Darset v MBNA

[Darset]

Why yet another completely new thread on MBNA?

 

 

Well, apart from the obvious fact of their being the hard-nosed bank everyone now loves to hate

I guess there are two reasons:

 

 

firstly, if I post material then others may give me help and advice, weapons to take on the company;

 

 

secondly, if I can essentially keep a diary of events going in chronological order,

logging acgtions and responses, then that may be helpful to others going through similar battles.

 

The background

 

I have two credit card accounts with MBNA.

 

 

One is an Abbey Visa account opened around eight years' ago with a current debit balance of just over £10,000

and the other is an affinity Mastercard account, opened a little earlier, with a debit balance of just over £7,000.

 

The Abbey card was initially issued by Abbey National

and the affinity card was initially issued by Bank of Scotland.

 

My cashflow over last year was terrible but despite that I have a perfect credit record over a number of credit cards going back perhaps ten years, there being one single delayed payment only (arising from a wrongly returned cheque).

 

A 0% balance transfer deal came to an end in March 2008 on the Abbey card and I was then charged 14.9%, roughly £125.00 interest monthly. Ordinarily I would have moved that to another beneficial rate elsewhere but I couldn't do that and so I was resigned to paying that and clearing the account one way or another quickly. However in June Abbey/MBNA announced that the rate would increase to 28.9% from July onwards. Correspondence about this is given in the next post.

 

As a result of a telephone call to MBNA the standard rate has been reduced to 23.9%, still a 60% uplift on the earlier standard rate.

 

Currently the MBNA affinity card is on a 0% balance transfer rate to November 2008 but although the nominal standard rate is 16.9% I fully expect exactly the same dramatic increase to be applied.

 

Up until this point I'd have had no intention of avoiding reponsibility for the debt but I'm outraged at the dramatic interest rate increase and the refusal of MBNA to act ethically and so I've now no qualms whatever about being as difficult as possible and, if necessary, reducing significantly the amount MBNA might eventually receive from me.

 

In immediate later posts I'll detail what I've done and how the saga progresses.

[Darset]

Correspondence about the interest rate increase

 

In June I received a standard letter from MBNA, partially undated (merely "June 2008") advising that from the July statement date the standard rate would increase to 2.1413% per month. This was signed by one Greg Reid, Senior Vice President, Europe Card Services.

 

I replied as follows:

 

Dear Greg Reid

 

I'm in receipt of your standard letter reference RAB071 where you advise me that the standard rate to be applied to this account is 28.9% from my July statement.

 

To virtually double an interest rate in this manner is quite unacceptable and I should like you to ensure that the rate remains at the already substantial figure of 14.9% and to write to me promptly to confirm this. If you demur on this then naturally I shall take the matter furtnher including, as necessary to the Financial Ombudsman and/or to the FSA as I believe that your proposed action certainly goes against thos bodies' codes of recommended pract and is probably also unsupportable undder appropriate contracts legislation.

 

 

 

This brought a holding letter on 20th June and a further holding letter on 14th July 2008 saing that they were looking into matters and would reply in due course. Naively, I took these somewhat at face value but I'm now certain they were merely devices to prevent my taking action early, thus allowing MBNA to apply the changes.

 

I duly received a reply nominally signed by one Gail Powell, Vice President which said:

 

... I note your comments regarding the increase of your contractural interest rate to 28.9% APR (variable). Periodically, MBNA undertake reviews of the interest rates charged and we believe that the rates we offer are a fair price for the product and service that we provide. We regularly review interest rates and, as a result of the reviews, adjust the rates on certain accounts. The factors we consider in such reviews include the way in which an account has been managed over a period of time i.e. the number of late payments and overlimit fees on an account. We also consider information provided by external credit bureaux.

 

Please note that it does not necessarily indicate that we have found any adverse account information for us to change your contractual interest rate. We do, however, make it clear in our agreements what our policies are concerning making changes to the agreement; you have agreed to these terms when opening the account.

 

 

As the rate has increased in accordance with your terms and condition's [sic] I regret that we are unable to alter this rate.

 

I hope that you find my response acceptable and I regret any inconvenience that this matter has caused you. We have now exhausted our complaint process; therefore I must inform you that this is our final response on the matter. If you remain dissatisfied with the response, you may refer your complaint to the Financial Ombudsman Service, within six months of the date of this final response.

 

...

 

 

I rang MBNA a few days later and spoke as if I'd just received the initial advice of a rate increase but made no mention of any other correspondence. This resulted in an immediate offer of a reduction to 23.9% and a refusal ("I don't have the authority to go any lower") to consider any further reduction. This was followed by another standard letter dated 11 August 2008, this [un]signed by one Thomas Rebel, Director of Customer Loyalty, saying how excited he was to confirm the standard rate of 23.9%.

