Have you ever considered why a regulated consumer credit agreement requires to include a notice that "in Scotland he [the lender] may need to get a court order at any time" before a motor vehicle can be forcibly repossessed?
It is often overlooked that Scotland has its own legal system and that Scots law has its own peculiarities. It is important that lenders are aware that in Scotland they may need to obtain a court order before a motor vehicle is retaken without consent, regardless of how much (if anything) has been paid for it.
When a customer has paid at least one-third of the total price for a motor vehicle it becomes "protected". Lenders must always obtain a court order before a "protected" motor vehicle can be forcibly repossessed. That well-known rule applies throughout the whole of the United Kingdom.
A motor vehicle will be "unprotected" when a customer has paid less than one-third of the total price. A lender has an automatic right summarily to retake possession of an "unprotected" motor vehicle in England, Wales and Northern Ireland. No such automatic right exists in Scotland.
In order to repossess summarily an "unprotected" motor vehicle in Scotland the lender must have an express contractual right to do so. A regulated consumer credit agreement should stipulate that a lender is entitled to retake possession of a motor vehicle without notice.
In the absence of such a contractual provision, a lender will require to obtain a court order in Scotland before they are entitled to repossess forcibly an "unprotected" motor vehicle.
In practice, a regulated consumer credit agreement will usually expressly permit a lender to repossess an "unprotected" motor vehicle without notice after the agreement has been terminated. That agreement will typically provide that post-termination:
If there are no contractual provisions permitting a lender to retake summarily possession of a motor vehicle, a customer in Scotland can legitimately retain possession until a repossession order has been granted by the court.
If an "unprotected" motor vehicle is repossessed without the customer’s consent, in the absence of appropriate contractual terms permitting that, there is a risk that the customer may pursue a damages claim and make a complaint to the Ombudsman.
To minimise that risk, and potential court costs, lenders should ensure that the appropriate contractual provisions are included in all regulated consumer agreements used in Scotland.
Ricky Cannon is a senior solicitor in the debt and asset recovery team of Brodies LLP