Monitoring of Legal Services – Consumer Problems – Hire Purchase
The Scottish Legal Aid Board (SLAB) was given a role in monitoring the availability and
accessibility of legal services in the Legal Services (Scotland) Act 2010. Our role is to
ascertain whether people or organisations are experiencing systemic problems getting the
help they need from solicitors, whether paid for by legal aid or on a private basis.
This paper sets out data collected in relation to consumer problems related to hire purchase,
and SLAB’s initial assessment for the purposes of its monitoring duty.
Feedback will help us to develop our overall understanding of possible problems with access
to solicitors for contentious consumer matters in the area of hire purchase.
Overall context for legal services and consumer issues – hire purchase
Figures from the Civil Module of the 2012/13 Scottish Crime and Justice Survey state that of
those respondents who experienced a civil problem within the previous 3 years, 10%
experienced problems with faulty goods or services: this makes problems with faulty goods
and services the second most prevalent civil problem recorded in the survey.1 We assume this
will include problems with ‘goods and services’ generally, in addition to covering various
specific consumer sub-areas. As such, we assume that consumer problems regarding hire
purchase agreements will be included within this figure, probably forming a fairly small
percentage of the total.
Hire purchase (sometimes described as conditional sale or rent-to-own) is a form of credit
generally associated with the purchase of furniture, appliances/basic household goods, and
vehicles. In this paper we have sought to analyse the relevant data related to the contractual
side of hire purchase (for instance, disputes around faulty goods). This paper will not address
hire purchase arrears, which have been addressed in a previous monitoring report2.
In terms of problems within the hire purchase sector, in 2014 the All-Party Parliamentary
Group on Debt and Personal Finance issued a call for evidence on the sector because of ‘longstanding concerns about poor treatment of customers’ and the effectiveness of
regulation.3 The APPG Inquiry highlighted potential issues around overcharging and the
possible mis-selling of insurance to a somewhat ‘captive market’ with few alternative credit
options.4 Another possible issue with hire purchase agreements is problems with faulty goods.
In 2014, according to research undertaken for the Joseph Rowntree Foundation, hire purchase
was the fourth ‘most common form of borrowing’ amongst British households, with 13% of
households UK-wide utilising this form of borrowing5. The All-Party Parliamentary Group on
1
Scottish Crime and Justice Survey 2012/13: Civil Module, p107
SLAB’s second monitoring report, published in 2013- http://www.slab.org.uk/about-us/what-wedo/policyanddevelopmentoverview/Accesstolegalservicesreferencegroup/
3
All-Party Parliamentary Group on Debt and Personal Finance, 2014, Report from the inquiry into the
Rent to Own sector, p2
4
APPG, 2014, Report from the inquiry into the Rent to Own sector, pp1-3
5
Joseph Rowntree Foundation, 2014, Poverty, debt and credit: an expert-led review, p22. The others
are, in order of prevalence credit cards (25%); formal loans (19%); overdrafts (17%).
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Debt and Personal Finance noted in 2014 that Rent-to-Own stores (functioning on a broadly
hire purchase basis) are increasingly visible on high streets, particularly in less affluent areas,
and suggested that the 3 largest retailers operating on this model have a combined customer
base of more than 350,000 households (UK-wide).6
Prevalence of Hire Purchase
In the year ending 31 March 2015, the Financial Ombudsman opened 1784 cases in relation to
hire purchase (UK-wide), an increase of 18% on the previous year.7 We are unsighted as to
whether most of these cases will be contractual-related, or arrears-related, and how many
cases were opened on behalf of consumers in Scotland.
CAS record ‘HP and conditional sale’ issues under their financial products and services
category (there is a separate debt category relating to arrears). In 2013-14, 311
HP/Conditional Sale issues were presented at CABx in Scotland, accounting for only 1.6% of
all issues under financial products and services.
More widely, the CAS Consumer Snapshot for 2013/14 states that of total consumer issues
seen (between CABx and Scottish calls to the Citizen’s Advice Consumer Helpline), there
were 2192 hire purchase matters, making this the 22nd most common consumer issue in
Scotland.8 We expect that the majority of these issues related to arrears, rather than
contractual issues: however, because the category is not disaggregated, this is not clear.9
Role of Solicitor Services
For consumer problems overall, we would expect solicitors to be involved mainly in complex
disputes which have reached court. Data from the Scottish Court Service suggests that very
few small claims cases that do not relate to debt are raised in the Sheriff Court.
Table 1: Non-debt small claims cases initiated in the Sheriff Court
Delivery /
Payment
Implement
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
52
67
75
40
74
41
72
19
77
15
93
20
Overall, we assume that solicitors will play a minor role in the hire purchase sector; they may
have a small role in more complex breach of contract disputes. However, we expect that a
larger proportion of advice on hire purchase disputes is provided by publicly-funded advice
agencies such as CABx, consumer helplines, and possibly by local authority trading standards
teams.
