GE Money refusal letter advice please

[Elizabeth315]

I sent a prelim letter claiming direct debit recall charges of £20 a time and admin fees of £40 a time for being in arrears. total cost all together is £815.00. I have had a letter back saying:

 

Thank you for outlining your concerns in relation to the charges that have been applied to the account. We would like to assure you that all our fees are applied within the terms and conditions or the agreement and in accordance to FSA/CCA guidelines

 

For each direct debit that is returned unpaid, numerous costs are incurred. There are the administrative costs of using the BACS system, the cost of advising you of the direct debit either by telephone or letter, as well as the charge from our bank for each returned direct debit. As per the terms and conditions that govern this agreement, we are entitled to apply any incurred costs to the account.

 

The £40 arrears administration fee is applied to the account every month the account is in arrears with us. The charge applied is in accordance to the Terms and Conditions of the Credit Agreement. This Charge is applied to recover costs we incur in relation to the account being in arrears. Theese costs include, monitoring the account, contacting the customer by telephone ad/or letter and making payment arangements with them.

 

The arrears asministration Charge is not a penalty for defalt but rather a reasonable sum having regard to the total costs of running our collections function (including overheads), allocated to estimated numbers of accounts expected to be in default.

 

Our arrears administation charge reflects the work involved in making contact with customers in order to recover missed payments. Our approach to calculating the correct level of this charge is that we applied a proportion of total costs incurred during the specific collections activities to the customers who default. Some of theese costs are direct, and others are calculated on a time-spent basis. From that exercise we have established the total cost to the business of collectiong missed payments. We then calculated the estimated number of instances and divide one by the other to provide a unit cost. We then set our fee by reference to the unit cost for the service, in this case for the collection of missed payments.

 

In addition we take account fees charged by other similar businesses. In 2005 we benchmarked 8 other lenders operating in similar arears to us and found a range of £15.00 to £54.00 for arrears administration fees.

 

Our arrears administration charge was set at £40.00 which is less than full cost recovery (£58.00 for arrears administration), and broadly in line with the market.

 

Whilst, to the best of our knowledge, the matter has not been subject to any final reported decision by any court, we are not aware of any findings in the past where a court has ruled that such charges are penalties. The level of our arrears administration charge is lower than arrears administration charge levied by the majority of other similar financial institutions. Moreover, we ensure that prospective customers are made fully aware of possible charges, which could arise during the life of a loan. They were given a copy of our tarriff of charges for which they would have signed confirming that they understood such matters.

 

We are satisfied that our fees are both reasonable and justified and do not amount to a "penalty" for default. In our oppinion the level of the charge we make is proportionate and an accurate pre-estimate of our actual costs and goes towards paying for coolections activity reasonably required in consequence of default by certain customers in meeting their agreed obligations.

 

We therefore conclude that all fees applied to the account have been done so fairly and lawfully; therefore they will not be refunded.

 

 

So does anyone understand that fully or is it just babble. not sure now whether the charges are fair and to just leave it at that or to send the LBA. Can't find any succesfull claims against GE money (formely I-Group). Please any help greatly appreciated.

Liz x

[Bona]

Normal bog off letter apart from asking for your money back have you done anything else

[Elizabeth315]

not done anything else yet. next step is treaten to take to small claims isn't it? just wasn't sure if what i was asking for was reasonable since the letter they sent and couldn't find any posts for successes against g e money.

[tonycee]

next step is treaten to take to small claims isn't it?

 

Yes, send your letter before action claiming the amount they owe you.

Tell them you are happy to ask a judge to force them to reveal their true costs in such matters.

 

couldn't find any posts for successes against g e money.

 

I noticed 1 or 2 in here.

http://www.consumeractiongroup.co.uk/forum/search.php?searchid=1201081

Good Luck.

TC.

[Elizabeth315]

Thanks very much for all your help. Liz x