 

 

I replied as follows:

 

...

 

While I appreciate that you have reduced the proposed standard rate from the earlier figure of 28.9% to 23.9% this is still an arbitrary and punitive increase from the standard rate of 14.9% and the comments in my letter of 16th June still apply.

The letter of 21st July from your colleage Gail Powell gives no justification for your action in, at least initially, virtually doubling the interest rate charged despite the management of the account having been conducted in an exemplary manner. I appreciate that the claim is made that it’s entirely open to MBNA Europe Bank Limited to charge what it likes but it’s equally clear that taking this action, whatever your terms and conditions say, is not only entirely foolish in terms of customer relations and the ability of customers to meet usury terms but also clearly constitutes an unfair relationship as defined initially, albeit in different wording, under the Consumer Credit Act of 1974.

I should like you, therefore, to revert the interest charged to a standard rate of 14.9%, that prevailing earlier. You may note that I have today made a payment of £250.00 to that account in respect of both capital and interest repayment but that that payment is conditional on a proper application of interest and that the interest, calculated at 14.9%, should not exceed £155.00 rather than the £247.07 wrongly demanded and that your acceptance of that payment constitutes acceptance of these terms.

Although I consider this account currently in dispute I’m prepared to give you sixteen days from today, that is until Friday 5th September 2008, to reply to me agreeing the reversion of the standard interest rate to 14.9%. If I do not receive a satisfactory reply by that date then I shall initially complain formally to the Financial Services Ombudsman and to the Banking Code Standards Board and reserve the right to take action through other bodies such as the FSA, the OFT and the courts system and during which period of dispute I shall naturally suspend all payments to you.

...

 

 

Around the same time I'd received a monthly statement with a minimum payment due of £247.07 of which £242.07 was claimed interest for the month. I sent a cheque for £250.00 endorsed on the back with:

"This account is in dispute and this cheque is issued subject to the terms set out in my letter to you of 20/08/2008 including that interest amounts to not more than £155.00 of this payment and that the balance is to be used for cpaital repayment of £95.00 this being in full and final settlement of the amount due during this period as per the statement ..." and duly signed it.

 

 

 

 

Simultaneously with all this I made a CCA request to MBNA in respect of both the Abby and the MBNA affinity accounts. This is the subject of the next post.

[citizenB]

A good idea to CCA them. Look forward to your next diary entry.

[Darset]

CCA request

 

On 11th August I wrote separate letters to MBNA in respect of the separate MBNA/Abbey and MBNA affinity cards, saying:

 

Please supply to me within the required period of twelve working days a copy of the original credit agreement relevant to this account, under the terms of the Consumer Credit Act 1974, sections 77-79, and on payment of the statutory fee of £1 which I enclose in the form of a cheque in your favour.

 

 

The two cheques were duly cashed and I then received a letter dated 28th August replying to both letters, signed by one Angela Cummings, Compliance Manager, and saying:

...

In accordance with section 78 of the Consumer Credit Act of 1974, I enclose copies of the credit card agreements, including applicable term and conditions, and statements of accounts. [sic]

We are sorry we have not been able to send you a photocopy of the original, but hope that you will find the enclosed copies clear to read and sufficient for your purposes.

If anything needs clarifying ...

 

 

For each account Angela had enclosed what appears to be a four page copy of current terms and conditions (identified in very small print with the account reference number at the foot but with nothing else and no signature), a copy of the most recent credit card statement, and a copy of the general so-called Information Table advising how payments are to be made and referring generally to the T&Cs.

 

 

I replied on 29th August as follows:

...

 

Thank you for your letter of 28th August with its enclosures of what appear to be copies of a currently issued credit card agreement, unsigned by either party, a current credit card statement and a current information sheet in respect of each account referred to above. I note your admission of your inability to provide photocopies of the original agreement on which the claim of validity of the terms of these accounts rests.

Unfortunately the material you’ve supplied doesn’t meet the requirements of the 1974 Consumer Credit Act nor of the subsequent associated Regulations. As I’m sure you know the Act refers to the requirement for a creditor under a regulated agreement to supply a copy of the executed agreement and of other relevant documents. While there is indeed some leeway given to providing reconstituted copies in certain clearly defined situations the supplying merely of current MBNA terms and conditions for accounts where agreement may have been made with predecessor companies under entirely different terms and conditions and, more specifically an agreement in clearly prescribed form, does not meet the requirements of the Act and MBNA Europe Bank Limited is consequently in default of its statutory obligations.

