OFT - Proposed Letter

[Wild Billy]

Whoa! Superb! Another weapon for the armoury. Thanks, meagain!

Not really.

Unfair Terms in Consumer Contracts Regulations 1999 - Regulation 12 requires the OFT to consider whether or not to take action against an organisation regarding standard terms in their contracts. The action open to them includes the usual sanctions (suspending/revoking licences, etc.), but R12 also provides them with the power to obtain an injunction to prevent an organisation from enforcing an unfair term. If they decide not to do anything, under R12 you're entitled to know a good reason why.

The Regulations require "consideration" but that is open-ended. What is "consideration"?

And the removal of a consumer credit licence happens under the Consumer Credit Act and not the Unfair Contracts Regulations. Injunctions are possible under the regulations but it is a very long-winded and very costly process that involves court action- no regulator can just get an injunction and would need to build a case on evidence. To be fair to the OFT, I get the sense that is what it has been doing. It isn't much good us saying to them that we think the default charges are too high because we aren't really providing any evidence that is actually the case. We all know that £25 or whatever seems really high but none of us actually know if that is the cost or not do we? I'm generally supportive of what the OFT is doing in the sense that it must be based on evidence it has been collecting although it is disappointing that it hasn't taken a test case. Let's hope it does that for the bank charges.

I've been wondering if we (as in the Bank Action Group) shouldn't be negotiating with the OFT to allow us to represent the consumer's point of view. After all we have 62,000 members and rising, with all aspects of banking and consumer credit experience. We could put together a dossier of lies, delaying tactics, underhand tricks and other evidence of general wrongdoings and badness by the very companies who are currently accepted to be fit to hold a consumer credit licence.

I'm new here so it isn't for me to say but can we provide hard evidence to the OFT? Have we asked them what evidence they want from us to help them? Maybe they would meet with us? Could we write an open letter to them asking to meet? It might generate publicity. Could we then coordinate a dossier of that evidence and present it to the OFT? The point I make about injunctions is that it requires good quality evidence- not just assumption or assertion. Reading these threads, it seems clear that people generally struggle to provide much actual evidence of wrongdoing by the banks in terms of bank charges and I'd guess it would be quite difficult to go to court. Guess OFT has same problem if it has to rely on that quality of information?

By the way, be careful not to confuse the consumer credit issue with the unfair contract terms. This issue seems to be dealt with under the latter so let's not muddy the water.

[PeterG]

Dave

I have found the OFT website

Who to contact in the OFT

very informative as to what the OFT can and cannot do.

The linked Consumer Direct advice service is also a useful ally.

One significant point they stressed to me last week was that I (and anyone else fo that matter), am quite within my rights to ask for a detailed breakdown of how a default charge has been calculated (in the same way you would receive an invoice) and that it is the Financial Ombudsman Service that is then empowered to take this further, not the OFT.

What was fully not ascertained was what action one could actually take if the Bank did not comply with the request but I presume the answer would be as above, to complain to the FOS - which is what I've just told the Halifax. I suppose the other tedious option would be to take Court Action again.

PeterG

[meagain]

Originally Posted by Wild Billy

And the removal of a consumer credit licence happens under the Consumer Credit Act and not the Unfair Contracts Regulations.

Your point being ... ? It is still a power that the OFT holds, there's nothing that says that because you made a complaint under R12 they're not allowed to exercise it.

It isn't much good us saying to them that we think the default charges are too high because we aren't really providing any evidence that is actually the case. We all know that £25 or whatever seems really high but none of us actually know if that is the cost or not do we?

I would hope common sense would prevail on that count. Though, as we all know, common sense usually isn't.

[PeterG]

I had a go at HSBC Credit Card section yesterday for the sheer devilment of it really. Although we already hold a joint Visa card, they were trying to persuade my wife to take out another card - not for the first time - and I couldn't help but point out to the chap I spoke to that in their 'Key Information', their Default charges should include wording to the effect that one could be charged up to a maximum of £12 and this figure itself was not a norm.
I said I would expect a separate invoice detailing the extra work that the Bank had been obliged to do, specifically related to the default charge in question, so incurring the Bank in costs over and above the norm that they were now seeking to recover.
'Oh no' he said, 'There is a straightforward charge of £12 - there's no invoice or anything like that'!!!
I then acquainted him with what the OFT had actually said. He seemed quite perplexed, said he had made notes on what I had said and would pass it on for consideration by the 'relevant department' so that HSBC could offer an even better service. Meanwhile, he suggested that I go into my local branch and discuss my concerns with them - and he was serious!

PeterG

[ppauls150]

Originally Posted by meagain

If it makes any difference, my bank has now told me that it cannot refund my charges unless I give them a valid reason why I missed the payment. Really, should I have to give them a valid reason to reverse charges they're not allowed to apply?

