Militant Consumer's Friend v Egg Loans PPI - WON

[militantconsumer]

Witness Statement

 

 

1. Response to Bryan Carter Witness Statement

 

2. Introduction

 

3. Notice of Default

 

4. Multiple Agreement

 

5. Secret Commission

 

6. Unfair Relationship

 

7. Calculations of Amounts which may be owed

 

NOTE: Numbering in the next few posts is not consistent. In the original document we used continuous numbering, i.e. from point 1 to point 118. (the forum automatically re-numbers in places)

Edited February 7, 2011 by militantconsumer
comment about numbering

[militantconsumer]

Introduction

 

1. I, XXX of XXXX Street, XXXX, XXXX, make the following statement, believing it to be true.
   
2. This case has come to court after I decided to stop making regular payments in March 2009 when I believed I may no longer be indebted to the Claimant and the Claimant was refusing to provide information about my account.
   
3. The Claimant was using a debt collector to demand £5,224.33 as late as 22nd December 2009, whereas the claim is for only £3,746.84 – Exhibit KA19 – Debt Collection Letters.
   
4. I have written over 20 letters to the Claimant and their agents but did not even receive a loan statement until 25th June 2010, after proceedings had been issued against me by the Claimant.
   
5. On 27th November 2009 I complained to the Information Commissioner’s Office that the Claimant was failing to provide information to me.
   
6. On 19th March 2010 the Information Commissioner’s Office replied, stating that “… it is my assessment that it is unlikely that Egg has complied with the DPA [Data Protection Act] in this case.” Exhibit KA4 – Letter from Information Commissioner’s Office.
   
7. On or around 29th December 2009 I lodged a complaint against the Claimant with the Financial Ombudsman Service. Exhibit KA5 – Acknowledgement letter from Financial Ombudsman Service.
   
8. The last letter that I received from the Financial Ombudsman Service was dated 23rd September 2010 and was regarding another account I previously held with the Claimant. This letter stated that the Claimant has decided to refund PPI premiums to me in the form of a cheque. However, this has not happened. Exhibit KA22 – Egg Card Settlement.
   
9. On or around 29th December 2009 I also sent a letter to the Claimant, setting out the reasons why I disputed the debt. Exhibit KA6 – Dispute letter.
   
10. On or around 12th January 2010 the Claimant replied to my dispute letter, stating that they disagreed with my dispute, but without explaining why. Exhibit KA7 – Claimant response to dispute letter
    
11. The Claimant decided to issue proceedings against me rather than cooperating with either my own investigations, or those being carried out by the Financial Ombudsman Service and the Information Commissioner’s Office.
    
12. On or around 29th March 2010 the Claimant’s solicitor sent a “FINAL NOTICE” Letter Before Action. Exhibit KA8 – LBA.
    
13. I was overseas at the time and did not receive the LBA until after the Claim Form was issued on 19th May 2010.
    
14. I have spent many hours trying to settle this matter with the Claimant out of court. I am not trying to evade my debts but pay the correct amount that is due to the Claimant, if anything. However, the Claimant has not cooperated with my enquiries and so I have to come to court and defend myself.
    
15. As this matter is now subject to proceedings I will focus on the legal reasons under Consumer Credit Law why I think judgement should not be entered against me. These are explained in more detail below, but in summary are:
    

 

• Notice of Default
  
• Multiple Agreement
  
• Secret Commission
  
• Unfair Relationship
  

 

1. If the court decides that none of these legal reasons will prevent a judgment against me then I request that the judgment is correctly calculated with reference to the section below – Calculations of Amounts which may be owed
   

[militantconsumer]

Notice of Default

 

1. Section 87(1) of CCA 1974 states that a default notice must be served on the debtor before the creditor may terminate the agreement or demand earlier payment of any sum.
   
2. Therefore if no default notice was issued the Claimant has no right to take legal action against me for the alleged debt.
   
3. LJP2 contains a ‘template’ default notice which the Claimant states was sent to me by Royal Mail and not returned.
   
4. The Claimant does not give a date for the Default Notice in their Witness Statement.
   
5. The ‘template’ LJP2 includes only the dates 23rd July 2008, 31st July 2008, 1st August 2008 and 29th September 2010.
   
6. I do not believe that I ever received a default notice from the Claimant.
   
7. I do not accept that the ‘template’ proves that I was sent such a default notice.
   
8. The Claimant recorded a default with the credit agency Experian Ltd on 6th May 2005 for the sum of £7,229. Exhibit KA10 – Experian Credit File Default.
   
