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There has been a lot of talk recently about which matters the NCT can hear and assist with.
Some Debt Counsellors were worried that all their consent orders might not be valid for consumers and could be set aside or over turned.
Extracts from a recent case might set your mind at ease.
Rescission of Granted Consent Orders
In a recent case (3rd June 2023) at the National Consumer Tribunal (NCT), NCT/252312/2022/165 the tribunal gave some interesting information about why consent orders might be recinded.
Note: Some consumers and attorneys have tried to get the NCT to overturn past consent orders because the consumer wants credit bureaus to remove the debt review flag from their records before they have finished paying off all their debt. These types of attorneys may be offering the scammy “get out of debt review” services that you often see on Facebook.
In this very recent finding the NCT took their time to explain why a consent order might be rescinded.
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The Technical Stuff
Section 165 states that the Tribunal, acting of its own accord or on application by a person affected by a decision or order, may vary or rescind its order.
Section 165(a) prescribes that an order may be varied or rescinded when it has been erroneously sought or erroneously granted in the absence of the party affected by it.
Section 165(b) only makes provision for an order to be varied, and section 165(c) states that an order may be rescinded if it was granted because of a mistake common to all parties to the proceedings.
So, we have 2 scenarios when a consent order in terms of Section 165 (which is commonly used by the NCT for debt review matters) might be rescinded.
- They essentially didn’t know about it and;
- There was a mistake common to all parties (note: not 1 party)
NCT Reasoning
Given that the NCA says these are reasons why the NCT may rescind an order, and not that they must, the NCT has some leeway in what they will do.
Still, they must consider the two points mentioned above. Did the person know and was their a mistake common to all the parties in the consent order?
Normally, of course, the consumer and credit providers are all notified of the NCT matter and will receive a draft of the consent order. So, point 1 is easily settled.
The consent order is basically a separate agreement between consumer and credit providers that adjusts how they are paying their debts (not according to the original obligations, this is something supplementary).
This means the consumer suddenly can afford all their monthly obligations. So, they are no longer really over indebted as long as they stick to the plan and pay back the money in this new way. And that is dependent on the consent order being granted.
Interestingly, the NCT order may not even say that the consumer is or ever was or ever could have become overindebted or not. It may simply say that the Debt Counsellor made a finding that led the consumer’s application being filed with them.
Point number 2 is also of interest. Was there a mistake common to all parties?
If all parties knew about the proposed restructure and agreed then even if there was a mistake of some type with only one of the parties the consent order would not need to be rescinded.
In fact, the NCT point out that this would be prejudicial to all the other parties (this is why the mistake would have to be common among all parties) who have all agreed to now receive repayment in this reduced and prolonged manner.
Something to think About
This explanation of why and when the NCT might rescind a consent order gives Debt Counsellors (and attorneys) something to think about.
Even in the situation where perhaps a consent order was granted and the consumer was say, already ‘technically’ over indebted (though no one had declared them so at the time, so perhaps they are not technically anything) then it would seem that this may still not be grounds for an obligatory rescission.
The NCT has the choice, it may do so, but does not have to rescind such a consent order due to the perameters set out above.
