Cahoot Flexi Loan Rip Off

[noniustus_commodus]

I too have fallen foul of the interest hike from Cahoot. The previous post mention a doubling of the rate, for me it was closer to triple the rate. Although the amounts involved are small compared to other logs I would appreciate any views on my story before I take Cahoot to court. I have been deliberately vague on the amounts in case this goes to court.

I took a flexi loan of around £15k in early 2006. The rate that was applied to my loan and as shown on the first statement was 5.65%. Then a week after this statement I received 2 weeks notice that the rate was going to be 8.9%.

I complained about this and to limit the effect I paid off around £5k.

Then a few months later I received the same notification everybody else has mentioned, 2 days notice that the rate was going up to 9.something and then up to 14.9% a couple of weeks later.

Compared to my initial 5.65% that is nearly triple the original rate in six months.

I consider this plainly unfair, I know that the contract I have is that Cahoot can change the rate to whatever they want, but nobody can reasonably expect this kind of increase in such a short time. What if they decided to increase the loan rate to 30% after another 6 months and then again to 60% after that?

After looking into this a bit my opinion is that I have common law and statuary rights that over-rule their contract.

I have also learned that this type of account is NOT governed by the FSA or the banking code; it is governed by the OFT rules on unfair contracts. So when Cahoot say that you can take your complaint to the FSA it is not worth it.

Luckily for me I received the money I was expecting and paid off the loan almost immediately. However, I withheld around £100 in what I considered to be over charges of interest. So that rather than me trying to chase them for money they now have to chase me for money.

I wrote to Cahoot explaining that this is what I had done and asking them to recalculate my loan with a more reasonable rate. They responded with the usual letter that everybody keeps posting and stated that their calculations are correct and even sent me the spreadsheet to prove it.

The other thing I learned from the OFT website is that for this type of account they must give 30 days pre-warning of rate changes. So I used their spreadsheet to recalculate how much interest I should have paid if they had applied the 30 day rule.
The grey area for me though is what rate they should apply. I absolutely refuse to be ripped off in this way and will not pay 14.9% to any financial institution. If they wont offer me a better rate and recalculate then I refuse to accept any rate change from the original 5.65%

Thus I sent them 2 calculations. 1 based upon the applied interest rate but with 30 days notice whereby they have overcharged me by £20. And the other calculated on 5.65% interest whereby they have overcharged me by £120.

I wrote that I accepted they were entitled to increase interest rates but that increasing them by 300% in six months was in breach of my statuary rights and offered them a half way compromise. Basically I gave them 2 weeks to accept £20 to close down my account. Otherwise I will be making a claim for £120 plus interests plus costs.

They immediately refused my offer and told me to take my complaint to the next stage which is contacting Abbey complaints.

I contacted abbey complaints but I don’t think they are doing anything with it and the 8 weeks is nearly over.

The twist in this is that cahoot have now started charging me £30 a time for my failed Direct Debit, even though I wrote to them and told them that I have cancelled my DD while this is still in dispute. This puts me in the same arena as everybody else’s complaint.

My question is this: should I let Cahoot try and pursue me for the £100 that say I owe them or should I take action first and try and claim £120 in excessive interest plus the £60 in penalty fees.

The excessive interest claim is by no means clear cut, either for or against, it is entirely dependant on personal circumstances. I believe I would win if it went to court. The penalty fees argument is clear cut as the many threads on this site demonstrate.

Any thoughts out there?

[noniustus_commodus]

Waited 8 weeks for abbey to deal with my complaint - nothing.
Emailed my LBA to Cahoot and so far no response. I presume that they are looking at my claim a bit more seriously now as they normally email back within 24 hours with the usual trite response: "our charges are legal blah blah blah".

[jwright]

I am in a similar situation.
I am looking at doing a 0% balance transfer.
Would it be possible with this type of loan do you know?

[noniustus_commodus]

I presume you mean a 0% balance transfer from a credit card? I should think you could transfer the balance to your cahoot loan.
By the way I got a response from Abbey asking me to re-send details that were already in the email. All they had to do was read it. They also wanted another 8 weeks to look at my complaint. I told them the 2 weeks I gave them stands. That ran out today so I am just preparing my court claim.

[jwright]

Yes - stick to your agenda. They are doing what they all do. Prevaricating and buying themselves time hoping that you will be intimidated and put off.
I'm going to see if Halifax will give me a credit card and pay the flexiloan back as a purchase. I have checked with Cahoot and they are happy with this arrangement. You can only balance transfer from credit card to credit card apparently. Halifax has this great 12month 0% on purchases deal at the moment if you apply for it online. 9 months offline.
But I shall be watching you progress with Cahoot.
I should receive my settlement figure in the next few days.
It would be good to get some feedback about our rights re this enormous hike in interest.
I have a sense that you are on the right track.

