HSBC managed account - Trying to remove a invalid? default

[chris1977]

Nice one! I'm off to the post office now to send it off.

 

I'll keep you posted.....

[chris1977]

Could somebody please explain to me why banks are exempt from using a Default Notice in the case of an overdraft? I've just read through the CCA 1974, the OFT Determination and Consumer Credit (Enforcement, Default and Termination Notices) Regulations again and I just can't see where they are exempt.

 

Seems the more I read the more confused I get ..... :-|

[Castlebest]

Because an overdraft isn't in essence a loan its an extension of your current account that allows you to have negative values as well as positive (probably not a good explanation but a good way to think of it)

 

your current account is regulated by the terms and conditions applicable to current accounts and these are not subject to the Consumer Credit Act.

 

pete

[car2403]

Part of the Determination allows for them to prescribe the method of termination of the agreement, so the letter they send originally will state the method of termination up on either your default of the agreement or their decision to terminate it otherwise. (All overdrafts are repayable on demand regardless of default or otherwise)

 

So, as the termination of the agreement has to happen as described in the agreement itself, it isn't subject to the prescribed default and termination process described in Part VII, s.87/s.88, of the CCA.

 

In essense, by using the overdraft, you are agreeing to the terms of the agreement as outlined by the bank in their letter to you when you sign/signed up for the overdraft. This falls in to one of the areas of the CCA that allows for "voluntary enforcement" - ie, you've agreed that the terms of the overdraft apply to you by implicitly agreeing because you've used the agreement.

 

It does get quite technical looking at the legal arguments, especially as you have to understand the contractual obligations created between/by the parties, as well as the effect of consumer legislation, but, in essence, only a termination notice giving you notice to repay in full or have the agreement terminated is usually the requirement.

 

I may have must confused you some more...

[Castlebest]

I knew that chris read my homer simpson version or cars brilliant actual version.... the effects are the same (use car's if your writing though )

 

pete

[chris1977]

Thanks, I suppose I must have missed the part in the determination that allows them to decide how they will terminate the account. I thought the determination only excused them from Part V of the act, not from following the prescribed method of termination, which is covered in Part VII.

[car2403]

Thanks, I suppose I must have missed the part in the determination that allows them to decide how they will terminate the account. I thought the determination only excused them from Part V of the act, not from following the prescribed method of termination, which is covered in Part VII.

 

In fact, they aren't exempt from Part VII - they use s.98 termination notices (non-default cases) to terminate, instead of a s.87/s.88 default notice.

 

In theory, they never terminate an overdraft agreement because you are in default - they demand repayment in full, because they can, then terminate when you don't.

 

In practise, they terminate because you are in default, otherwise why would they terminate the agreement?

 

It's all clock and dagger, but this is what the OFT wants - Parliament allowing them to do it - so who are we minions to argue?

 

It would be an interesting argument to have in front of a Judge though wouldn't it?

[chris1977]

I hear what you're saying Chris, but I still don't see how they can dodge the requirements of Part 7 of the CCA by first demanding immediate repayment, then defaulting you if you don't pay up. A default is a default and, as an overdraft is a regulated CCA agreement under running-account credit, then in order to benefit from the CCA surely they need to conform to the requirements of Part 7 in order to default someone. That is, issuing a default notice which prescribes to the form and content required. The fact that they tell you in advance how they would terminate the account doesn't make it right to ignore the Act's requirements. If I told someone I was going to punch them in the face, then went ahead and punched them in the face, it wouldn't make it right just because I'd warned them first.

 

Maybe I'm going over old ground but if I'm missing something here I'd be grateful for a bit of guidance otherwise I'll never understand my own case and I have a feeling I'm gonna really need to...

 

Cheers

[car2403]

Not old ground - these are valid questions.

 

There is a difference between a "default" and a "Default"; a default is a failure to maintain your obligations under a contract, whereas a Default is a formal method of termination of a consumer credit agreement.

 

An overdraft is effectively a regulated agreement that falls short of a full consumer credit agreement, due to a relaxation of the form/content requirements in the form of exemption from Part V of the Act. By breaching any term of that contract and, in fact, even if you don't breach the agreement, the bank can demand full and immediate repayment - this is their right under the contract which forms part of the agreement. Such a demand doesn't require a Default Notice, as you don't have to be in default to have a demand made.

