HSBC managed account - Trying to remove a invalid? default

[chris1977]

Update..... Today I received a letter from HSBC enclosing a signed copy of "the" final demand letter. This final demand letter is dated the 19th Feb 2008, so yesterday! Bearing in mind that the default occurred in mid 2007 this letter is about as much use as a chocolate teapot. Not only that, but the letter is addressed to my current address - I have only lived here since July this year!

 

So, I'll be sending a follow-up letter tomorrow to acknowledge receipt of this waste of paper and stamps, and to advise them that the statutory notice I sent remains extant as they have still failed to substantiate the information they have passed to the CRAs!

 

Irrespective of the various acts to which they are obliged to adhere, I find it quite insulting that they expect their customers to just accept a less than half-hearted attempt at resolving a basic query written in plain English, and with no explanation of why they were unable to provide the requested information. What part of "signed copy of the original default notice" did they not understand??

 

Rant over :grin:

[car2403]

Standard process I'm afraid Chris - bombard you with letters trying to scare you in to paying up, when the account is in dispute.

 

Send them this;

 

I refer to your recent letter dated XX/XX/XXXX.

 

You will see from your files that this account is “in dispute” and you have failed to reply to my s.77/s.78 Consumer Credit Act 1974 request dated XX/XX/XXXX.

 

I am writing to inform you that this dispute still stands and has not been resolved by your company.

 

 

 

 

 

As this account is in dispute and you were aware of this and are continuing to carry out collection activity, I now feel that you are in breach of your obligations under;

§

The Office of Fair Tradings Collection Guidelines – s2.8;

o

“i. failing to investigate and/or provide details as appropriate, when a debt is queried or disputed, possibly resulting in debtors being wrongly pursued”

§

The Banking Code – s.13.6

o

“k. not ceasing collection activity whilst investigating a reasonably queried or disputed debt.”

§

Your Consumer Credit License

 

 

 

 

 

As such, I must ask you to take notice that you must cease all collection activity with immediate effect. You have failed to produce a properly executed credit agreement and as such I dispute the entire balance of the alleged debt is unenforceable. As there is no agreement between us, you also do not have permission to continue to contact me regarding this account, either by post or by personal contact, be that by telephone or visits to my property. In fact, OFT rules and regulations clearly state that you can only visit me at my home if you make an appointment and I have no wish to make an appointment with you. There is only an implied license under English Common Law for people to be able to visit me on my property without express permission; the postman and people asking for directions etc (Armstrong v. Sheppard and Short Ltd [1959] 2 Q.B. per Lord Evershed M.R.). Therefore take note that I revoke license under Common Law for you, or your representatives, to visit me at my property and if you persist in sending "doorstep callers" to my home, you will be reported for harassment and be liable for damages for a tort of trespass. You would also be liable for conspiring in a tort of trespass by acting in defiance of my instructions and sending someone to visit me nevertheless. Should it be necessary, I will obtain an injunction from the Court.

 

 

I also deem any further collection activity, of any nature that involves contacting me in relation to this account, an act of personal harassment, for the reasons outlined in this letter. Please ensure that your system is updated to reflect this, as I will bring any further letters or phone calls to the attention of the Police, to whom I will make a formal statement regarding your conduct given I have already warned you your behaviour causes me to feel harassed.

 

I am of the view that your continued harassment of me puts you in breach of Section 40 of the Administration of Justice Act 1970, and the Protection from Harassment Act 1997.

 

If you continue to harass me by calling me, you will also be in breach of the Communications Act (2003) s.127 and I will report you to OFCOM, Trading Standards and The Office of Fair Trading, meaning that you will be liable to a substantial fine.

 

Be advised that any further telephone calls from your company will be recorded and used as evidence in any further formal complaint.

 

If you wish to resolve my complaint, as has been suggested in your recent letters to me, you must supply the documentation previously requested to substantiate your claims against me under the alleged agreement. Failure to do so will result in my ignoring any further letters from you and the actions outlined herein being taken in complaint against you. I will not correspond further with you regarding this issue unless you can fully substantiate your claim as I have outlined.