[noniustus_commodus]

Just sent off the moneyclaim online!
Lets see how they respond.

btw I didnt bother claiming interest; the amouint was too small and it just complicated things.

[jwright]

Cahoot Rip Off (merged) - MoneySavingExpert.com Forums
I have found this thread.
I haven't read it all yet but it might be of interest.
I'm going through it now.

[jwright]

Having read further it looks to me as though cahoot are in deep ****.
The interest has gone up to over 19% for some!
Surely there must be some protection for customers when this situation arises? Not everyone will be able to 'jump ship'.
Anyone?

[MarkyT]

Wow. I didnt realize this has become such a widescale issue. Mine is still at the 14%.
I'm not sure there is much we can do really with it being a flexible account as this is what we agreed in when opening the account. I have tried the method of moving the loan around using the process explained on MSE but egg are not interested and have told me in no uncertain terms they will not lend me money again based on my history with them.
I am pretty much stuffed as I imagine a lot of others will be, some even more so.
The only plus I have is that I am already claiming back a large sum from cahoot which covers my overdraft and my loan more or less exactly so I'm lucky enough to be in a position to get rid providing all goes well with the claim.
I would have thought abbey would be willing to enter into talks with anyone experiencing difficulties making repayments.
I also think it would have been more responsible on their part to give the customers the option of freezing the credit limit on the account and then not raising the interest rate as hight as they have. My loan has been pretty much maxed out for the duration as I kept borrowing back the amount I have paid off. This has made it very expensive and I would imagine a lot of people who are in difficulties have done the same.

[noniustus_commodus]

[quote=MarkyT;681845]
I'm not sure there is much we can do really with it being a flexible account as this is what we agreed in when opening the account.
[end quote=MarkyT;681845]

Didnt everybody agree to paying bank charges when they opened their account? Yet those bank charges are seen as unfair so people are claiming them back.

It is the same for the interest rate hike, except I see this as even more unfair because it was impossible to foresee, and because it is more complicated people ignore the problem.

Anyway I have made a moneyclaimonline to recover all interest charged to me above the original 5.65%. Cahoot have failed to file a response within the allotted time. Therefore (in theory) I win by default.

Can Cahoot do anything if I claim for judgment by default? I am a bit cautious to claim victory just yet.

[noniustus_commodus]

It has been 2 weeks now since the court awarded judgment in my favour and sent Cahoot a demand for payment. Despite me sending Cahoot a reminder a week ago I have not received anything.

Therefore the next step is to ask the court to issue a warrent for Bailiffs to go round to Cahoot. I am going to send Cahoot a letter giving them 1 more week to cough up and warn them of the impending action.

If it does go to that stage then I am going to make sure that the press hear about it. I would love to be at their offices when the Bailiffs turn up and seize their equipment!

[jwright]

Wow!

[noniustus_commodus]

Victory!
of sorts. Abbey finally sent me a cheque for all the money I claimed. A pity really, I was looking forward to sending bailiffs round.
They still havent closed down my account as I asked and there is 1 bounced DD charge remaining that came on after I sent my court claim.
However, they didnt charge me this month for a failed DD so it looks like they being wary of people who do challange them.

I guess I will have to give them one last chance to close my account before court action begins once again.

[gwildfire]

I too had the 5% initial rate, I was furious back end of last year when it went up 3 times in 6 months. I even complained directly to the CEO, who wrote me letter back about how intrest rate rises meant increased costs of lending etc.

Then I open my email today, a hike from 14.9% to 19.9% !! this is outragoues Now I owe about 3K on this account so will be acting fast to settle it, but I pressume as they have elected to stop offering such products they are trying to bully people in to early redemption by increasing the rate.

I wrote a letter to the FSO asking them to investigate and stating that this was not the act of a responsible lender under the 1974 credit agreement act. I doubt anything will come of it.

Having read the above I am tempted to file a claim concurrent with my current account claim, which is soon due in court.

[noniustus_commodus]

Since successully getting Cahoot to refund the rip off interest they charged me I have asked them to close down this account. They have failed to comply.

And because the Courts process takes so long they have charged me for failed DD even though I dont actually owe them anything.

I have just had to issue another moneyclaim online to recover these charges, only this time I added £250 that I am charging them.

Lets see if they bother to file a defence this time?