Your valid reason for missing the payment in the first place is due to the fact that they have taken money off you which meant that you no longer had that money to pay your bills. If they hadnt taken the money then you would of had that money to pay the bills which meant that they wouldnt of bounced simple it is their fault for stealing your money and leaving you with nothing

[Wild Billy]

I would hope common sense would prevail on that count. Though, as we all know, common sense usually isn't.

That's the problem with some people here- no regard for life in the real world! Just because it seems high, doesn't necessarily mean it doesn't reflect costs- you have to PROVE it! The legal system wouldn't be in much of a state if it relied on unproven assumptions, no matter how much they seem to be based on common sense. 50 years ago, it seemed common sense that man couldn't set foot on the moon but look what happened.

[JonCris]

Originally Posted by Wild Billy

Not really.



The Regulations require "consideration" but that is open-ended. What is "consideration"?

And the removal of a consumer credit licence happens under the Consumer Credit Act and not the Unfair Contracts Regulations. Injunctions are possible under the regulations but it is a very long-winded and very costly process that involves court action- no regulator can just get an injunction and would need to build a case on evidence. To be fair to the OFT, I get the sense that is what it has been doing. It isn't much good us saying to them that we think the default charges are too high because we aren't really providing any evidence that is actually the case. We all know that £25 or whatever seems really high but none of us actually know if that is the cost or not do we? I'm generally supportive of what the OFT is doing in the sense that it must be based on evidence it has been collecting although it is disappointing that it hasn't taken a test case. Let's hope it does that for the bank charges.



I'm new here so it isn't for me to say but can we provide hard evidence to the OFT? Have we asked them what evidence they want from us to help them? Maybe they would meet with us? Could we write an open letter to them asking to meet? It might generate publicity. Could we then coordinate a dossier of that evidence and present it to the OFT? The point I make about injunctions is that it requires good quality evidence- not just assumption or assertion. Reading these threads, it seems clear that people generally struggle to provide much actual evidence of wrongdoing by the banks in terms of bank charges and I'd guess it would be quite difficult to go to court. Guess OFT has same problem if it has to rely on that quality of information?

By the way, be careful not to confuse the consumer credit issue with the unfair contract terms. This issue seems to be dealt with under the latter so let's not muddy the water.

Hi Billy Lets start by saying that we don't have to know what their actual charges are as it's for them to prove they are acting lawfully.

The evidence can be obtained without any problem, the banks only have to hand it over which they won't The formular for assessing bank charges has already been set by the OFT. The banks only have to provide the information.

[JonCris]

Originally Posted by Wild Billy

That's the problem with some people here- no regard for life in the real world! Just because it seems high, doesn't necessarily mean it doesn't reflect costs- you have to PROVE it! The legal system wouldn't be in much of a state if it relied on unproven assumptions, no matter how much they seem to be based on common sense. 50 years ago, it seemed common sense that man couldn't set foot on the moon but look what happened.

Lets no kid ourselves if their charges reflected the true cost they wouldn't be refunded thousands of pounds daily or refusing to enter a court room

[meagain]

Of course, that which can be used to harm us can also be used to our advantage. The bank's refusal to contest our claims in court amounts to silence, and the court is permitted to draw adverse inferences from this as seem proper. We don't need to prove anything - we can rely on their refusal to back up their claims to at least get a foot in the door.

[patrickq1]

