HSBC managed account - Trying to remove a invalid? default

[chris1977]

Suppose, to comply with the s.74 Determination, they should tell you how they will terminate the agreement, but to comply with the CCA in order to Default you because of a default under the agreement, they should send you a Default Notice - in which case a termination due to a default need to be included in the Determination information, or that would be an unlawful Default.

 

Usually, though, Banks terminate agreements with termination notices, rather than Default Notices, which gets them around this issue.

 

It's quite technical, but the point is they must tell you how they are going to terminate and comply with Part VII if they terminate you due to your default of the agreement.

 

I can follow your argument, though - and I think we're saying the same thing, just in a different way. Hopefully!

 

Hi Chris, thanks for your post. I'm not sure we are saying the same thing though. Maybe I'm just trying to over-simplify things. My interpretation is simply that the Determination and Section 74 exempts the banks from Part V, not Part VII. So, for any regulated agreement (which an overdraft is), if the bank are to terminate an agreement due to a debtor defaulting on that agreement, they must use a Default Notice which prescribes to the form and content stipulated in Part VII. Neither the Determination nor Section 74 seems to provide exemption from this requirement.

 

Are we saying the same thing?? Or am I completely misinterpreting something??

[car2403]

Are we saying the same thing?? Or am I completely misinterpreting something??

 

I don't think so, then.

 

The Determination information provided when the agreement is taken out would determine how the agreement is to be terminated - usually, this is in the form of a final and immediate demand for repayment, followed by a termination period, then termination.

 

I'm not an expert on how this ties in with the CCA, but I do recall Peter saying that the contractural agreement between the parties to allow termination by termination notice, even in the case of a default, would be acceptable as the CCA would take the agreement between the parties in to account. I also recall something about voluntary enforcement of the agreement, even if not complying with the CCA, which would also be effective.

 

I'm not sure how this applies to your (or any!) case, to be honest, so if it's important we may need to get some of the big guns in to explain what is going on.

 

[chris1977]

I see what you mean Chris. Surely though, the banks can not just decide to go against the requirements of the CCA, irrespective of whether they include this in a credit agreement or not? Clearly I'm only considering the CCA and the Determination here - I dont have any real knowledge of the wider issues or of consumer or contract law. I'm sure the issue of the requirement for Default Notices for Overdrafts must have been raised in the past (and most likely dismissed or the floodgates would already be open). So, the chances are that I'm missing something but I'd be very grateful if the big guns could clarify this

 

Cheers

 

Chris

[steven4064]

Chris

 

The OFT determination means that bank overdrafts are exempt from part V of the CCA 1974 (ss55-73). Section 87 which deals with defauilts is in part VII. IMHO, they should issue a default notice.

[chris1977]

Chris

 

The OFT determination means that bank overdrafts are exempt from part V of the CCA 1974 (ss55-73). Section 87 which deals with defauilts is in part VII. IMHO, they should issue a default notice.

 

Hi Steven, thanks for your post. That's definitely my interpretation but I'd be really surprised if this hasn't been addressed before, considering that it's such common practice for banks to "default" customer's accounts without first issuing a valid Default Notice

[steven4064]

Chris

 

s87 says

87.--(1) Service of a notice on the debtor or hirer in accordance with section 88 (a default notice) is necessary before the creditor or owner can become entitled, by reason of any breach by the debtor or hirer of a regulated agreement,--

(a) to terminate the agreement, or

(b) to demand earlier payment of any sum, or

© to recover possession of any goods or land, or

(d) to treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred, or

(e) to enforce any security.

the only exception is

(4) Regulations may provide that subsection (1) is not to apply to agreements described by the regulations.

I don't know of any regulation - although there may be.

[Dileepan]

HI Guys

In my case My Bank A/C overdrawn by unauth OD(DDebit)then bank applied unpaid item Charge.then this balance started to grow up by massive monthly charges every month.at one stage bank contact me over the phone and Arranged a repayment plan and also adviced me me this was a CCA.but I never received any letters from bank confirming this.

but on monthly bank statements they made the overdrawn balance as overdraft limit then started to deduct the limit by agreed monthly repayment amount every month. I failed to make payments so they started to add charges again .then this arrangement/Agreement? expired. bank also wrote me a formal letter saying this planned OD expiring and they will make further decision about extending OD .then no communication from them for a while.

then i received a letter from them saying to pay the full balance and not

doing so will damage my credit worthiness.I didn't take this serious and I started to make a claim against the bank was looking for advice on the internet.finally i received letters from DCA and found out Default registered

1.did the bank follow correct procedures in this matter(no signed CCA,no formal letter saying OD limit,No final demand notice,no default notice sent by the bank)

2.is this Default legitimate

 

if not what is the correct route to fight

advice please

[steven4064]

I have now confirmed that s87 does apply to overdrafts

[chris1977]

I have now confirmed that s87 does apply to overdrafts

 

Hi Steven, thanks for looking into this! Can I ask where you got your information from? I might be wrong here but I think this could be quite a big deal......

