An idea - any comments from mods and others?

[gizmo111]

Also if the bank have made an 'arrestment of benefits' in contravention of the Social Security Act - my income is more than the above but is mainly tax credits and child benefit.

 

Yes but if you calculate what you income would be if you were solely on benefits - remeber include housing benefit or income support mortgage interest payments to make up the minimum what the law says you need to live on.

 

Am I making sense here?

[caro]

Er, not sure.

[gizmo111]

A real example - single mother, 2 month old child. (Figures rounded)

 

Income Support - £48.00

Child Tax Credit - £51.00

Child Benefit - £17.00

Housing Benefit - £60.00 (100% of social housing rent)

Council Tax Benefit - £22.00

Total Income £198.00

 

This is the amount the law says you need to live on - so you would have to be taking home £857 per month to meet the benefit level any charges taken at this level would automatically cause hardship cos the law says so.

[Goldlady]

Yes Gizmo, I know what you mean. The difficulty is that tax credits actually give you far more income than housing benefit/income support as it is a government plot to encourage people to work for low wages and therefore keep the unemployment figures down. For the same reason many people have been encouraged into self employment, when really they are technically unemployed. So you have two levels of poverty - the calculation you have quoted (60% of my income left would be nothing short of a miracle) and people like me who are surviving for the most part on benefits but whose income is far more than income support/housing benefit would give them.

 

I managed to get my charges back from the Halifax due to the SSA. I would think that hardship claims should include people with benefits paid by the government, however much they get, being DLA and all those associated payments, could claim hardship if the bank were stealing them. After all disabled people get money to help them with mobility and home helps etc.

 

Rant over..........

[caro]

Right, I get it.

[crfx250]

Iv'e just spoke to the Banking Code Standards Board who have told me that they don't have a definition for financial hardship. I definitely remember reading somewhere in the press shortly after the waiver was anounced that Which? asked the FSA to define 'financial hardship' for the purposes of the waiver and they were told to refer to

''the definition in the Banking Code''.

 

When I put this to the Banking Code Standards Board they said ''well that was a bit naughty really''.

 

She told me that banks have their own guidlines on financial hardship but not a definition as such.

[caro]

I think any bank would be hard pushed to justify not using the Government's standard if they can't come up with a definition of their own. Even if they did try to dispute it, I'd hope the FSA or FOS would set them straight.

[crfx250]

Here's an artical I just found which dosn't inspire one with confidence when it comes to the FOS and hardship.

 

Firstly, consumers have a limited six month window to appeal final decisions from banks to FOS. By not logging receipt of such appeals, consumers may be deprived of their right of appeal. Secondly, whilst FOS gives very general guidance regarding hardship, it will not be drawn on giving concrete examples. In a recent case where the consumer was facing bankruptcy, FOS refused to expedite the case. Bankruptcy ensued shortly after. If this is not a case of financial hardship, what is?

[gizmo111]

Bankruptcy ensued shortly after. If this is not a case of financial hardship, what is?

 

Someone going bankrupt may not neccasarily be suffering hardship, they may be paying their essential outgoings and living on a realistic budget but unable to service huge debts. Not servicing debts IMO wouldnt mean hardship, but having charges deducted when your income is on or below the poverty line as I posted above would be, as you would not be able to afford the basic essentials.

[crfx250]

I think we've got a bit of clarity to work on now. There is no definition of financial

hardship that banks have to work to as the last paragraph states.

 

 

 

----- Original Message ----- From: hilary putt

To: crfx

Sent: Monday, October 15, 2007 1:56 PM

Subject: Definition of hardship-BCSB ref 9251

 

 

 

Dear crfx I refer to our telephone conversation earlier. I have set out below the text of an email we have prepared to send to people who contact us regarding the definition of financial hardship following on from the complaints handling waiver granted by the FSA to the banks pending the outcome of the test case in the new year.

“The BCSB is an independent body that polices the Banking Code and the Business Banking Code. We do not investigate individual complaints against banks, building societies and card companies, because that is the role of the Financial Ombudsman Service (FOS). The BCSB Helpline can only advise on your rights under the Banking Codes, and cannot give legal advice.

Your rights under the Code

Section 14 of the Code says that your bank should “consider cases of financial difficulty sympathetically and positively. Our first step will be to try to contact you to discuss the matter.”