Hire purchase-related work appears very infrequently in SLAB’s legal aid data, with only a
small handful of cases mentioned under SLAB’s breach of contract and debt categories. Under
6
APPG on Debt and Personal Finance, 2014, Report from the Inquiry into the Rent to Own Sector, p6
http://www.financial-ombudsman.org.uk/publications/ar15/about.html#a1 – See ‘new cases by
financial product.’
8
CAS, 2014, CAS Consumer Snapshot, 2013/14, p11
9
This figure may also include repeat contacts, which the prior number (311) does not.
7
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the breach of contract category for advice and assistance, between May 2010 and May 2015,
only 16 of over 2000 records mentioned hire purchase issues as subject matter.10
We assume that the role of solicitors in private practice in this area is likely to be very small,
with solicitors involved in only the most difficult, protracted disputes where the value of the
goods in question is relatively high (for instance motor vehicles).
We can conclude that hire purchase consumer disputes are not an area in which legal aid - or
indeed solicitors generally - play a significant part. In the few cases where legal services are
required, we have no information to suggest there are any problems with availability.
Geographic Coverage
In terms of solicitor availability by urban/rural, given the minimal numbers in the legal data
mentioned above, we are able to provide a useful breakdown of legally-aided provision by
local authority area.
As mentioned above, CAS data which SLAB holds for 2013-14 shows that there were 311 hire
purchase or conditional sale issues presented to CABx in that year. At local authority level,
there does not appear to be a clear urban/rural split in terms of advice provided by CABx on
this issue. In particular, there is no clear urban bias. However, we are unsighted as to where
calls made to the Citizens’ Advice consumer helpline are made from.
However, given the relatively small number of issues seen in total (311), we are wary of
making any assertions about geographic spread. In particular, we are not sighted as to the
levels of advice provided by local authority trading standards teams on this issue: one
possibility which must be accounted for is that where there are few CABx enquiries, this is
because local trading standards teams are providing the bulk of advice instead, rather than
due to a lack of available advice (or demand).
We conclude that the data currently available to us does not appear to indicate any
particular geographic pattern in the availability of advice on this area, and do not have
sufficient data to comment on the geographic availability of legal services specifically.
However, we are aware of the limitations of the data we currently hold, and intend to seek
further input and data from CAS regarding the use of their consumer helpline in this area, and
representatives of trading standards bodies where applicable.
Reports of problems with access to solicitors or advocates
We have no data available to us, nor reports made to us which suggest that there are any
problems with the availability and accessibility of legal services in this area, in general terms.
We have not been made aware of any specific instances of problems in this area.
10
Advice and assistance (A&A) helps pay for advice from a solicitor on any matter of Scots law, civil or
criminal – for example, to try to settle a dispute without going to court, or to advise on whether there
is a legal case to take forward. Civil legal aid helps pay for a solicitor to act in court. It covers the
preparation work, as well as the hearing itself, and can provide funding for advocates and experts if
needed. Only a solicitor can grant advice and assistance (make an ‘intimation’) or submit an
application for civil legal aid. Some people need only advice and assistance, others need only legal aid,
and some need both. Many people start the legal process with advice and assistance, and then move on
to legal aid. See http://www.slab.org.uk/public/civil/info/
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Overall summary of the availability and accessibility of legal services
As with the other sub-topics within the area of consumer problems, we assume that for
individuals seeking advice on hire purchase consumer issues, solicitors will play a relatively
small role, with people more likely to turn to publicly-funded agencies such as CABx, the
Citizens Advice consumer helpline, or their local trading standards team for advice.
Individuals’ use of privately-funded solicitors in this area is likely to be minimal. From the
evidence on hire purchase available, our initial conclusion is that there is not a systemic
problem with access to solicitor services, caused by issues with availability.
Probability that a
systemic access
problem is
occurring
1 (low) –
5 (high)
Hire purchase
1
Reports of actual
instances
of
problems
with
access
1 (no reports) –
5 (consistently
reported systemic
access problems)
1
Exposure
[Probability
Reports]
x
1–4 Green
5-14 Amber
15-25 Red
1
Questions
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Do you have any additional data you would be willing to share with us regarding this
area, or are there any other sources of data we should look at?
o Are you aware of any specific figures on number of hire purchase agreements
in Scotland, per year, or number of complaints relating to hire purchase in
Scotland per year?
Are you aware of any specific instances where someone has not been able to find a
solicitor to deal with a timeshare problem when needed?
Do you agree with our assessment that the role of solicitors (both legally-aided and
privately-funded) is likely to be minimal in this area?
o In particular, do you have any comments on the statement that the private
market is likely to be small, and advice sought primarily from publicly-funded
advice agencies?
Do you have any suggestions for additional organisations which we may wish to
consult?
Consultees






Which?
Citizens Advice Scotland
Financial Ombudsman
Consumer Credit Association
Financial Conduct Authority
Finance and Leasing Association

SCOTSS (Society of Chief Officers of Trading Standards, Scotland)
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