School wins right to appeal
decision over lease terminations.

 

The question of what power the Finance
and Leasing Association (FLA) has both to act on behalf of and
bring to book lessors and their subsidiaries over their working
practices has reared its head again.

It recently came to light that the trade body
was neither called upon to give evidence nor its guidelines heeded
in a dispute between a school and a servicing company, linked to a
leasing contract for photocopying equipment, which came to a UK
county court in May.

The school lost the dispute in the end –
although it has now been given leave to appeal – and a judge ruled
it was liable for about £20,000 (€24,169), including costs, to be
paid to the lessor in not more than 14 days, after apparently
attempting to cancel a service agreement ahead of the end of the
term.

The dispute arose after the school, apparently
being dissatisfied with service provision, chose to enter into a
new contract with a different provider and later found itself being
pursued for two years’ worth of service charges from the original
company.

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The claimant – in this case, the service
company, a non-member of the FLA – claimed the school was at fault
for breaking the termination clause of the contract. The judge
agreed with this point of view, despite submissions from the
defence that the FLA code of practice ought to come into play,
which might have offered some protection to the school.

 

Rumblings in the past

In particular, the defence claimed rules
surrounding exclusions of certain costs from termination figures
should be followed, saying the school should not be asked for more
than six months of charges – but admitted there was no reason the
claimant should be bound by these rules.

There have been rumblings in the past over
whether the FLA ought to do more when its members find themselves
in legal disputes, as some might feel they have been left high and
dry without its support.

But as the organisation itself states on its
website, its remit is to “be the acknowledged and trusted
representative body for the business and consumer finance
industries”.

Its mission, furthermore, is to represent
members’ interests to “government, regulators, the European
institutions, the media and the general public” – not to courts of
law.

Indeed, if it did have the recourse to appear
in court on a company’s behalf, it could find itself in a decidedly
sticky predicament if faced with a legal dispute between two member
lessors.

On top of this, it is not, and nor has it ever
been, able to issue legally binding regulations.

A spokeswoman for the FLA said: “They are not
regulation in law and they are not legislation.

“In the consumer sphere, our guidelines have
actually been used by the ombudsman in making a decision on a case
where the lender was not even a member of ours.”

The body does do compliance visits, she added,
where issues over a lessor’s practices can be flagged up and
addressed, but it would be extremely unusual for it to be called
upon in a legal context.

Its purpose, moreover, is to advise and to
lobby – not to act as the sword and shield of the industry.