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Annual Report of the Ombudsman 2003

Chapter 3 - Mayo County Council - Obligations Under the Consumer Credit Act, 1995

Mayo County Council

Obligations Under the Consumer Credit Act, 1995

Due to an oversight, Mayo County Council's Law Agent charged a Council client, rather than the Council, for legal work done in certifying title to a property in connection with a Council loan application. The amount involved was €153.67. My Office discovered that this practise was contrary to Section 125 of the Consumer Credit Act, 1995 which provides that, after 1 September 1997, any costs of legal investigation of title must be borne by the Council and not by the borrower.

When my Office brought this matter to the Council's attention, it arranged to refund the amount in question to the complainant and apologised to him for the oversight. However, as this might not have been an isolated incident, we asked the Council to clarify whether there were other similar cases and, following an examination, the Council confirmed that, in addition to the original case, it had identified a further 16 cases where a similar error had occurred. The Council's clients were all overcharged in sums ranging from €122.94 to €153.67. The total amount, including the original case, came to €2,397.25. Once these cases were identified, the Council arranged for the necessary refunds to be made to its clients.

Another issue arose out of this complaint. It involved the notification to applicants of any fees which may be charged by the Council in connection with housing loans. In this particular case Mayo County Council told my Office that its initial procedure was to notify applicants at interview of any legal fees arising which would be charged to the applicant. When my Office examined the relevant legislation, it was clear that Section 132 of the Consumer Credit Act, 1995, obliges a local authority to draw the attention of the applicant in writing to his/her liability and how the fee is to be determined. The purpose of this is to ensure the applicant will be aware of how much he/she will have to pay in advance of agreeing to accept the loan. By notifying people verbally rather than in writing, the Council did not meet its obligations under the Consumer Credit Act. I subsequently asked the Council to review its procedures in this regard and the Council obliged. Given the scale of the problem which was identified in Mayo, my Office reported the matter to the Department of the Environment, Heritage and Local Government and requested it to remind all local authorities of their responsibilities to their customers under Sections 125 and 132 of the Consumer Credit Act, 1995. Shortly afterwards, the Department issued the necessary Circular Letter to all local authorities.

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