Thread: Petition - Increases in APR Could be an Unfair Term

Please leave a post denoting your support and/or if you have been a victim of a creditor increasing the APR significantly. Please read below where i will attempt to set the scene!

Firstly terms which relate to variations in the APR are not core terms since it does not relate to the adequacy of the original price. Therefore action can be taken persuant to Part 8 of the Enterprise Act.

Paragraph 10 of the consumer credit (agreement)regulations 1983 stipulates creditors must include the circumstances in which any variation to the APR may occur and this should be included in the original terms and conditions sent to the debtor for signing. Sound fair, sound reasonable and easily understood!

Most credit agreements I have seen go along the lines of MBNA in this case:

We may decide to change any of the terms of this agreement, including interest rates, fees and charges or introduce new terms. If the change benefits you (like that will happen) we will do it immediately and tell you within 30 days. Otherwise we will tell you at least 14 days before any increase in interest rates at least 30 days before any other change.

and

we may vary interest rates or fees at our discretion at any time. In particular we may vary the interest rate and the APR depending on our assesment of your circumstances and conduct of the account from time to time.

In my opinion there are ommissions and misrepresentations as they fail to highlight the purpose, form, nature and long term implications of paying late or going over the credit limit. See Fraud Act 2006

They should also provide estimates of what the rates could increase to.

They should check to see if you can afford the increased payments.

With this in mind the increase in APR as a result of account conduct is a penalty. MBNA admitted they increase the APR following late payments/going over the limit in one of their letters to me!!

It is a penalty by stealth and I think there are a lot of people out there similar to me experiencing huge hikes in the APR following the conduct on their account.

They cannot penalise us twice. This type of penalty is much more significant than the late charges if it continues over a period of time.

The more support then the more likely OFT will take this up with the creditors. I intend to do this depending on the response out there!!

Similar Threads:

• cca received - unfair contract? 79.5 apr please look thanks
• MBNA......Massive APR increases!
• Unfair Terms - what is a term?
• is this another unfair PPI term?
• Hire purchase, unfair term

100% support you on this one and a great new tactic

Yup, this happened to me and I was disgusted.

MBNA played silly b*gg*rs with me - upping the interest rate, changing payment dates and minimum percentage repayment yada yada... I CCAed them - WOT no enforceable agreement?

I've politely told them to stick their account where the sun don't shine and they are now getting all upset!

Any way of spoiling their day is fine by me. Count me in!

there must be more of us out there who have been on thereceiving end of interest rate rises. Consider this and add your support:

Contract law is and should be concerned solely with the issue of compensating loss between the parties. The issue of penalising, or put more simply, punishing parties is the exclusive reserve of criminal law. The arguments are all the more compelling in consumer contracts where the law is expected to provide the consumer with protection. Furthermore, where the rules of common law and equity conflict, equity prevails.

In April 2007 the OFT issued a report titled “Unfair Contracts Terms Guidance – Consultation on revised guidance for the Unfair Terms in Consumer Contracts Regulations 1999” [exhibit ***]. Relevant sections from this report are quoted as follows;


Section 5.8 - Disguised penalties

Objections under the Regulations to an unfair financial penalty can apply to any term which requires excessive payment in the event of early termination, or for doing anything else that the supplier has an interest in deterring the consumer from doing. The Regulations are concerned with the intention and effects of terms, not just their mechanism. If a term has the effect of an unfair penalty, it will be regarded as such, and not as a 'core term'. Thus a penalty cannot be made fair by transforming it into provision requiring payment of a fee for exercising a contractual option.

Section 18 1.3

These objections are less likely to arise if a term is specific as to what must be paid and in what circumstances. In that case, it may be considered a 'core' term and exempt from consideration for fairness provided it is in clear language and properly drawn to consumers' attention – see Part IV, paragraph 19.12. (But note that this may not hold good if it is a 'disguised penalty', that is, a term calculated to make consumers pay excessively for doing something that would normally be a breach of contract.


Regulation 7(2) of the Unfair Terms in Consumer Contract Regulations 1999: which provides if there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer will prevail. Application of the contra proferentem rule would also incline to such a result.

subbing

100% with you on this one! Egg hiked up my APR and it is causing huge problems with that account now!