England and Wales.