 

Cheers

 

Chris

[steven4064]

Eventually from pt2537 who is a law student

[JOSH_IOU]

So what is the name of the case then Steven?

 

Should we include the name PT2573 in our particulars and say steven4064 said they were relevant?I shoudlnt think so lol

[chris1977]

Brilliant, thanks Steven.

 

So unless I'm mistaken, for a current account with an overdraft, if the bank are to terminate the agreement and default the customer, they must first issue a Default Notice which complies with the form and content requirements stipulated in CCA s.87.

 

So, no valid Default Notice = unlawful default = inaccurate reporting to CRAs.....?

 

I must admit, it all just seems a little too straight-forward and I'm pretty sure I must be missing something. Might just be one for the judge to decide on the day

 

Cheers

 

Chris

[steven4064]

So what is the name of the case then Steven?

 

Should we include the name PT2573 in our particulars and say steven4064 said they were relevant?I shoudlnt think so lol

 

No case law that we know of but we do know that overdrafts are exempt from Part V (ss55-73) of the CCA 1974 by virtue of s74. They are not exempt from s87, so it must apply.

So unless I'm mistaken, for a current account with an overdraft, if the bank are to terminate the agreement and default the customer, they must first issue a Default Notice which complies with the form and content requirements stipulated in CCA s.87.

 

So, no valid Default Notice = unlawful default = inaccurate reporting to CRAs.....?

That is what we think is the case, yes.

[chris1977]

 

No case law that we know of but we do know that overdrafts are exempt from Part V (ss55-73) of the CCA 1974 by virtue of s74. They are not exempt from s87, so it must apply.That is what we think is the case, yes.

 

Does anybody know of any threads where this has been used to challenge the recording of a default?

[car2403]

Does anybody know of any threads where this has been used to challenge the recording of a default?

 

I haven't seen any, but then, I don't think s.87 applies to overdrafts.

 

It's down to interpretation, IMHO - there's no chance a Bank will allow a test case through to get a final decision though. (Also IMHO)

[steven4064]

Why don't you think it applies, car?

[car2403]

Why don't you think it applies, car?

 

The Determination states that they need to provide details of how the agreement will be terminated, which implies that they can terminate the agreement without a default, if they so wish. If so, even where a default does occur, they can demand repayment and issue a termination notice, which would comply with the Determination, thereby meaning they don't need to issue a Default Notice, so don't need to comply with s.87.

[chris1977]

The Determination states that they need to provide details of how the agreement will be terminated, which implies that they can terminate the agreement without a default, if they so wish.

 

Hiya Chris. My interpretation of that requirement is that they have to provide details of how the agreement will be terminated, not that they can choose how the agreement will be terminated. Then again, that could be because that's what I want it to mean and to be honest, I can certainly see how it could be interpreted in the way you suggest.

 

 

If so, even where a default does occur, they can demand repayment and issue a termination notice, which would comply with the Determination, thereby meaning they don't need to issue a Default Notice, so don't need to comply with s.87.

 

I'm struggling to understand this part though Chris. Why would they demand repayment if the customer hadn't defaulted? So, in the example you gave, wouldn't a Default Notice still be required? A termination shouldn't be used in cases of default and that sounds like a default IMHO...

 

Cheers

 

Chris

[Castlebest]

I think the problem arises because they think they can do what they like... or rather... and more likely, they employ a bunch of desk monkeys who do a weeks course on what they are allowed to do and armed with this knowledge and the HSBC handbook do what they think should be done so they often get it wrong.

 

One thing is certain, you have spent more time researching your case than anyone at the bank has and on that basis you are more likely to be right.

 

pete

[car2403]

Hiya Chris. My interpretation of that requirement is that they have to provide details of how the agreement will be terminated, not that they can choose how the agreement will be terminated. Then again, that could be because that's what I want it to mean and to be honest, I can certainly see how it could be interpreted in the way you suggest.

 

This is my point - if the Determination states they have to tell you how they will terminate the agreement and they stick to it, it's irrelevant that you defaulted so they should have sent a default notice, as they have fully complied with the Determination.

