OFT applies “home jurisdiction” rule

The Office of Fair Trading (OFT) has warned UK lenders that taking court action against consumers outside their home jurisdictions is unacceptable.

The move follows an OFT investigation into Creation Consumer Finance, which provides point of sale finance to major retailers.

Solicitors acting on behalf of the company had been issuing proceedings against Scottish debtors in English courts, and the OFT found the practice to be unfair stating: “The unfamiliar law and procedure involved in a court claim in a different jurisdiction, and any associated travel costs, may deter consumers from defending such action.”

The requirements imposed on Creation Consumer Finance Ltd mean that the company must:

Ensure that businesses and/or firms acting as its agent or sub-contractor in the course of any consumer credit licensable business comply with the OFT’s Debt Collection Guidance.

Not issue, and ensure that third parties acting on its behalf do not issue, proceedings against a consumer in a jurisdiction other than that in which the consumer is domiciled.

Any consumer credit licence holder taking action or threatening to take action against consumers in a court outside their home jurisdiction is therefore in breach of the OFT’s Debt Collection Guidance.

The watchdog’s director for consumer credit, Ray Watson, sums up: “Issuing proceedings in a different jurisdiction is clearly unacceptable and lenders should take heed that the OFT will act to prevent this practice.”