I look forward to your prompt reply but would point out that until the requested documents are received MBNA Europe Bank Limited remains in default and that I therefore dispute the validity of the interest charges made in particular and, in consequence, of the total amounts in general in respect of the accounts identified by the reference numbers cited above.

...

There it currently rests. I don't yet know if the £250.00 cheque has been cashed.

[poppynurse]

Subscribing - I'm a few steps behind you, just sent my CCA request.

[littlebert8]

your situation seems familiar.

 

I too have just received virtually the same letter that you have. It seems we both have an old BOS affinity card that they cant provide an agreement for.

 

If you are interested my thread is here.

[macie]

Could you not say that the new interest rate is unfair.

 

The APR under a credit agreement, or other charges falling within the total charge for credit, are normally "core terms" and so, if clearly expressed, would not themselves be subject to an assessment of fairness under the Unfair Terms in Consumer Contract Regulations.

 

However, apparently, a term providing for variations in the interest rate would not in the Office of Fair Trading's (OFT's) view constitute a core term within the meaning of the UTCCRs as it does not relate to the adequacy of the initial price. See the OFT publication OFT854 paragraphs 4.15 to 4.20 found here http://www.oft.gov.uk/shared_oft/business_leaflets/enterprise_act/oft854.pdf .

 

This OFT document is a very good read.

 

If it is alleged that the agreement is unfair within the meaning of Sections 140A to 140C of the CCA 1974 as amended, then, is it not then for the creditor (mbna in this case) to prove to the contrary?

[Darset]

littlebert8:

 

Thanks for the link - now had a look. Interestingly the "agreement" you've been sent is quite different to mine although parts do indeed overlap.

 

Yours looks like the fairly standard application form. Mine, however, although headed "Credit Card Agreement regulated by the Consumer Credit Act 1974" is, at least in that form, nothing of the sort being essentially a set of T&Cs running to three and a bit pages and quite possibly a template for a personalised agreement. There's a box headed "Cancellation Form" with space for name and address details and signature but no other boxes linking it to any specific person.

 

The two differ slightly in content and each has a 36-digit number at the foot, of which the last 16 digits is the specific account number. The first 13 digits are identical - 0823400002000 - and the next 7 are almost the same in each - beginning 80 and 61 respectively followed by 82610. These are presumably internal document codes or perhaps some form of account classification in part - anyone any ideas or knowledge about that?

 

Your comment about having lots of CCA requests to cope with is probably right. What's also interesting is the wide variation in response, not just between yours and mine but on evidence posted in other threads. I wonder if that means they're seriously under pressure and drafting in people who don't know the detail of what properly to do; perhaps consider that CCA requests aren't actually that important and that any old rubbish will serve; or perhaps don't really themselves understand the relevance and potential importance of CCA-related documents.

[Darset]

macie:

 

Your point about unfairness is an interesting one and it's precisely the dramatic leap - 14.9% to 28.9% then 23.9% - which got me into this course of action and where, despite MBNA's insistence of freedom under their T&Cs, their position may be shaky. I'd already picked up a note headed "Extortionate credit" (now replaced by the term "unfair relationship") relevant to ss. 137-140 of the CCA 1974 and which contains the interesting comment "Any court can re-open any credit agreement ... where it considers the bargain was an unfair relationship. The debtor must raise the matter and it is for the creditor to rebut it ...", that last clause relevant to the point you make at the end.

 

Thanks for the link. Not had time to check it in detail yet but I'll certainly do so.

[macie]

Darset,

 

what year did you sign up with mbna?

[Darset]

Without checking records further I'm not sure but I'd guess maybe about 2000 in the case of the Abbey card, perhaps around 1990 for the other.

[belovedm8]

nice thread folks.

 

Darset

 

What is the leeway regarding reconstituted executed agreements you refer to in post no 4. I suspect i may get something like this from MBNA (return of section 78 request due 5/10/08) as my account was opened in 98.

 

Any advice/experiences would be appreciated.

[Darset]

Don't know in detail and with certainty, I'm afraid.

 

From a fairly quick skimming of the relevant sections it looks as if the Act requires supplying a copy of the actual agreement on request.

 

 

However, I understand that in court situations some leeway is given whereby the credit provider can offer a copy of an agreement which it asserts (and, presumably, can show) is a correct copy of the original in respect of the terms offered and agreed to but which isn't the one actually signed.

 

 

That is, the court would need to be satisfied that these particular terms had been made known to the borrower and duly agreed and the absence of an actual signed original wouldn't then necessarily cause any case to fail.