Section 14.4 says that you can instruct an advice agency, such as a Citizens Advice Bureau (CAB) to act on your behalf in repayment negotiations with your bank. The bank is then obliged to correspond and deal with your money adviser there, who will have had experience in handling repayment negotiations and will provide a free service. You should be able to negotiate repayments that you can afford. You may be able to ask the bank to freeze interest and other charges accruing to the account, although this is discretionary. Other agencies which provide a free advice service are:

National Debtline: 0808 808 4000 (www.nationaldebtline.co.uk)

Consumer Credit Counselling Service: 0800 138 1111 (www.cccs.co.uk)

Payplan: 0800 085 4298 (www.payplan.com)

A money advisor at one of the above-listed agencies can help you to draw up a Financial Statement that shows how much of your income is needed to pay for essential living expenses, before assessing how much you can afford to repay the bank.

Complaining about your bank

You may believe that the bank has not complied with its obligation under the Code to be “sympathetic and positive” and to work with you in resolving your financial difficulties, and that this has caused you a financial loss. In this case, one course of action is for you to pursue this as a complaint against the bank. You should make your complaint through the bank’s internal complaints procedure. The bank will give you details of this, on request. This sets out the legal timescale the bank is required to follow in dealing with your complaint. Your complaint should be made in writing, to its designated complaints department. After the bank has looked into your complaint, it will write to tell you of the outcome of its investigation. It will also tell you about your right to bring your complaint to the FOS if you are still not happy.

The FOS helps settle disputes between individuals or small businesses and financial organisations. If a settlement cannot be agreed, they decide who is right. The service is free to consumers and its decisions are binding on financial organisations. FOS can make awards of up to £100,000. You can find their contact details on their website at www.financial-ombudsman.org.uk. The FOS takes account of the Banking Code in making its decisions.

Complaints about unauthorised overdraft charges: hardship cases

An announcement was made recently about a test case on unauthorised overdraft charges. Until that case is heard in court, banks joined in the case have been given dispensation by the FSA just to acknowledge but not to investigate complaints, unless the customer is in very difficult financial circumstances. Banks and building societies will have to conduct a filtering process to ensure that cases of genuine hardship are still dealt with during the waiver period. Complaints about banks which have not complied with the financial difficulties provisions of the Code would still be entitled to be referred to, and dealt with by, the FOS under the complaints procedure as explained above.

“Financial hardship” is not defined in the Banking Code. Financial institutions should consider complaints on a case by case basis, taking into account the information provided by the customer. Similarly FOS will consider the merits of each individual case. Section 14 of the Code and Guidance cover how firms should treat customers in financial difficulties.”

I hope this is helpful to you and the CAG.

Regards,

Mrs Hilary Putt

Helpdesk Manager

Banking Code Standard Board

CONFIDENTIALITY NOTICE

We would ask you to treat any communication from us as confidentially as you would want us to treat communication from you. If you are not the intended recipient, please notify the sender immediately, and do not use, disclose, print or forward this email or any part of it. You should know that some of our communications may contain confidential information which it could be an offence for you to disclose or use without authority.

Banking Code Standards Board Limited, Level 12, City Tower, 40 Basinghall Street , London, EC2V 5DE

The Banking Code Standards Board Limited, Company Limited by Guarantee, Registered in England & Wales, No. 3861859. Registered Office: 21 Holborn Viaduct, London EC1A 1DY

www.bankingcode.org.uk

 

[jansus]

Well that means one of two things - 1) it makes it harder for them to give a reason for refusal as they have no criteria to measure it against - so the wording of the letter becomes more important or 2) it gives them an opt out as no one can measure whether they are being fair or not .

 

I guess they are choosing the latter

 

I have been informed that the following is an extract from RBOS criteria ( but I have not personally checked it.)

 

Events which may lead to being considered in hardship

 

Divorce - warranting loss of income

Loss of Job - customer or partner

Reduction in earnings due to unexpected occurrence

Maternity

Increased dependants (more kids/dependant relative)

 

 

Customers should not be considered for Financial Hardship just because they have too much to repay. There has to be an additional change in circumstances. In considering suitability consideration must be given to current guidelines from regulatory bodies and also consider reputational risk to the Bank whilst not compromising credit risk.

 

QUALIFYING CRITERIA

 

Total house income must be less than 15,000 PA

 

or - normal house income has suddenly reduced by 50% or more

 

or - unforeseen outgoings have suddenly increased by 50% or more

 

These case can be managed by the Collecton Centres for a period of 6 months whereupon the position is reviewed and if no change in circumstances account should be referred to CMS

 

 

Personally I think if a letter is drafted carefully we should shift the onus back on the bank to give full reasons why the application has not been considered and give them 14 days to reply ( apparently that is the guidance from the FOS).

