One the most important documents when researching a default listing is the demand notice.
A credit provider must provide a correctly structured demand notice to the borrower prior to listing a negative credit listing with a credit reporting agency.
A demand notice must to sent to the last known address for the borrower and must state the amount owed, how the borrower can pay this and that recovery action may commence unless resolved. It must also state that a credit reporting agency may be notified should the matter remain unresolved.
When our company, Clean Credit researches’ a credit listing on behalf of a client it is common for us to find errors and faults with demand notices, in fact we have come across cases where credit providers have not sent a demand notice at all. Given how important this document is, it is surprising how often we come across credit providers that do not retain a copy of the demand notice that was sent to the borrower. It is common for a credit providers to provide a copy of their template used for the production of a demand letter however all this proves is the template content is structured correctly, it does not prove that a demand letter was produced or sent in relation to a particular borrower.
It is important to keep in mind that a default listing is nothing more than an allegation, an allegation that the funds in question were owed and equally as important that the listing party has fulfilled their legal obligations with respect to process followed prior to the recording of the event.
Once this allegation is made the burden of proof falls directly on the listing party, this is a well tested legal stranded.
As in a court of law, evidence must be produced to support an allegation. In the absence of evidence can be very hard for a Plaintiff to prove their case. The same can be said for a credit provider not being in a position to produce key evidence to support a default listing.
The Financial Ombudsman is aware of this fact and as a result produced Bulletin 34 which was designed to document the importance of credit providers being able to produce key documents in relation to the listing of a default.
BULLETIN NO 34 – JUNE 2002
Records of notices sent
In some automated collection systems, a copy of the notice actually sent to the customer is not retained. Instead, the financial services provider may seek to rely on a system generated collection note indicating that the relevant notice was sent together with a template notice kept on the system.
In particular cases, it will be crucial to establish that a notice was sent, its contents and the address to which it was sent. If members make a commercial decision not to retain such documentation, they should bear in mind that if there is a dispute about whether the required notice was sent, where it was sent or what it contained, inferences may be drawn against the financial services provider if it is unable to provide a copy of the actual notice sent.
With the law the burden of proof falls on the accuser not the accused and it is our view that if a credit provider is unable to verify the validity of a credit listing they should remove the listing from the borrower’s credit file immediately. Sadly not every credit provider sees it this way.
In these cases Ombudsman involvement is often required which in most cases resolves the matter in favor of the borrower.