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MFS Portfolio Ltd v Phelan & West - Appeal - Overdrafts

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  • MFS Portfolio Ltd v Phelan & West - Appeal - Overdrafts

    The claim against our clients in this case was for monies owing under a personal Current Account Overdraft. We lost at first instance before a District Judge in Peterborough County Court and appealed the decision before HHJ Walden-Smith sitting at Cambridge County Court.

    The Appeal was successful yesterday. This is an important case because it confirms that consumers using the unenforceability provisions of the Consumer Credit Act 1974 can successfully defend claims for personal Current Account Overdrafts in court. In this instant case the Appeal court found the personal Current Account Overdraft agreement to be unenforceable pursuant to the Consumer Credit Act because of lack of evidence of compliance with the requirements of the OFT determination.

    It was also accepted that Creditors must comply with S 78 Consumer Credit Act 1974 requests relating to personal Current Account Overdrafts, not just credit cards and loans. In this case the Appeal court did find that MFS Portfolio Ltd had complied with the S 78 Consumer Credit Act request. If they hadn’t complied with the statutory request then the personal Current Account Overdraft would have been unenforceable pursuant to s.78 (6) (a) Consumer Credit Act , which is contrary to the position creditors normally take.

    The court also positively approved of the principle established in a European case ruling we put before the court that it is for the creditor to prove statutory compliance. The court did not appeove of the District Judge’s earlier decision in the lower court that our client not recalling something somehow reversed the burden of proof onto our clients and away from the Claimant.

    The appeal court also found that MFS Portfolio Ltd had not proved the Assignment to it from the original creditor.

    We were not successful on the MFS Portfolio Ltd’s lack of FCA Authorisation point. For obvious reasons, having won the actual appeal for our Clients, this won’t be appealed further by our Clients - however this decision is not a binding decision on other courts as HHJ Walden-Smith was sitting as a Circuit Judge and not as a High Court Judge. On this same point, we are currently waiting for reserved judgment, in a different appeal case at Chester County Court, to be handed down.
    Legal Disclaimer
    I am a solicitor Advocate who specialises in consumer credit and my firm is Joanna Connolly Solicitors. My leading case of Carey v HSBC set the legal precedence for creditors compliance with s.77 & s.78 Consumer Credit Act 1974 statutory requests & enforcement of debts in court. Any posts I make on the AAD Consumer Forum are for information and discussion purposes only and shouldn't be seen as legal advice. Any advice I provide on the forum is without liability. If you are unsure please seek formal legal guidance or contact your local citizens advice bureau at

    If you need to contact me you can send me a message by clicking my username or by emailing me at or by telephoning 0330 053 9340.