Thread: hsbc self employed ppi...question?

some years ago when i was self employed i took out a loan and was sold the PPI insurance. Trouble is i didnt really check it and was in trouble financially at the time and was sort of grateful for the business loan. a few years later i became wiser and sold my failing business, i was offered another loan which would pay off the old loan including the ppi. i didnt take out the ppi on the new loan. i did get a refund but the amount i had to pay them was very high because of the ppi.

i am thinking after reading this section that i was probably missold the ppi because i was self employed and therefore could not claim due to unemployment, which is what i wanted (although the sickness and health part was reassuring at the time)

sounds comlicated but i no longer have the account as i have moved on and paid off the other loan.

Do you think i could have a reasonable claim? or am i just clutching at bamboo shoots.

rich

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Certainly no harm in trying .. Do you still have a copy of the agreements etc ?

Ian

Hi,
The banks love it when we punters have a hard time and they add to our problems. If you are trying for a refund on the PPI I think that you would need to fight that one on the grounds of being Mis Sold the policy.
Did they say no PPI then no Loan ?..

Another thing worth having a go at.. When you settled the loan they will no doubt have calculated out your refund using the Rule of 78.. I had this with Firstplus..which I Challenged as being a penalty charge therefore unenforceable under Common Law. They put up a fight about it so I issued Summons and was due in Court 5/2/07..But gues what..they Crapped it and settled in full as a gesture of goodwill, and I just got the Cheque this morning. I am now looking forward to going into my Local Lloyds TSB to pay that cheque in..I think I really ****ed them off on telly last week so I wonder what reaction staff will give when I go in today..lol

You may not get a huge amount back from them but every little helps, and it is better in your pocket than theirs.

If you want to fight them over the Early Settlement Charges that they applied , let me know and I will send you the Arguements that I used.

Good Luck

Ian

Reidnet yes please i would love any help.

I feel that i was probably sold the policy incorrectly as at the time i was in the process of selling my house and took out the loan to tide me over until it was sold, hence they gave me the loan as they new i would be paying it off. I dont think it was a condition of the loan to obtain the PPI though. At that time they did not discuss what the early penalties for paying off the ppi or wether i really needed it at the time. However i did feel pressurised as i did think to myself that if i didnt take ppi i may not have been successful in getting the loan .But nothing in writing to that effect.

I think the early pay off charge is very high and any info would be helpful.

could you advise me on the next step and what you think i should write, i have limited infomation but all the figures involed.

Thanks a bunch for the assistence. Do i go for the part of the £3849.40? and write to them to confirm the amount i paid?

rich

Hi Rich,
Sorry for the delay getting back to you on this one..
Here is the statement of claim that I used to reclaim the early Settlement Interest charged when I settled my loan with Firstplus.. It worked for me and they have paid up..

You will need to alter bits of it suit your own needs, if you get stuck just shout..

STATEMENT OF CLAIM

Case ref:

in causa

XXXXXXXX

v.
XXXXXXXXXXXXXXXX

1) The parties are designed in the instance. This pursuer is a consumer within the meaning of paragraph 3 to schedule 8 of the Civil Jurisdiction and Judgments Act 1982 as amended. The Credit Agreement was completed at the pursuer’s home address. This court accordingly has jurisdiction. No proceedings are pending elsewhere between the parties hereto in respect of the subject matter of this action. To the knowledge of the pursuer, no agreement exists between the parties prorogating jurisdiction of the subject matter of the present cause to another court.

2)The claimant, XXXXX, agreed to take out a personal loan through brokers YYYYYYYYYY who at the time were acting as agents for ZZZZZZZZZZZZZZZ. After the agreement had been running for some 30 months, the pursuer settled the loan in full with ZZZZZZZZZZZZZZ. The defender then charged a penalty charge in way of an early settlement interest charge of £764.97. This charge does not in any way represent a liquidated loss incurred by the defender but in fact is a penalty charge.

3) The defenders are called upon to lodge in process a statement indicating how much annual pre-tax profit is generated from applying early settlement interest charges to early settled accounts. The defender is also called upon to produce actual proof that the sum of £764.97 is a liquidated loss incurred. Their failure to do so will be founded upon. The Pursuer has agreed to pay the sum of £14.97 in terms of settlement for this early cancellation and is therefore claiming the sum of £750.00 in way of refund.

4) The defenders charges represent a contractual penalty or fine and as such are irrecoverable at Scots common law. In the case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. (1904) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses which flowed from a breach of contract. The defenders charges are not liquidated losses and therefore the pursuer is entitled to be reimbursed in the sum craved.

5) Separatim, the defenders charges represent an unfair penalty charge in terms of the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083) (the ‘UTCC’). The pursuer’s contract falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) as the pursuer is a consumer. The defenders charges constitute an unfair penalty under reference to paragraph 1(e) of schedule 2 of the said regulations:
‘Indicative and non-exhaustive list of terms which may be regarded as unfair

1.Terms which have the object of effect of
(e) requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation’.