 

Certainly what's happened in my case is that the stuff sent to me bears little relation to the terms or wording of the original agreement and so I'd have thought that, firstly, it certainly doesn't comply with the requirements to supply me with a copy (under the Act) and, secondly, wouldn't stand up in court as valid proof of the agreement if it came to that.

 

Again, I'm not sure of the details but while there is generally a limit of six years set on the requirement to keep documents such as invoices and the like I can't see that this should apply to something which is ongoing such as a mortgage, overdraft, long term bank loan or, as here, continuing credit (card) agreement.

 

 

Common sense would suggest that if you're lending someone several thousand pounds you should be pretty careful about keeping that agreement safe and that if you've taken over the debt liability from an earlier provider you should make sure that the relevant documents (either in original or in valid electronic image form) come as well.

 

 

You'd be pretty annoyed if, say, 25 years after a mortgage was taken out the finance house said, "Sorry, no idea where your deeds are; we probably destroyed them 19 years ago. Never mind; here's a copy for a similar house down the road."

 

Perhaps someone else knows more definitively.

[belovedm8]

looking at it logically.

 

there are two parts here. The prescribed terms (sechedule 6 and 7 of Consumer Credit (Agreement) Regs) and the terms and conditions which is schedule 1 of the same regs.

 

I think it would be very difficult to pockle a document containing the prescribed terms with the creditors and debtors signature on it. I would very much doubt a judge would accept this as at the end of the day you could stick joe bloggs in and claim he owes 10 grand!

 

Use of reconstituted terms and conditions (schedule 1) is more likely as they could say here are our standard terms and conditions from 98. i.e. when mt bloggs was given the loan.

 

Would you agree?

[Darset]

You've lost me with "pockle", I'm afraid - can't find it in either the OED or my Chambers Scots Dictionary (you being in Bearsden); do you mean "counterfeit", say? Anyway, I'd agree that the two are indeed different and, further, that there may be a reasonable case for the court to exercise some discretion in the case of T&Cs claimed to be those applying at the time, always provided there was some other supporting evidence. But as I earlier commented, I don't that discretion applies to CCA requests.

 

On a separate matter I find that MBNA/Abbey has cashed the cheque endorsed in the way I explain in my second posting, above. However, they haven't replied either to that letter or by sending me any comment on the CCA request.

[citizenB]

To behave in a muddled, awkward way. 'He's a right pockle that one.' 'Nivver worry, we'll pockle through'. 2. To walk with difficulty. 'Ye shudda seen him tryin' til pockle up the stairs.'

 

I believe this is an Irish interpretation ?

 

This was just one of the many definitions of the word I found when googling - " We didnae pockle the results - pockle means to fix the result of something"

[Darset]

Ah, thanks!

[belovedm8]

sorry to confuse...they are fabricating something retrospectively. i.e. i could pockle the agreement and insert 0% APR for 25 years!!

[Darset]

Thanks. I took it as being something like that but it wasn't a word I'd come across before.

 

Mind you, I rather like the idea of 0% for 25 years ...

[citizenB]

Thanks. I took it as being something like that but it wasn't a word I'd come across before.

 

Mind you, I rather like the idea of 0% for 25 years ...

 

That would solve a few problems wouldnt it ?

[AA99]

Hello Darset

 

We thought we were the only ones out there with the same problem until I found this site last week. I have started my own thread AA99 v MBNA and would appreciate your contribution.

[Darset]

AA99

 

Not sure I can necessarily usefully contribute but I'lll certainly have a look. Thanks for the link.

[Darset]

CCA request:

 

Just had a reply from MBNA to my complaint to them that they hadn't sent me what I'd asked for and was entitled to receive. (see post 4 above.

 

Here's what one Bez Shaw of the "Compliance Department" wrote in part:

 

" ... I can confirm that the documents we have provided you with do fulfil the requirements of the Consumer Credit Act.

 

I can also confirm that it is not necessary to provide you with copies of the original terms and conditions of the agreement. This is because the copy ... you received at the time you entered the agreements, was intended to be kept by you for future reference. As such the law allows MBNA to respond to the s.78 requests without having to provide a further copy of those original terms and conditions. ..."

 

Essentially she's saying "it's your responsibility to keep them, sunshine, so don't expect us to do that as well" - an interesting argument were it to come to court I think. I plan to go through the CCA and later Regulations over the weekend but I very much doubt her claim is right. Does anyone have a definitive pointer or view in the meantime?

[Darset]

More on the CCA request/non-compliance:

 

Just found a reference to this useful letter from Curlyben: *click*

[AA99]

Darset, that link won't work for me