 

Yours faithfully

[chris1977]

Early start Chris.....?!

 

Thanks for that. The thing is, they haven't sent the final demand letter as a way to scare me into paying. I did ask them for a copy of the original default notice when I CCA'd them, so they've sent this in response, however, all they seem to have done is printed off a generic demand letter two days ago and popped in the original default amount. They've even used my current address at the head of the letter so this clearly is not a copy of the original default notice as I have only lived at that address since July!

 

Sorry, crossed wires methinks....

[car2403]

Even better, because that isn't a Default Notice - so it sounds like they don't have one.

[chris1977]

Well that's what I thought when I initially saw it, but then I got to thinking about the OFT determination for overdrafts and from what I've read in these forums I'm pretty sure they don't need to subscribe to the form and content of a default notice under the CCA 1974.

 

I don't suppose you could point me in the right direction for a copy of the OFT determination so I can check on this could you? Although I reckon you probably know it inside and out by now!

[car2403]

You can get all that from my thread on Barclays, as I'm challenging my overdraft with them;

 

http://www.consumeractiongroup.co.uk/forum/barclays-bank/110184-car2403-barclays-bank-default.html

[chris1977]

OK thanks Chris. Having looked over your thread again, and at the OFT determination and CCA etc, here are the facts of my particular case and my understanding of where I stand...

 

1. Overdraft granted in March 2007.

2. Defaulted some time in August 2007 due to no account activity in 3 months, and account passed to HSBC's in-house collectors.

3. No default notice received.

4. So far HSBC have failed to provide a copy of the credit agreement, or an original default notice.

5. Received a signed "original" final demand letter which they had dated the 19th February, with my current address at the head of the letter, not the address I was living at when the default occurred.

6. Even with the above, there is a good chance that none of this will be grounds to have the default removed if they can prove that they conformed to the OFT determination. So, I need to check that at, or before, the conclusion of the agreement they informed me of:

 

a. The credit limit

b. The interest rate

c. The method of terminating the agreement

 

7. So, if I can prove that they did not conform, then they have to have had complied with Section V of the CCA in which case I should have them over a barrel because of 1 to 5 above! But, if the OFT determination applies, I will have to then rely on the fact that approximately 10% of the default amount was made up of penalty charges, potentiall making the default invalid as per Woodchester Vs Swain. But again, this will depend on the outcome of the OFT test case

8. Have CCA'd HSBC (unsuccessfully)

9. Followed up the CCA with a statutory notice under the Data Protection Act as they have failed to provide a copy of my agreement to share data and I also outlined their failure to comply with my CCA request.

10. Sent them SAR and will start my claim for bank charges on receipt of statements

 

Originally, I was quite confident that I could be in with a chance of getting this default removed but the more I read on the subject, particularly the OFT determination etc, I'm starting to wonder if I'm not just wasting my time and effort.

 

I know there's quite a lot of information here but I'd be grateful if someone could let me know if I'm along the right lines.....

 

Thanks

[car2403]

You've got it in one... nice to see a poster investigating their own claim, then just asking for clarification - lots of people ask and ask and ask, but you've taken the bold step of wanting to understand your own case! Excellent!

 

I'm not convinced you don't have a case - you have the same case I have against Barclays and look how far I've gotten with that one! Still some way to go, probably waiting for the OFT TC outcome, but that's looking promising and is due in May, (it will take you 5-6 months to get to Court anyway!) but it's worth the risk, IMHO.

[chris1977]

Thanks for confirming Chris - there's so much information out there that it's easy to get confused so it really helps to get a second opinion, particularly from someone who's going through a similar situation.

 

I guess I'll just keep going the way I'm going and see what the bank comes up with in response to my SAR. And obviously the outcome of the test case. I know it's gonna be a long drawn-out process and I'm prepared (at least mentally!) for that....

 

Cheers

 

Chris

[chris1977]

Received a letter from the Customer Services Officer at HSBC today (faster than expected!). I've reproduced the letter below (spelling and grammatical errors included ):

 

Thank you for your dated 19 February 2008 the contents of which have been noted. I am sorry that you have had cause to contact us again on this matter.