9. The Claimant sent me a copy of my “Contact History” on or around 24th November 2008 in response to a request for information under the Data Protection Act.
   
10. The “Contact History” contains details of every telephone call and postal correspondence between the Claimant and me. For example it records the sending of a rejection letter in 10th November 2008 in response to a complaint that I had made to the Claimant. Exhibit KA11 – Contact History (excerpts) page 2
    
11. The “Contact History” shows that there was no correspondence between the Claimant and me between 6th April 2005 and 21st June 2005. Exhibit KA11 – Contact History (excerpts) page 3, bottom half of the page
    
12. The absence of a default notice letter on the Contact History, against a background of every other letter and phone call being recorded, strongly suggests that no default letter was sent by the Claimant.
    
13. Additionally it appears from the loan statements provided by the Claimant in their letter dated 25th June 2010 – Exhibit KA3 – Reply to CPR Letter from Claimant –that the Claimant continued to charge interest in 2006, after a Default Notice was supposed to have been issued.
    
14. This also suggests that the agreement has not been properly terminated in accordance with section 87(1) of CCA1974, as contractual interest charges should stop once an agreement has been terminated.
    
15. If no Default Notice was sent then the Claimant may not take legal action against me as the agreement has not been terminated.
    

[militantconsumer]

Multiple Agreement

 

1. The Claimant’s own internal documents relating to this loan show that they considered loans to be made up of various parts such as cash, PPI and payments towards “Egg Cards” (the Claimant’s credit card division). Exhibit KA13 – Claimant’s multi-part breakdown of loan
   
2. The loan agreement appears to show that I received £505.29 in cash, that £6,100.71 was retained by the Claimant as settlement of a previous loan agreement, and that there was also a PPI policy which further increased my indebtedness by £1,418.24. Exhibit KA13 – Claimant’s multi-part breakdown of loan.
   
3. The agreement signed by the Claimant and me contains both restricted-use credit and unrestricted-use credit, as defined by section 11 of CCA1974. Restricted-use credit was in the form of a front-loaded payment protection insurance premium paid directly to a third party by the Claimant. Unrestricted-use credit was in the form of a cash advance.
   
4. Therefore this agreement is a multiple agreement as defined by section 18(1) of the Act.
   
5. Per section 18(2) and 18(3), such an agreement must be treated as two separate agreements for the purposes of this Act.
   
6. The terms of the agreement (as prescribed under section 60 of the Act) and signed by the Claimant and the Defendant have not been separately set out for each part of these two agreements contained within the signed agreement.
   
7. The failure to set out prescribed terms for the two agreements means that the agreement has been improperly executed and is therefore enforceable only by the court as per section 65(1) of the Act.
   
8. However, under section 127(3) of the Act, the court shall not make an enforcement order under section 65(1) if section 61(1)(a)(signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner).
   
9. No such document has ever existed, and therefore the court may not make an enforcement order in this case.
   
10. Although s127(3) was repealed from 2007, this did not apply retrospectively for earlier agreements but only for new agreements signed after the legislation was updated. Therefore section 127(3) of the Act is still in force for this agreement.
    
11. The Claimant submits in their Witness Statement (points 6-7) that the agreement was an ‘integrated package’ and that the PPI was an interdependent part of the agreement and was not a distinct bargain requiring different terms in respect to the credit provided.
    
12. However, it is a fact that the loan agreement could have been taken out with or without PPI. In the Contact History on 28th May 2004 the salesperson “gemma w” notes that “full pp (180)” was sold with the loan. Exhibit KA12 – Notes on Sale of Loan
    
13. It does not seem likely that such notes would have been made if it were not possible to create loan agreements with various combinations of restricted and unrestricted credit.
    
14. It is a fact that the amount advanced to me in cash was substantially less than the total amount of the agreement. The PPI element of the loan was paid directly by Egg to a third party and at no point did I have access to this money.
    
