Assignation is the Scots law equivalent of assignment in English law. There are different notification and publicity requirements between the jurisdictions. These differences add to the endless conversations and due diligence on effective transfer of debt. All these traditional considerations focus on the front end of the transfer and making it valid. What happens once a lender has transferred debt to another lender? How should consumers be treated post transfer? This isn't often touched upon but a recent case does shine some light on the topic.
In R (on the application of Kelly) v Financial Ombudsman Service Ltd  EWHC 3581 (Admin) the claimants sought judicial review of a Financial Ombudsman Service (FOS) decision. The High Court ruled that FOS had been irrational in their decision making. The High Court's decision is of interest for numerous reasons. Rather than focus on the legalities and the proceedings, I would focus attention on what can be done to prevent customer dissatisfaction post transfer.
In this case the lender's terms and conditions required the customer to tell the lender of changes to their address. The customer moved and did not update the lender. Letters were sent out informing the customer of the loan transfer. The letters went to the customer's old address. Upon receiving their bank statement they did not recognise the company the loan re-payments were now going to. They subsequently cancelled the re-payments. The customer advised FOS they had done this on the basis that they feared the transactions were fraudulent.
There is the potential for this type of situation to happen again. If that is the case, the new lender should at the earliest opportunity provide the customer with written proof that they are entitled to receive the re-payments. Continuing to send letters to the old address is of no benefit to either party. Swift action could prevent additional interest and charges being applied to the loan. It could also prevent detrimental reporting to Credit Reference Agencies.
No lender wants to buy a book of debts to then find the customers stop repaying. As we all become ever more aware of the risk of fraud, lenders will find that consumers question where their payments are going. Providing the necessary level of comfort should result in the customer continuing to make timely re-payments.
TCF isn't just for the beginning, it's for the whole journey.