 

Ironically, being in default isn't dependant on having a Default! A Default would, (or should!) however, always flow from a default!

 

A complicated bit of law to explain, as it merges contract law with consumer law and makes this a minefield. Upshot of this is, the bank calls the shots and you allow them to because you consented to the terms of the agreement by using the overdraft. Their, arguably well grounded, response is that if you don't like it you shouldn't have used the overdraft. Harsh, but fair, if you look at it like that.

 

Ultimately, they hold an argument that you've consented to all this as you've used the overdraft based on the contract - which isn't fully regulated by the CCA. (I believe voluntary/consentual enforcement is a defence against an unlawful enforcement claim also, just to stick the boot in)

[chris1977]

Chris, thanks for taking the time to explain. I understand where you're coming from now. I think the long and the short of it is..... I'm screwed! In the eyes of the law, it looks like the bank has done everything right (and I'm saying that through gritted teeth!)

 

I'll wait and see what the bank come up with in response to my most recent letter, but I'm not holding my breath....

[car2403]

They won't budge an inch - this is all pre-litigation protocols before issuing a court claim to force their hand. It won't see a Court room - have you read my Barclays claim thread recently?

 

Don't forget they DO need to send a s.98 Termination Notice, which, if it includes unlawful penalty charges, can still be challenged - in the same way that amounts to an unlawful default amount on a Default Notice, IMHO.

 

Working for me...

[chris1977]

have you read my Barclays claim thread recently?

 

I've been keeping a very close eye on it ;-)

 

Don't forget they DO need to send a s.98 Termination Notice, which, if it includes unlawful penalty charges, can still be challenged - in the same way that amounts to an unlawful default amount on a Default Notice, IMHO.

 

Working for me...

 

The thing is, your default amount was made up mostly of bank charges, in my case bank charges make up a tiny fraction of the default amount. Still, I suppose you can't have varying degrees of unlawfulness can you? I guess an unlawful default is an unlawful default irrespective of the amount....

 

Incidentally, I got a response to my SAR yesterday. Despite the fact that I gave them a comprehensive list of the types of record I required, they chose to assume that it was in relation to a bank charges claim and forwarded 6 years worth of bank statements and nothing else. I've replied advising them they have only 8 days left to comply with my request or they will be in default and will have committed an offence under the DPA.

 

I'll keep you posted.

 

And good luck with your Barclays case Chris

 

Cheers

[car2403]

I've been keeping a very close eye on it ;-)

 

Thought you might...

 

The thing is, your default amount was made up mostly of bank charges, in my case bank charges make up a tiny fraction of the default amount. Still, I suppose you can't have varying degrees of unlawfulness can you? I guess an unlawful default is an unlawful default irrespective of the amount....

 

Hmmm... Yes and no, is the answer.

 

The Woodchester Lease Management v Swain ruling will render a Default Notice that is inaccurate unlawful, therefore any Default as a result would be unlawful as a result.

 

The argument here is that penalty charges applied to the account render the Termination Notice, (akin to a Default Notice in effect) unlawful as well.

 

The Woodchester case ruling Judgment includes the words;

 

"Moreover, a lender should be able to calculate quite easily what sum was due, whereas an ordinary hirer might not know, although the court might overlook an error which could be described as de minimis. In the instant case, the breach was adequately described as 'failure to pay the rentals specified on their due dates', but it did not specify accurately what sum of money had to be paid. Accordingly, the assistant recorder had been incorrect to hold that the default notice was not rendered defective by alleging an amount which was in excess of the sum necessary to remedy the breach"

 

Now, what is "de minimis" would seem to be a question of fact. (It isn't clear from the ruling!) The question of fact, in your case being, does the application of unlawful penalty charges mean that the Default Notice is sufficiently inaccurate to render it unlawful?

 

Personally, this is why I think your case won't see a Court room - they won't want a precedent being set saying what is/isn't unlawful with regards to Default Notices. Bar the OFT TC outcome, they can't show the penalty charges are lawful neither. In either case, you can argue that, with penalty charges then contractural interest being applied, the impact of the charges was so great that the Notice should be unlawful, IMHO.