15. Furthermore, in the document OFT Rulings - Consumer Credit (Agreements) Regulations 2004, the Office of Fair Trading gave its view that agreements with PPI are a ‘unitary multi-part’ agreement and that all the required information should be provided separately for each element of the agreements. Exhibit KA14 – Office of Fair Trading interpretation
    
16. Although the 2004 regulations did not come into force until 31st May 2005, the OFT’s view was based on the requirements of CCA1974. The new regulations added the requirement that all agreements must be split into two sections with two separate signatures. However, the rules about multiple agreements were already in place in CCA1974 and the 1983 regulations.
    
17. The credit agreement is a misleading document which contains no total charge for credit, no total amount payable and no breakdown of monthly payment and APR% for repaying capital as opposed to funding PPI.
    
18. Indeed, it may appear to the layperson, as it appeared to me at the time, that no interest would be charged on the PPI policy at all, and it is almost impossible to check this without a sophisticated calculator or a spreadsheet.
    
19. In conclusion, the Claimant has not complied with the requirements of CCA1974 and this renders the agreement unenforceable by the court.
    

[militantconsumer]

Secret Commission

 

1. I believe that the Claimant may have made a ‘secret’ profit from the PPI policy sold with the loan, and that the cash price of the loan may therefore be less than the figure appearing on the agreement.
   
2. The Claimant is not an insurance company and so would have arranged PPI using third parties.
   
3. According to a Financial Services Authority (“FSA”) press released dated 10th December 2008 - Exhibit KA15 – FSA press release - the Claimant was fined £721,000 by the FSA for mis-selling PPI policies to its customers.
   
4. Although this finding was in the period January 2005 to December 2007, it seems reasonable to conclude that the financial arrangements which led the Claimant to ‘hard sell’ PPI in January 2005 were likely to have been in place in May 2004.
   
5. I sent a Subject Access Request letter to the Claimant on 28th October 2008 in which I requested details of all transactions between the Claimant and third parties which related to my account. The Claimant did not provide this information in their response to my letter.
   
6. If the Claimant did make a ‘secret’ profit from the PPI policy then this element of the PPI price should have been included in the agreement as a charge for credit rather than an amount of credit and interest should not have been charged.
   
7. This means that amounts of prescribed terms were incorrectly listed in the agreement.
   
8. Therefore the agreement has been improperly executed and is enforceable only by the court as per section 65(1) of CCA1974.
   
9. However, under section 127(3) of the Act, the court shall not make an enforcement order under section 65(1) if section 61(1)(a)(signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner).
   
10. With only an incorrect credit agreement the court may not make an enforcement order in this case.
    
11. Although s127(3) was repealed from 2007, this did not apply retrospectively for earlier agreements but only for new agreements signed after the legislation was updated. Therefore section 127(3) of the Act is still in force for this agreement.
    

[militantconsumer]

Unfair Relationship

 

1. I believe that this agreement, together with the way that it was initiated and maintained, and taking various other factors into account, has created an unfair relationship between the Claimant and me.
   
2. The Claimant used ‘hard sell’ techniques on many occasions to persuade me to sign up to complex financial products at a time when I was financially inexperienced.
   
3. For example, on 15th July 2004 I telephoned the Claimant with an enquiry about a savings account and was transferred to a sales person who tried to convince me to top up my loan. Similarly on 8th February 2005 I again made an enquiry about savings accounts and a sales person tried to sell me a £13,000 loan. Exhibit KA16 – Hard sells
   
4. There are numerous additional examples of the same tactics used by the Claimant.
   
5. The Claimant’s staff were incentivised to sell products irrespective of the customer’s financial circumstances or understanding. This incentivisation is clear from the notes made on the Contact History such as “******LOAN BELONGS TO LISA PERRY***” – Exhibit KA16 – Hard Sells.
   
6. The Claimant was fined £721,000 by the FSA for mis-selling PPI policies to its customers - Exhibit KA15 – FSA press release.
   
7. Although this finding was for the period January 2005 to December 2007, it seems reasonable to conclude that the financial arrangements which led the Claimant to ‘hard sell’ PPI in January 2005 were likely to have been in place in May 2004.
   
8. My loan was topped up twice and so there were three ‘sales’ in total. I believe that I was pressured into agreeing to these deals by incentivised staff who misrepresented the contracts.
   
9. Although I was sent paperwork to sign in the post this did not include key information such as the fact the interest would be charged on the PPI or that I was in debt by significantly more than the amount of cash advanced.
   