 

If we are going to gather evidence of say 4-5 good strong cases to show the FSA it would have to be cases where we could show evidence that they have either written to the bank/solicitors or appealed the stay on this basis? I am sure that would not be too hard to find by using "hardship" as an advanced search?

 

Simon in abbey /dougal / spring to mind and I am sure there are plenty more. Surely its worth a try ?

 

Jan

[crfx250]

Yes I agree with all of that. The e-mail from the BCSB adds more weight

to the onus being on the bank to determine whether a claimant is in financial difficulty so cases where the bank hasn't done that will presumably be stronger.

 

I tried to speak to the FSA waiver team manager - Johnathon Bromburg - but havn't managed to get hold of him yet. His assistant, rather carelessly, gave me his direct dial number so I'll try him again tomorrow.

[jansus]

I see that dougal has lost his case and the banks won the appeal - and the same happened to several other hardship cases .

 

If it helps with a decision on a letter/ questionaire to go back to pressurising the banks and copying the FSA here is the latest post from the A&L case

 

Hi,

 

In reply:-

 

My approach was to contact the bank by telephone first of all and argue that they had a duty to examine cases of genuine financial hardship.

 

Take a look at my entry dated 12th October 2007, posted at 13:19

 

The crux of my argument was to argue, initially during telephone calls, and subsequently in writing that.......

 

……….my position (confirmed via contact with the FOS and OFT) is merely that the agreement reached between the banks, FSA, FOS and OFT prior to the OFT v banks case being submitted to the High Court at the end of July clearly states that responsibility for determining and resolving a ‘hardship case’ lies with the bank, that the waiver granted to banks, allowing complaints re charges to be held pending the outcome of the High Court case does not apply to ‘hardship’ cases, and banks should therefore seek to identify and resolve such cases; further that where agreement cannot be reached between a customer and a bank the bank must issue a final response letter as a precursor to the FOS seeking to resolve matters.

 

I argued this point on a no. of occasions, first of all with the dept. that handled bank charges claims (in the case of A and L the Credit control dept., you need to find out who this will be with your bank) and thereafter with the Customer Care Team (likewise re determining the correct dept. in your bank) that took up my case, eventually successfully winning the day on my behalf.

 

It was necessary to ensure that the latter dept. accepted my arguments (during a telephone call) and once they had done so I faxed them a copy of the letter originally sent to the initial dept, (I have copied this letter into the aforementioned entry, namely the entry dated 12th October 2007, posted at 13:19)

 

As indicated, if you cannot determine which dept. you need to contact, seek the support of a PA in the Chief Exec.'s office.

 

Whilst you could go down the N244 route ( and to check I believe this would be an application to set the stay aside) it is only worth doing so if you are sure that the Court dealing with your claim is one of the Courts that is proceeding as normal, if it is a Court that is maintaining the stays until the outcome of the High Court case then obviously there is little benefit in pursuing this route. Alternatively, contacting the bank may be a quicker route, as you will not be delayed waiting for your N244 application to be considered.

 

Re the other option you mentioned, the advice I had from the FOS is that in the present climate you can only seek to gain their support once you have a final written response letter from the bank, and as indicated in several of my submissions, I seemed to succeed by using the request for the aforementioned letter as a bargaining tool with the bank, i.e., consider my case or you MUST provide me with a final written response which I will take to the FOS. Even at this stage (my experience) was that the banks do not wish to involve the FOS, and lo and behold they came up with an offer !

 

Hope this helps.

 

All the best, and keep at the buggers !

vbrep_register("1183952")

"

[jansus]

Also - another quick thought - The agreement does not say what the banks should do with these cases? Pay them - or at least freeze charges ? It is very vague to say the least - but the FOS obviously seem to think it means paying the charges without going to court?

 

I think CRFX would like the info to send to the FSA fairly quickly - any more ideas on how to get it?

 

Jan

[jansus]

I have just made a couple of suggested edits on post one ( in green).

[caro]

Just to let you know that CAG has taken up the suggestion of collating data.

 

http://www.consumeractiongroup.co.uk/forum/announcement.php?a=114

[jansus]

sorry I could not access the link?

 

Jan

 

Dont worry just found the announcement in big red letters!

 

Jan

[caro]

LOL, great, although I have edited the link just in case anyone manages to miss it.

[crfx250]

Excelent