Rt Hon John McFall
John McFall, Chair of the Treasury Select Committee

John McFall, Chair of the Treasury Select Committee responds to Dumbarton constituents on Overcoming Barriers to Social and Financial Exclusion
The provision of service from the credit and store card industry and regulatory frameworks intended to protect the consumer has proven to be severely inadequate. The present consumer credit regime is very outdated and bears little relevance to the financial market that exists today. It is, however, in the process of being updated through a White Paper issued from the DTI.
Generally, in the credit card industry important information is written only in the small print and in type so minute it is barely, if at all, readable. Confusing technical jargon is used and the real costs of interest are concealed through complex calculations. The industry has not launched any concerted initiatives itself to tackle these problems. This leaves them falling well short of fulfilling their basic social responsibilities of providing a transparent and competitive market.
As Christine Liddell has pointed out one of the most confusing areas of credit cards is the calculation of Annual Percentage Rates (APR). Not only is the APR a misleading way in which credit cards can be compared but there are two different ways in which APR can be calculated. This is an enormous obstacle to any meaningful comparison of cards and reflects very badly upon the industry. The Treasury Select Committee has been pushing for the introduction of a single method of APR calculation to be used by the entire industry by October 2004. The DTI has now indicated that they are on-course to achieve this long-overdue reform.
Christine Liddell has suggested that credit cards should show the true cost of borrowing, meaning the cost of the item plus the sum of interest that will be paid depending on the speed in which the debt is cleared. The Treasury Committee have introduced a scheme where certain likely scenarios are printed on the card’s literature to show how the amount of interest paid is effected by different repayment patterns.
A Summary Box, with the key information about the card listed, is being introduced as part of the Banking Code’s requirements. The Committee has recommended that likely scenarios, showing the ‘actual’ cost of interest should be included in this, including particularly the cost if only the minimum amount is repaid each month. Some high street banks have already begun to include this. The idea of the Summary Box is to provide customers with a meaningful way of comparing cards and enabling them to chose the card which best suits their needs. The Box should have a minimum font size so that it cannot be lost in the small print of an application form.
Clear communication between credit card companies and their customers is essential in order to maintain public confidence in the industry. Advertising campaigns such as the Barclaycard 0% forever offer can mislead the public. Even the Chief Executive of Barclays had trouble understanding the terms of his company’s own offer at a session with the Treasury Committee. Thanks to pressure from the Committee this advert has now been withdrawn. As highlighted by both Malcolm Wright and Christine Liddell this practice of aggressive selling tactics and misleading adverts are unacceptable. The new Consumer Credit Act from the DTI is tightening up on these practices, especially those that encourage increasing debt in order to take advantage of special offers. The Committee has recommended that the OFT should develop best practice guidelines to be either incorporated into the Banking Code or enforced by the OFT.
The Summary Box provides an opportunity to eliminate the existence of hidden charges. All charges should be clearly listed in the Box. The Treasury Committee has also raised the need for card issues to charge lower fees for customers with lower credit limits or low outstanding balances when payments are received late, as is the practice in the US. Furthermore, the fee levied should not exceed the cost to the lender of the relevant breach of contract. The practice of some sections of the industry has given rise to some customers “sleepwalking into a situation of over-commitment.” Over-indebtedness has devastating consequences and can be a threat to social stability as Malcolm Wright pointed out. Card issuers need to recognise their social responsibility to prevent this from happening.
Credit Unions are presently stepping in to fill the void where banks have failed the poorest sectors of society. Although they are yet to become as prolific as other countries (Britain’s Credit Unions have 1 million customers compared to 2 million in Ireland) they are providing, to an increasing number of people, a valuable borrowing service. Without such a service people who find themselves below the conventional banking threshold can face rates of up to 410%.
Hugh Collins and Catherine Liddell have addressed another problem with the industry - insufficient credit checks, which can ultimately lead to individuals or households becoming overstretched financially. The Treasury Committee has recommended that credit limits should never be raised without appropriate and thorough checks being carried out and that the practice of sending out unsolicited credit card cheques should cease immediately. In order to prevent an increasing number of people finding themselves unable to meet their financial commitments it is essential that the minimum repayment on any debt covers the interest and insurance to ensure that the debt is at least not growing despite payments being made.
Task Force One, set up by the Government, provides a forum where consumer groups, the industry and the regulatory bodies can discuss the way forward. Recently made more permanent, this body can make recommendations to help guide the industry in a direction agreeable to all parties.
The cosy relationship between store card providers and the stores has provided another area for concern. There are suspicions they have acted together to prevent customers from being able to get all the fact about the products they are selling. The cards have extremely high interest rates and hide most if not all of the important information in illegible small print. The behaviour of the stores and their card issuers in providing sufficient transparency in their products has prompted an OFT investigation into this market. The practice of preventing application forms from being taken out of the shop has been stopped through pressure from the Treasury Committee and further advances in the transparency of this market should follow after the OFT’s findings.
As Malcolm Wright highlighted one of the most important steps to help prevent more people finding themselves in a cycle of indebtedness is to improve the financial education of consumers. The Treasury Select Committee has welcomed any steps towards fostering an improved level of financial understanding in the general public. It is essential that the financial industry face up to its responsibilities in this area. Products should be tested on consumers to ensure they are comprehendible and clear advice must be provided to any one struggling with their debt. The Citizens Advice Bureau has worked hard in this area and although the assistance provided by the financial services is welcomed it will not be sufficient to cope with the rising numbers of people facing debt related problems.
The Treasury Committee hopes that the financial industry will fulfil its obligations by continuing to comply with all of the Committee’s recommendations and provide a socially responsible, inclusive, stable, transparent and competitive credit and store card market.

[crfx250]

interesting. When was this published Patrick?

[Bookworm]

May 2004.

[patrickq1]

Originally Posted by crfx250

interesting. When was this published Patrick?

i have it in my files lol anything to do with banks and data protection,found this one last night i think if you go to the MPs website you will find all his published reports their but he has a bee in his bonnet when it comes to banks,i am also awaiting a reply...i have invited him to this website but i think really the Mods should already be pleading with the MPs to do this every MP has their own web site...he more than likely has been on in the last couple of days.....but what he says is very interesting,ive also sent him my complaint against the FSA/Information Commissioners Office for their mis management and Coercive Acts and attitude colluding with the banks

[patrickq1]

TY bookwoim

[patrickq1]

Advertising campaigns such as the Barclaycard 0% forever offer can mislead the public
well isnt that interesting,perhaps when they cannot find the agreement you suddenley remembered this was part of their terms and conditions ,so if you want to re construct your own agreement like the banks want to do then you can certainly insert this in your contract.....the difference being we are not the crooks or fraudsters...we are the good guy & gals just a thought me doodlin again