 

Incidentally, I got a response to my S.A.R - (Subject Access Request) yesterday. Despite the fact that I gave them a comprehensive list of the types of record I required, they chose to assume that it was in relation to a bank charges claim and forwarded 6 years worth of bank statements and nothing else. I've replied advising them they have only 8 days left to comply with my request or they will be in default and will have committed an offence under the Data Protection Act.

 

Don't take any prisoners on this one;

 

http://www.consumeractiongroup.co.uk/forum/bank-templates-library/6986-data-protection-act-non.html

 

and you might want to consider a separate action?;

 

http://www.consumeractiongroup.co.uk/forum/bank-templates-library/6971-data-protection-act-non.html

[chris1977]

I guess it's just a case of waiting for a response now, then I'll take it from there. As you say though Chris, looks like Court is the only way. That said, I'm tempted to try the FOS first, for two reasons. 1) If it does end up in court, I don't want to show that court was a last resort, and that I'm not abusing the process. 2) I have copies of emails from my local branch manager that indicate I attempted to resolve the matter within the 28 days period granted by the termination notice, but through the bank's negligence, this was not possible and they continued with the default.

 

Do you think this would be a valid route or just an unneccessary step in what is already going to be a lengthy process?

[car2403]

Depends on how fast you want it removed. You aren't guaranteed success with the FOS, especially on this issue, as I believe they will close ranks on you, IMO. (which is why I didn't go that way) Remember also that the DPA arguments won't wash with the FOS, as this is "outside their remit", as the ICO is the DPA regulator! (Their words, not mine)

 

I don't see the Judge viewing your case differently because you've been to FOS first, so I can't see value in doing it really.

 

It's your case though, so don't let me sway you - I will help either way - but just be aware you could go to FOS then have to go to Court to move the Default. The Court is the only way to take a hollistic approach, with a combined CCA/DPA argument, IMHO.

 

The fact this lot always peddle the "you can now refer your complaint to the FOS" strapline does make me wonder what their intentions are. You won't hear them saying "fine, take us to Court", will you?... (Here we go with the conspiracy theories!)

 

[chris1977]

It's your case though, so don't let me sway you - I will help either way - but just be aware you could go to FOS then have to go to Court to move the Default. The Court is the only way to take a hollistic approach, with a combined CCA/DPA argument, IMHO.

 

I see where you're coming from Chris, and having browsed through a fair amount of the threads on here the general theme is that FOS = No joy! With that, and your comments, in mind and the fact that I don't want this to drag on any longer than it has to I think I'll bypass the FOS and go straight for Court.

 

The fact this lot always peddle the "you can now refer your complaint to the FOS" strapline does make me wonder what their intentions are. You won't hear them saying "fine, take us to Court", will you?... (Here we go with the conspiracy theories!)

 

 

I never really believed in conspiracy theories......until I found out that everyone was out to get me

 

I received a stock response from the bank today in reply to my most recent letter dated 11th March. They are "looking into the matters" that I have raised and will contact me with a full response as soon as they have completed their investigation.

 

They also "enclose a leaflet explaining how these matters are dealt with." But failed to actually enclose said leaflet! I wonder if that's what happened to my original Termination Notice! Anyway, I'll post the content of the next letter as soon as I recieve it.

 

I've also sent a letter to them highlighting their failure to comply with my SAR, enclosing a second cheque as they destroyed the first one.

 

As an aside, I had an interesting conversation with a solicitor today who, after listening to the particulars of my case advised that I seek assistance from, wait for it...... the Consumer Action Group! Brilliant!

[chris1977]

OK Here's the letter I sent them on the 11th March......

 

Dear Sir/Madam,

Re: "Default” showing on Credit File

 

Dear Sir/Madam,

 

I refer to your letter dated 19/02/2008.

 

Your response in no way satisfies my request for information, nor does it fully substantiate the grounds upon which you are continuing to process Default information with third party Credit Reference Agencies. I will clarify this by responding to each of your points in turn.