 

I'm struggling to understand this part though Chris. Why would they demand repayment if the customer hadn't defaulted? So, in the example you gave, wouldn't a Default Notice still be required? A termination shouldn't be used in cases of default and that sounds like a default IMHO...

 

It is a default! The point is, they don't need a default notice, as it's not what they provided to comply with the Determination.

 

IMHO, this is because the OFT wanted - back when the Determination was issued - to protect the bank as much as the consumer, in this case, and haven't put their error right yet.

 

I think the problem arises because they think they can do what they like... or rather... and more likely, they employ a bunch of desk monkeys who do a weeks course on what they are allowed to do and armed with this knowledge and the HSBC handbook do what they think should be done so they often get it wrong.

 

One thing is certain, you have spent more time researching your case than anyone at the bank has and on that basis you are more likely to be right.

 

pete

 

Agreed, Pete.

 

Remember also, though, that it's all about how you convince the Judge - they will argue against you whatever you say, so the more convincing and prepared you are to counter their argument against you, the more you are likely to win.

 

As I mentioned above, it's about interpretation - CAG may have a different interpretation to me, but it's the Judge you need to convince.

 

[chris1977]

 

One thing is certain, you have spent more time researching your case than anyone at the bank has and on that basis you are more likely to be right.

 

pete

 

According to my missus I'm always wrong (even when I'm right), so I wouldn't be too sure Pete

 

Originally Posted by car2403

 

As I mentioned above, it's about interpretation - CAG may have a different interpretation to me, but it's the Judge you need to convince.

 

I think you're absolutely right Chris, it is down to interpretation and I'll be very interested to see how the bank try to convince the judge that they don't need to issue a default notice (or even a termination notice) in the prescribed form. Roll on September :grin:

[chris1977]

Received a bundle from the bank's solicitors yesterday as ordered by the Judge's special directions. Now the directions ordered that they were to provide the following:

 

- Copy of Default Notice (or similar document)

- Copy of any documentation that showed they complied with the requirements of the OFT Determination for overdrafts on current accounts

- Copies of any other documents which they are to rely on in their defence

 

What I received was:

 

- Computer print-out showing that a final demand letter was generated and a generic copy of a final demand letter.

- Computer print-out showing that an overdraft confirmation letter was sent out and a generic copy of an overdraft confirmation letter.

- Reference to copies of bank statements provided in the Defence showing the state of the account at the time of the alleged default.

 

On the face of it and assuming that the judge will accept the note on my record which states that the letters were sent as proof that they were, this would appear to scupper me, however........

 

1. The Final Demand letter is not a Default Notice as per CCA S.87.

2. The overdraft confirmation letter does not give details of charges applicable or how these will be varied (although it does refer to "the attached terms and conditions" but no such terms and conditions are attached and even if they were I'm not sure that this would comply with the OFT requirement that "this information shall be confirmed in writing.").

3. The overdraft confirmation letter does not specify the method of terminating the agreement.

4. There is nothing that shows they have met the following OFT Determination requirement:

 

"© that where a debtor overdraws his current account with the tacit agreement of the creditor and that account remains overdrawn for more than 3 months, the creditor must inform the debtor in writing not later than 7 days after the end of that 3 month period of the annual rate of interest and charges applicable."

 

Although all of the above is positive for me, as they clearly don't have a leg to stand on, it annoys me that they're continuing the charade, wasting time and money and abusing the process.

 

We have to exchange witness statements by 12th September but I feel like requesting the Judge strike out their defence based on this disclosure as it confirms that they never had any hope of defending the claim.

 

Any advice here would be appreciated. Do I carry on and prepare my witness statement? Or do I (can I) request that the judge strike out the Defence? Bearing in mind I have already suggested a VERY reasonable settlement to which they didn't bother responding.......

 

Cheers

 

Chris

[JOSH_IOU]

:)It annoys me that I am not geting back my money:D

 

Not a bad line for the claim

[JOSH_IOU]

Still dont no how they can justify this charge.

 

It would seem there fireing blanks to me.

[car2403]

You're unlikely to get the Judge to strike out their defence - it sounds daft, but everything you've said about what they've provided is right, but it needs to go to trial for the Judge to consider your argument against their disclosure. The fact they have disclosed something and are relying on their argument automatically means you won't get a strike out, IMHO, so I wouldn't even bother if I were you. (It would also delay the proceedings, as it would incur another hearing)

 

Your call, Chris.