Hire purchase ruling may help struggling families

A MOTHER and daughter have won a High Court case against a finance company which could help thousands of people trying to terminate hire purchase agreements and hand back goods bought on credit.

Michelle and Noreen Gabriel, from Togher, in Cork, took the case against GE Money and also the Financial Services Ombudsman, who ruled in favour of GE Money when the pair brought their difficulties to his attention.

Mr Justice Michael Hanna said there was “significant error” in the ombudsman’s decision and said a section of the Consumer Credit Act 1995 relied on by both the company and the ombudsman was being interpreted more restrictively than was intended by the legislature.

The Gabriels bought a Renault Clio on a four-year hire purchase plan from GE Money in 2008. In 2009, they tried to end the agreement. GE Money refused to take the car back until half the full four-year value of the hire purchase was paid.

Mr Justice Hanna ruled while the act did state at least half the value must be paid if an agreement was terminated, the company could not refuse to take back the car in advance of that sum being paid.

Noeline Blackwell, director general of the Free Legal Aid Centre, which took the case on behalf of the Gabriels, said the significance was people could no longer be forced to hold on to cars they could not afford to care for.

“It has suited companies to apply this precondition because they don’t want a load of second-hand cars back. I understand that, but hire purchase is a very expensive form of credit so they get well-rewarded for the risk they take.”