 

You state in your response that a Final Demand letter was issued on 28th June 2007, yet you have provided me with a signed copy of a Final Demand letter dated 19th February 2008, addressed to my current address and not the address at which I was residing during the time of the alleged Default. This implies that you do not have a copy of any Final Demand Letter and have simply created one using my current details and the amount of the original alleged Default. Furthermore, the original Default amount includes at least one penalty charge which was refunded to me as part of a larger claim against the bank in late 2007. If it is found that such penalty charges are unlawful, this will make the Default amount inaccurate, thereby rendering the entire Default invalid. There exists case law which supports this.

 

You state that no response was received to your various correspondence relating to the running of my account. I contest that no correspondence was ever received, this includes the alleged Final Demand Letter. Furthermore, when I became aware that the account was under review (I discovered this when I was unable to withdraw funds from my account, despite being within my overdraft limit) I made every effort to resolve the issue, even visiting my local branch at the time to speak with the Branch Manager, as the Customer Service Centre appeared to be incapable of directing my call to the correct department, nor to arrange for a call back from anyone in the correct department. I followed up this visit with numerous emails to the Branch Manager. I have copies of all emails to and from the Branch Manager which shows that a) I made the bank aware that I was not receiving any correspondence and b) that I was making every effort to contact the bank to bring my account back in line and also to come to a resolution regarding repayment of the overdraft. The emails also show that all of this took place within the 28 day period granted by the alleged Final Demand Letter and, as such, the account should never have been placed in Default as it was due to negligence on the bank’s part, not mine, that we were unable to resolve this satisfactorily prior to the account being placed in default.

 

You also state that the bank, as a subscriber to the credit reference bureau, has an obligation to other lenders to ensure that the information recorded is accurate. I must draw your attention to the Consumer Credit Act 1974. To clarify, under the Act, defaulting a debtor without following the correctly prescribed process would be unlawful. Further to this, such default information is covered under the Data Protection Act 1998 and as such - were it 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 initial 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 Notice 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 correspondence, should you fail to respond, or respond in the negative, to this letter.

 

I would, however, be happy to reconsider my position upon satisfactory resolution of my complaint; that is the removal of any default entry relating to my account with HSBC from my credit files held by all Credit Reference Agencies including, but not limited to, Experian, Equifax and Callcredit.

 

I trust this makes my position clear.

 

Yours faithfully

 

And this is their response to that letter, received today:

 

Dear Chris1977

 

Further to our letter dated 17th March 2008, I have now fully investigated the matter you raised.

 

Whilst we fully appreciate your position regarding the passing of our debt to Metropolitan Collection Services, and your intention to consider legal action with regard to this case, unfortunately after fully reviewing our records, we remain unable to agree your request that the information recorded with the Credit Reference Agencies be removed.

 

I have also reviewed the decision to pass the debt to Metropolitan Collection Services. I acknowledge that you were incorrectly informed of the procedures we follow when referring a debt for recovery, for which I apologise. However, I can confirm that no error was made in the demand and recovery of your debt and am therefore unable to recall your debt to HSBC.

 

Thank you for taking the time to contact me to bring this matter to my attention, I am only sorry it was necessary for you to do so. I hope that matters have now been resolved to your satisfaction. However, should this not be the case, I enclose a copy of our leaflet which explains how these matters are dealt with and the attached guidance sheet explains the next steps available to you.

 

If you have any queries or would like any further information, please contact me on 0845 600 6423 quoting reference number **********.

 

Service Improvement Officer

 

I'm at work at the moment so haven't really got time to analyse this but my initial thoughts are "what a crock of [edit]!"

 

Court it is then. Happy days! :-|

[car2403]

They've totally ignored you again, Chris.

 

They also haven't fully complied with your DPA notices, as they haven't explained the reasons why they are refusing to comply with them, IMHO.

[chris1977]

Nope. Like I said, a crock of [EDIT]. They haven't yet complied with my S.A.R - (Subject Access Request) either but they've got a couple of days left before they've officially defaulted so I'll wait before sending the template you suggested.

 

I guess I better get reading up on small claims procedure.....

