Tec Rentals' deals may prove illegal

Up to 100 customers of Smartbox sister company Tec Rentals may be able to keep their equipment without forking out another penny.

The Morning Advertiser has learned that Tec Rentals, which hired out TV-equipment direct to licensees, only obtained a consumer credit licence on 12 November 2005. The company has been trading since 14 April 2000.

Tec hired equipment direct to licensees who would not have been able to gain finance through third parties. It is the only arm of the venture, which included Smartbox and Vision Leisure Services, which is still trading. Its directors (currently and at the time of the unlicensed transactions) are Kate Venables, Neil Orton and Amanda Alston.

The MA has a record of 44 deals made before the company gained a licence but they could amount to 100.

"If no licence is in place, all agreements with sole traders and partnerships are potentially unenforceable," said Consumer Credit Trade Association regulatory policy manager Graham Haxton-Bernard. "Consumers could be relieved of further liability and be able to keep goods."

The agreements could only be ruled enforceable by the Office of Fair Trading (OFT) if it could be proved that no prejudice was caused to the consumer and agreements conformed to Consumer Credit Act regulations.

However, a leasing industry expert who saw the agreement thought the document Tec was using did not conform and was "totally illegal".

The maximum punishment for unlicensed trading is a two year custodial sentence and/or a fine.

The MA has contacted Tec for a comment but has received no reply.

OFT warning to businesses

An OFT business guide warns: "Unlicensed trading is punishable by a fine, imprisonment or both. If any of your customers were to default on a payment, you would not be able to enforce a credit agreement that you had made whilst unlicensed."

third-party finance problems over

Vision Leisure Services applied for a consumer credit licence on 18 November 2005. However, there appears to be no

get-out for Smartbox victims who are tied into onerous three-year lease deals with third party finance companies.

Although VLS arranged finance for licensees taking up Smartbox, deals were sourced legally through brokers Mercian leasing, which did possess a consumer

credit licence.

However, licensees who have never received a pre-contract information sheet and signed their agreement after 31 May 2005 could have a way out, as reported two weeks ago (Morning Advertiser, 11 January 2007).

Hosts are advised to seek legal advice.

Bill Ganley is leading an action group to share legal costs. He can be contacted via email at william.ganley@eaststaffsbc.gov.uk or on 01283 568759.

Welcome news for customers

The news that many Tec Rentals customers could avoid paying any more money to the company will come as a welcome relief to many who were owed hundreds of pounds in advertising revenue by Smartbox.

Julian Barfield of the New Inn in Talgarth, Powys, signed his three-year deal with Tec and Smartbox on 4 July 2005. He was owed about £2,000 by Smartbox when the company folded. He pays Tec Rentals £75 a week for a plasma screen, Smartbox and monitor.

He cancelled his direct debit to Tec before Christmas but started paying again after they agreed not to pursue him for monies owed.

"No wonder they overlooked the money I owed them," he said. "Technically, it seems they wouldn't have been able to get it back from me".

What they have done is very naughty. I would be very happy if we could get out of this."