 

My records confirm that your account was closed and the outstanding balance passed to our recovery agents on 15 August 2007 following the issue of Final Demand. Final Demand was issued on 28 June 2007 due to the account being operated outside of its agreed terms and conditions. At that stage the account was overdrawn and inactive. A copy of the Final Demand was forwarded to you on 19 February 2008. I have also enclosed copy statements which will provide you with the nexessary information on how the balance was acrued.

 

As no response was received to our various correspondence advising you of our requirements in this respect, the bank had no alternative other than to continue with its normal debt recovery proceudures which resulted in the closure of the account. This information would be recorded with credit reference agencies.

 

As a subscriber to the credit reference bureau the bank has an obligation to other lenders who use the data in assessing credit applications to ensure that this information is accurate.

 

Whilst I appreciate your comments, I am satisfied that the entries recorded with Credit Reference Agencies provides a fair and accurate representation of the manner in which your accounts had been operated. In these circumstances, it would not be appropriate to amend them.

 

Thank you once again for taking the time to bring your concerns to the bank's attention. I am only sorry it was necessary for you to do so. I trust matters can now be considered concluded, however, should this not be the case the next step in our complaint handling procedures is detailed on the enclosed guidance sheet.

 

Your sincerely

 

Mrs xxxxxx

Customer Services Officer

 

I've had a long day and I really can't be bothered to take it apart right now so I'll look at it properly tomorrow, but I see they've failed to even acknowledge the statutory notice I sent or the fact that the "default" amount included bank charges. And as for operating the account outside of the agreed terms and conditions....what terms and conditions are these exactly?

[chris1977]

Just had a thought.... this is from the OFT determination

 

© 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.

 

Now I'm pretty sure this didn't happen but I might have to wait until they respond to my SAR. I went into my overdraft on 22nd March and, according to the most recent letter from HSBC, my final demand letter was issued on 26th June, so that would be within the period required by the OFT, however, the only reference to interest and charges in the copy of the final demand letter they provided me with is this:

 

Interest will be added on the same basis as presently applies

 

Maybe I'm being picky here but that doesn't seem to conform. Also, as I mentioned in previous posts, the copy of the final demand letter is dated 19th Feb 2008 and is addressed to my current address, so has clearly been created that day and not a copy of the original at all! Any comments would be appreciated.

 

Cheers

[car2403]

I'd disagree with your comments on your s.10 notice - this is their reply to that, which is why it has arrived so quickly, as they are given 21 days to reply, stating their reasons why they won't comply with that notice. Whether their reasons are flawed or not is up for discussion, but they have replied to your notice and advised why they aren't complying - now starts the fun.

 

If the sequence of events means that they didn't comply with the OFT Determination, they can't claim the benefit of it. This means they need a properly executed credit agreement and it appears they don't have one.

 

If they also can't get the documentation right, they are on thin ice, IMHO. Having said that, a quick read of recent posts on my Barclays/HFC threads will show this is more common practise than we're lead to believe. This could be cause for a mass complaint to the OFT on this issue, IMO. We'll look at that later though, as getting this sorted for you is more important right now.

 

I'll need to work on a suitable response...

[chris1977]

I see what you mean about the S10 notice Chris, I guess I was just expecting them to actually refer to it in their response.

 

The thing is, I'm starting to think they may have all bases covered in terms of the OFT determination:

 

1. I have a copy of overdraft terms and conditions dated 28th March 2007 which sets out the credit limit, the interest rate and the method of terminating the agreement.

 

2. If they can prove that the final demand letter was issued on the 28th June 2007, then they have conformed to the OFT's requirement to notify me of the interest rate. Allowing one day for postage, the assumption would be that I received this letter on the 29th June 2007 - this would be exactly 3 months and 7 days as required! That said, is it sufficient to state that "Interest will be added on the same basis as presently applies"?