Reference is made to the following three cases from the Office of Fair Trading’s Unfair Contract Terms Bulletin 21 (July to September 2002), issued in May 2003:

OFT case 15 – Kids of Wilmslow Ltd.
Clause 7 of the company provided for the supplier to charge interest on unpaid fees at an excessive rate above the bank base rate. Also unclear as to how the interest would be charged. The OFT amended the clause so interest was charged on unpaid fees at 3% per annum above the bank base rate. Further, an administration fee of £10 per letter sent concerning unpaid fees was deleted.

OFT case 18 – Legal & General Franchising t/a Parker Estate Agents.
A commission clause had the potential to allow the estate agent to charge a penalty fee for late payments. The OFT revised the clause to reflect the company’s practice of charging 8% per annum or the current rate of county court interest on late payments.

OFT case 4 – Dampcure-Woodcure/30Ltd.
Clause ‘W’ had the potential to impose a high financial penalty of payment was not received within seven days of the date of invoice. The OFT revised same to make clear that interest will be charged at 4% above a high street bank rate per annum if payment not received within 7 days of the date of invoice.
Accordingly, the defenders are fairly compensated for unauthorised lending by the imposition of their unauthorised overdraft interest rate currently at 29.8% APR. The imposition of further charges is unfair in terms of the UTTC. Reference is made to guidance issued by the OFT on 26 July 2005, which stated that 'a charge is likely to be disproportionately high if it is more than a court would be likely to award if the lender sued the account holder for breach of contract'. The court is asked to declare the imposition of the defender’s charges as unfair and irrecoverable in terms of the UTTC.

Furthermore the pursuer would suggest the law relating to penalties has been established through case law. The cases date back to the nineteenth century and the courts have been consistent in the way that they have ruled on penalty clauses:

Wilson v. Love (1896)

A tenant farmer agreed to pay an additional rent of £3 per ton by way of penalty for every ton of hay or straw that he sold off the premises during the last 12 months of the tenancy. The clause was regarded as a penalty because at the time hay was worth five shillings a ton more than straw.

Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Co. Ltd. (1915)
In the particular case, the judges held that the sum specified in the contract was reasonable and was classified as liquidated damages. However, in this case, Lord Dunedin laid down rules which are still applied today in these types of cases:

i) The sum is a penalty if it is greater than the greatest loss which could be suffered from the breach – in other words, if it is "extravagant and unconscionable".
ii) If it agreed that a larger sum shall be payable in default of paying a smaller sum, this is a penalty. Ford Motor Co. v. Armstrong (1915)

In this case, the judges reached the conclusion that the sum to be paid for a breach of the contract was substantial and arbitrary and bore no relation to the potential loss of the other party. It was, therefore, a penalty.

Bridge v. Campbell Discount Co. Ltd. (1962)

In this case a customer bought a car under a hire purchase agreement. He paid the initial and first payments and then cancelled the agreement. The company tried to recover the sums specified in the contract for canceling the agreement, but the courts held that the sums payable were excessive and constituted a penalty clause. It was, therefore, unenforceable.



6) The pursuer being entitled to reimbursement of the defender’s charges, decree as craved should be granted with expenses. The Claimant also claims interest at a rate of 8%, from the date of settlement to 20 November 2006 of £5.87. The claimant further claims interest at the rate of 8% APR up to the date of judgment or earlier payment, at a daily rate of £0.17 per day.

7) The pursuer has demonstrated to the defendant the reasons he is requesting a refund of all penalty charges in letters dated 17 October 2006, 02 November 2006 , 10 November 2006 and 17 November 2006. (these letters and a copy of the agreement are attached for you perusal). all correspondence from defendant is also attached for perusal.
8) ZZZZZZZZZZZ calculated the Early Settlement Interest Penalty Charge under the Rule of 78. The FSA recommended that all companies refrain from using this Rule with effect from May 2005. The FSA themselves viewed the Rule of 78 to be unfair to consumers.
From the FSA website
Early repayment charges (Early Settlement Interest Penalty Charge)

To use a method called the 'Rule of 78' to calculate a consumer's early repayment charge.

“We viewed this as unfair because it could result in the consumer paying a charge much higher than would reasonably compensate the firm for charges lost through early repayment.”


This charge represents an unfair penalty charge in terms of the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083) (the ‘UTCC’).

The regulations that applied to ERC's for regulated loans, ie those under 25,000, changed in May 2005. After this date, lenders have only been allowed to charge 1 month's interest as an ERC.

Summary of Claim
Unlawful Early Settlement Interest Penalty Charge £750.00
Interest on above from 16/10/06 to 21/11/06 £ 5.87
Court Fees £ 39.00
Juditial Interest @ 8%APR - Days @ £0.17 / Day
Total of Claim £794.87

The part I have claimed back was the Charge that they made when I settled the loan.

The case of the Mis Sold PPI is currently still ongoing, The loan and the PPI was arranged through a Broker and it the Broker I am Going after re the mis sold PPI.

Hope that clears it up ..lol

Ian