Credit search findings must be
passed on promptly, says Optima Legal’s Nicola
Bradford Crown Court recently dealt
with the salutary tale of Mohammed Hussain, who obtained credit to
purchase at least seven vehicles from different dealerships over a
seven-week period in early 2008.
Hussain knew he had a limited
window in which to work, and made his applications within that
window using his own name and the same income details each
He declared an annual salary of
£30,000 from employment as a takeaway pizza chef.
He had high standards when it came
to motor vehicles, choosing models such as BMWs and Mercedes to
make up the fleet of cars he acquired.
The scam came to light after no
payments were made on the credit agreements, and one of the finance
companies involved, growing suspicious, contacted the police. In
turn, the police checked other records and from there the fuller
picture of the fraudulent scheme emerged.
Most of the cars which had been
obtained were sold, and unlike the situation in Shogun Finance
vs Hudson, the purchasers would have been able to rely on the
innocent purchaser protection because the “mistake” made by the
finance companies in extending the credit to Hussain was related to
his creditworthiness and not his identity.
Ultimately then, in this case the
loss was borne by the finance providers.
Hussain pleaded guilty to seven
counts of fraudulently obtaining a vehicle and seven counts of
money laundering, with a financial benefit accruing to him of
£70,000, even though this figure did not cover the total value of
the vehicles themselves, which was estimated at closer to
He was sentenced in May to three
The case highlights the importance
of the duty to record information relating to credit searches and
associated information in an accurate, complete and timely manner,
in accordance with the Data Protection Act 1998, and of checking
that information carefully.
It is interesting to consider
whether this situation could arise now, following the
implementation of the Consumer Credit Directive into UK law with
effect from March.
When read alongside the
Irresponsible Lending Guidance, this introduces the twin
tests of creditworthiness and affordability, and hints heavily at
the grant of credit facilities being based upon more than a purely
But perhaps the other point arising
from this case is to listen to alarm bells ringing if information
supplied or uncovered as part of a credit application simply
doesn’t ring true, like the salary of a takeaway pizza chef topping
that of a teacher.
Nicola Hoskins is a
professional support lawyer at Optima Legal