 

Now, with the above in mind, I guess I have to put them to proof that the demand letter they allege was sent to me on the 28th June 2007, actually was sent to me. I think they may struggle with this, particularly now that they have provided me with a signed final demand letter dated 19th February 2008 and addressed to my current address, an address they have only had on record since August 2007.

 

I've also had a bit of a dig around and found the following, which may or may not be relevant, I haven't quite decided yet....

 

1. On the 26th June 2007 (2 days before they allegedly issued a final demand letter) I received an offer of settlement in relation to my claim for all bank charges paid up to the 22nd June 2007. On further investigation, this appears to include a £25 charge which was applied to my account on 25th April 2007 and is part of the default amount. I appreciate that the Woodchester vs Swain argument could be used here but with the default amount being inaccurate by only £25 I'm not convinced that this would be enough to sway even the most sympathetic of judges!

 

2. I have been digging through my emails and have found an email trail between myself and the manager of the Bracknell branch of HSBC, showing that in mid July 2007, I visited the branch to investigate the reason for my overdraft being withdrawn as I had not received any indication from the bank that there was a problem with the account. Now, the bank allege that the final demand letter was issued on the 28th June 2007 and it allowed me 28 days to attempt to resolve the issue. By visiting the bank in mid July and following up this visit with further emails advising the branch manager that nobody had contacted me as he had promised they would, I have shown that I did attempt to resolve the issue within 28 days.

[chris1977]

If they also can't get the documentation right, they are on thin ice, IMHO. Having said that, a quick read of recent posts on my Barclays/HFC threads will show this is more common practise than we're lead to believe. This could be cause for a mass complaint to the OFT on this issue, IMO.

 

Where do I sign!!!:grin:

[car2403]

They don't have to prove you received the letter, only that it was sent, which can be done by a witness statement from a member of their staff.

 

They are likely just to provide another "copy" with the right information, which has just happened to me with HFC Bank regarding a Default Notice! The Court won't like it, though.

 

It's all about the technicalities now...

 

Can you post up the content of that final demand letter, personal details removed? Barclays included a EAR (equivilent annual rate) which includes compound interest - naughty, naughty, as that isn't the interest rate is it?

[chris1977]

Hi Chris, I'll post up a copy of the final demand letter when I get home this evening.

 

Finding the email trail between myself and the manager of the Bracknell branch has given me a bit of a confidence boost as I'm thinking this puts me in a pretty good position. I approached the bank when I became aware that I could not access my account and made several attempts to contact them to rectify the issue, even explaining my current situation to them and my intention to repay the overdraft etc. All of this took place WITHIN the 28 day period quoted in the final demand letter which I never received. Yet, despite this my account was closed and the default recorded.

[chris1977]

OK, here is the final demand letter that they sent me last week:

 

Chris 1977

Current Address

 

Reference: *****/***** 19th February 2008

 

Dear Chris1977

 

FINAL DEMAND

 

NAMES OF DEBTOR: Mr Chris1977

 

Despite our previous communication concerning your debt, we have to date received no satisfactory response.

 

We now DEMAND immediate payment of £****.** (amount in words).

 

Interest will be added on the same basis as presently applies.

 

YOU HAVE SEVEN DAYS TO REPAY IN FULL or let us have satisfactory proposals for repayment by instalments or otherwise. If immediate repayment in full cannot be made, the attached Statement of Means form must be completed and returned.

 

ACTION will be taken against you through DEBT COLLECTORS or SOLICITORS if you fail to comply with this demand. You may also be taken to COURT.

 

As a DEFAULTING DEBTOR, details of your default including your name and address may be given to the CREDIT REFERENCE AGENCIES named below if we have not received a satisfactory response from you within 28 days. Credit Reference Agencies supply information to lenders in order to establish people's credit histories quickly and simply. Lenders then use this information to help decide whether or not to accept applications for credit from customers. If details of your default are given to Credit Reference Agencies, this may make it more difficult for you to obtain credit elsewhere in the future.

 

Your sincerely

 

 

 

 

 

Mr ******

Manager, Credit Services

 

Enc.