[chris1977]

I've had another read of the above letter and have decided to write to them one last time before commencing legal proceedings. I'm furious that they have failed to substantiate their position, let alone acknowledge any of the points made in my previous correspondence, yet they have the sheer audacity to close with the statement "I hope matters have now been resolved to your satisfaction." What planet are these people on?? Aside from the fact that they have completely ignored me, a couple of things confuse me about this letter:

 

Whilst we fully appreciate your position regarding the passing of our debt to Metropolitan Collection Services, and your intention to consider legal action with regard to this case, unfortunately after fully reviewing our records, we remain unable to agree your request that the information recorded with the Credit Reference Agencies be removed.

I have never questioned the decision to pass the debt to MCS..... And is it just me or are they implying here that, by virtue of the fact that the debt was correctly passed to MCS, they were right to record default information with the CRAs?

 

I have also reviewed the decision to pass the debt to Metropolitan Collection Services.

I didn't ask you to review that decision once HSBC, let alone twice...

 

I acknowledge that you were incorrectly informed of the procedures we follow when referring a debt for recovery, for which I apologise. However, I can confirm that no error was made in the demand and recovery of your debt and am therefore unable to recall your debt to HSBC.

I don't even know what they're acknowledging here. Are they admitting that they failed to advise me of the process for terminating the account, thereby failing to comply with the S74 determination?

I'll knock something up over the weekend and send it to the senior quality manager, as they suggest. I know it's not likely to achieve anything other than to delay matters further, however, I'm determined to get a response that shows that they've actually read my letters and not just skimmed over them before printing off a template that looks the best fit!

 

Back to Car's Barclays thread for me then

[car2403]

Chris, understand how these "complaints" are managed - I see them being constructed from standard responses and mashed together in a vicious attempt to make sense. This just shows the level of contempt they have for their customers - they can't even write a letter in proper English.

 

Have a look at my Barclays thread - post 8 seems the most relevant, perhaps - then post up what you're thinking of sending and I'll have a look.

 

I would do this for you, but you know more about this than me and I'm really busy with claims/other threads and I don't want to tell you how to suck eggs

[Castlebest]

Chris, understand how these "complaints" are managed - I see them being constructed from standard responses and mashed together in a vicious attempt to make sense. This just shows the level of contempt they have for their customers - they can't even write a letter in proper English.

 

There is no middle management left in any of the banks, they employ "kids" and give them a rule book to quote from, thats why they cant answer a properly constructed letter with even a half decent argument backing it, because the rule book doesn't allow for them to be wrong.

 

The same is true about the so called help lines where it is so obvious the telephone "helpers" are quoting from cue cards.

 

I firmly believe you could actually say anything within reason and get the same responses we get now

 

pete

[chris1977]

It's just frustrating and very insulting! The only positive thing I can find in this, is that this kind of obstructive behaviour should P the judge off if we ever make it to court.

 

I'll write a response over the weekend some time (Chris, I think post 18 of your Barclays thread seems the most relevant, rather than post 8). I'm just going to summarise their failings again and insist that they substantiate their claim that they have done everything right.

 

If (when) that doesn't work, I'll start court proceedings.

 

I've never been to court in my life, let alone take someone to court, so I'd be really grateful for a bit of guidance when I get to that stage. Is Patricia Pearl's book worth investing in??

 

Thanks peeps, for all your help so far

 

Chris

[car2403]

I couldn't recommend the book, because I haven't read/used it myself, but I didn't find a need to use it - CAG is a fuller resource, IMHO, which is free and has everything you need. If I don't know the answer, someone else will.

 

It is daunting, but it's not as hard as it seems.

[Castlebest]

I've never been to court in my life, let alone take someone to court, so I'd be really grateful for a bit of guidance when I get to that stage. Is Patricia Pearl's book worth investing in??

 

Just take everything one step at a time, make sure you understand all of your arguments and don't take what the bank and their solicitors say at face value . If/when you get a court date you will be ready for it .

 

I do have a copy of Patricia Pearl's book but I have to say I have only opened it up once, the information and guidance here is normally targeted at the specific problem you have at that time and I think for that reason alone is far better than trying to get an answer from a book.

 

pete