News item

The end of bills of sale?

TSI welcomes the Government consultation on the repeal of bills of sale legislation for consumer credit. 

The legislation dating from 1854 regulating 'chattel mortgages' was created to prevent fraud against lenders to the business community. It predates the concept of 'consumer' let alone consumer protection and therefore affords the consumer none of the protection the Consumer Credit Act 1974 provided for consumer borrowing. 

It is almost exclusively used to finance car sales in the non-prime sector or as a method of secured lending such as a 'log book loan against a car a consumer owns.  This law has been used increasingly in recent years to exploit people in time of need.  A car financed on a bill of sale remains the property of the finance company until the bill is discharged.  Therefore there is a trap for innocent third parties who buy a car subject to such outstanding finance as they do not get title.  With the more usual hire purchase loan, innocent private buyers for value are offered protection under existing credit law. 

This anomaly alone has lead to TSI to campaign against this legislation for many years but, due to the recent practices of parts of the credit industry during the credit crunch TSI has escalated this campaign and hope to see this legislation banned from use in consumer credit transaction in the near future.