 

Experian, Talbot House, Talbot Street, Nottingham NG1 5HF

Equifax Europe Limited, Anchor House, Ingleby Road, Bradford BD99 2XG

Callcredit plc, PO Box 491, Leeds LS3 1WZ

 

And then attached is a 5 page Statement of Means form (also dated 19th February 2008 and addressed to my current address).

[car2403]

OK, here is the final demand letter that they sent me last week:

 

And then attached is a 5 page Statement of Means form (also dated 19th February 2008 and addressed to my current address).

 

Interesting, as it doesn't say it's a termination notice under s.98 CCA 1974 but clearly is;

 

 

98

.—(1) The creditor or owner is not entitled to terminate a regulated agreement except by or after giving the debtor or hirer not less than seven days' notice of the termination.

 

It's my understanding that there is no form/content requirements for this type of Notice, as it's not used in cases of default. This is from s.98(6);

 

(6) Subsection (1) does not apply to the termination of a regulated agreement by reason of any breach by the debtor or hirer of the agreement.

 

Thinking about this off the top of my head, they shouldn't be using termination notices in cases of default, IMO.

[chris1977]

Hi Chris, I'm a little confused here. The CCA Section 98 applies to non-default cases so you're saying that using such a method to terminate the account should not give the bank the right to record a default... is that right?

 

Also, am I right in thinking that The OFT determination only applies to Part V of the act which covers entry into agreements and not which agreements are covered by the Act.

 

So in summary, if I understand it correctly, the overdraft is a regulated agreement, however, by conforming to the requirements of the OFT Determination the banks are exempt from the requirements of Part V, which covers entry into agreements. This does not exempt them from the requirements of the remainder of the act, which means that in order to default me they must have served a Default notice in the prescribed form, as required by Section 87?

[car2403]

Hi Chris, I'm a little confused here. The CCA Section 98 applies to non-default cases so you're saying that using such a method to terminate the account should not give the bank the right to record a default... is that right?

 

Stick with me kidda...

 

The Bank will use this section to terminate the agreement, as it is a regulated agreement under the CCA - they can't issue a Default Notice as that's not the way that the original (alleged) letter sent to you would have outlined the method of termination. This section is used to terminate agreements that aren't in default - what I'm say is that practise is suspicious in the least, but if they hadn't done this they couldn't have terminated the agreement. It's quite technical and a moot point really, as the bank has terminated - just thinking out loud as to what it means. (Although, we may need to consider this if you get to Court - be interesting to see what a Judge would decide)

 

Also, am I right in thinking that The OFT determination only applies to Part V of the act which covers entry into agreements and not which agreements are covered by the Act.

 

Technically not right.

 

The s.74 Determination covers agreements between banks and their customers to allow them to go overdrawn - they are regulated agreements regardless, so are covered by the Act. The determination just means that they aren't subject to the regulation of Part V. (form/content of agreements - not how you enter in to one)

 

So in summary, if I understand it correctly, the overdraft is a regulated agreement, however, by conforming to the requirements of the OFT Determination the banks are exempt from the requirements of Part V, which covers entry into agreements. This does not exempt them from the requirements of the remainder of the act, which means that in order to default me they must have served a Default notice in the prescribed form, as required by Section 87?

 

Replace "entry into agreements" with "regulation as to form/content of the agreement" and the rest is spot on, except for the Default Notice. They would have to have told you the method that they would use to terminate the agreement - in this case, a final demand requiring immediate payment of the outstanding amount.

 

Overdraft agreements in general, it seems, are never terminated using a Default Notice - (to my knowledge) the bank just demands full repayment, then records a Default on your CRA file if you don't repay it on demand.

[chris1977]

Thanks for clarifying Chris. I'm not really sure of my next step now though.

 

I guess I need to write back to them, explaining why I believe they have failed to provide the information I requested in my previous letter, so I'll have a look at your Barclays thread some time over the weekend to help me knock up a response.

 

On the other hand, I'm tempted to try a different route here, as the email trail I found between me and the branch manager proves that I did attempt to resolve the situation during the 28 day period granted in the final demand letter. Perhaps I could request that the default is removed on the grounds that I did as they requested in their alleged letter?

 

Happy to forward the emails to you if you want to take a look.

[car2403]

There's an email link in my sig.

 

I'll have a think about a reply and see if I can conjure up something interesting for you, too.

[car2403]

This is the letter we're responding to, right? (A bit confused by multiple posts above)

 

Thank you for your dated 19 February 2008 the contents of which have been noted. I am sorry that you have had cause to contact us again on this matter.

 

My records confirm that your account was closed and the outstanding balance passed to our recovery agents on 15 August 2007 following the issue of Final Demand. Final Demand was issued on 28 June 2007 due to the account being operated outside of its agreed terms and conditions. At that stage the account was overdrawn and inactive. A copy of the Final Demand was forwarded to you on 19 February 2008. I have also enclosed copy statements which will provide you with the nexessary information on how the balance was acrued.

 

As no response was received to our various correspondence advising you of our requirements in this respect, the bank had no alternative other than to continue with its normal debt recovery proceudures which resulted in the closure of the account. This information would be recorded with credit reference agencies.

 

As a subscriber to the credit reference bureau the bank has an obligation to other lenders who use the data in assessing credit applications to ensure that this information is accurate.

 

Whilst I appreciate your comments, I am satisfied that the entries recorded with Credit Reference Agencies provides a fair and accurate representation of the manner in which your accounts had been operated. In these circumstances, it would not be appropriate to amend them.

 

Thank you once again for taking the time to bring your concerns to the bank's attention. I am only sorry it was necessary for you to do so. I trust matters can now be considered concluded, however, should this not be the case the next step in our complaint handling procedures is detailed on the enclosed guidance sheet.

 

Your sincerely

 

Mrs xxxxxx

Customer Services Officer

 

Here's my considered response then;

 

Dear Sir/Madam,

 

I refer to your letter dated **/**/****.

 

Your response in no way satisfies my request for information, nor does it fully substantiate the grounds up on which you are continuing to process Default information with third party Credit Reference Agencies.

 

To clarify, under the Consumer Credit Act 1974, defaulting a debtor without following the correctly prescribed process would be unlawful. Further to this, such default informtion is covered under the Data Protection Act 1998 and as such - were found to be inaccurate - would also be unlawful under that Act. Without a correctly executed credit agreement, or evidence to show that you have otherwise complied with the requirements of the Act, any recording of such default information is indeed inaccurate. In fact, how can you demonstrate that I owe you money at all, not least show that I was in default of our agreement? This is the crux of my complaint, which has gone ignored in your replies to date.

 

As you have failed to provide any substantial evidence to show that you have complied with the requirements of the Consumer Credit Act 1974, I consider you in default of my request and further consider that the outstanding debt under the alleged agreement is now unenforceable due to your default. As such, I will no longer be making payment to this account, until such time as you are able to demonstrate that you have fully complied with the relevant legislation and subsequent regulations.

 

Further to this, I also consider that your response is an inadequate reply, for the reasons stated above, and I look forward to hearing from you in confirmation that you will comply with the Data Protection Statutory Notices issued to you previously.

 

I must warn you that any attempt to enforce this debt against me will be met with strong defence in reply. I am also considering taking legal action in the County Court to enforce your compliance with my previous correspondance, should you fail to respond, or respond in the negative, to this letter.

 

Yours faithfully,

 

If they don't come back with what you want, you'll have to consider your options - Court is the only way to force their hand here, IMO...

[chris1977]

Thanks for the quick response again Chris. I'll send that off tomorrow and see what happens.

 

I know you said it wouldn't add any value to my case but I'm really tempted to add something to this letter about the emails I found from the Branch Manager. They do show that I advised the bank that I was not receiving any correspondence, and also that I did attempt to resolve the issue - all of this within the 28 days granted in their alleged Final Demand letter.

 

I don't think it will do any harm to include it but I bow to your greater knowledge and if you think otherwise then please feel free to comment.

 

Cheers

 

Chris

[car2403]

The only value to can add is to "p" the Judge off at a later stage.

 

As you say no detriment for putting it in, so go for it, Batman!