10. The Claimant has refused to provide a recording or transcript of any telephone conversations, leading the Information Commissioner’s Officer to conclude that there is a “strong indication” that the Claimant has not complied with the sixth principle of the Data Protection Act 1998. Exhibit KA4 – Letter from Information Commissioner’s Office.
    
11. I believe the reason that the Claimant has refused to supply these recordings is that they would prove that there is a misrepresentation of the contracts and an unfair relationship.
    
12. The first loan taken out with the Claimant included an amount of £1,598.73 to pay off an Egg Card. Exhibit KA17 – First Loan paid off Card
    
13. I believe that this was an unfair relationship because I was already behind with my payments on the Egg Card but the only solution proposed by the Claimant was one which increased my indebtedness with them.
    
14. This arrangement replaced a flexible debt, which could be paid off at any time, or indeed increased with additional purchases, with a fixed term loan.
    
15. The second loan taken out with the Claimant included an amount of £5,450.83 to settle the first loan agreement.
    
16. The third loan agreement replaced the second loan agreement. £505.29 was advanced to me in cash but the effect was to increase my indebtedness by significantly more as the APR was increased by 1% from 6.9% to 7.9%, the PPI was increased from £1,064.59 to £1,418.24 and the term was increased by 20 months.
    
17. It is difficult to calculate by exactly how much the £505.29 cash advance increased my indebtedness to the Claimant because none of the loan agreements include a total amount payable.
    
18. One estimate would be:
    

 

• The £353.65 increase in PPI plus the extra cash of £505.29 = £858.94.
  
• Plus interest on the above at 7.9% for 6 years [39.5%] = £339.28 interest on the new amounts
  
• Plus the 1% extra interest for 6 years on the amount outstanding from the second loan i.e. £6,100.71 x 6% = £366.04
  
• A total of £1,564.26 additional indebtedness in exchange for cash of £505.29.
  

 

1. This is an effective interest rate of 210% over 6 years.
   
2. None of the above information was explained either in the telephone call when the loan was taken out or in the loan agreement – the detail is only in the breakdown paperwork supplied in the Subject Access Request under the Data Protection Act.
   
3. I understand that PPI policies are normally for a maximum of 5 years, although I have never seen a copy of the terms and conditions for my own PPI policy. As the loan was to be repaid over a period of 72 months, this would suggest that the policy was inappropriate for my needs.
   
4. In short I believe that the Claimant took advantage of my financial situation and indebtedness with them by further increasing that indebtedness by an amount significantly more than was needed and more than the amount of cash actually advanced.
   
5. When the Claimant entered a default on my credit file in May 2005 they continued to charge PPI premiums on a monthly basis on the credit card element of my alleged indebtedness.
   

24. The PPI premiums offered me no economic benefit as no insurance claim could be made on a balance in default.

25. The effect of this was to increase my indebtedness every month until April 2007 at a time when a Debt Management Plan had been agreed with the Claimant to clear my indebtedness. Exhibit KA18 – Egg Card Statement

26. The Claimant admitted in a letter to me that they had not followed ‘best practise’ while I was in financial difficulty but ‘are under no obligation to do so’. Exhibit KA21 – Egg letter mentioning ‘best practice’.

27. The Claimant subjected me to a campaign of debt collection harassment at various times between 2004 and 2010. This consisted of numerous telephone calls, text messages, emails and letters.

28. After upholding my complaint about PPI mis-selling on 3rd November 2009 (see point 3 of Claimant witness statement), the Claimant continued to use harassment techniques to pursue me for a balance greater than the amount now being claimed in proceedings.

29. I received three letters from the Claimant’s agents, on 23rd November 2009, 3rd December 2009 and 22nd December 2009, each claiming the sum of £5,224.33. The third letter is similar in appearance to a County Court Claim Form. Exhibit KA19 – Debt Collection letters

30. From 25th January 2010 I received a series of letters from a second Debt Collection company demanding £3,746.84, without any confirmation that the previous agency was no longer pursuing the higher balance, a breach of the OFT Guidance on Debt Collection. Exhibit KA20 – Letters from 2nd Debt Collector

31. In summary, I believe there has been an unfair relationship between the Claimant and me since 2003. Since I became indebted to the Claimant they have regularly used high pressure techniques to sell me or try to sell me financial products without regard to whether I understood them or whether they were suitable for me. They have used the financial pressure of pre-existing agreements where I had late payments to extract further money from me and increase my indebtedness. The new agreements were misrepresented by sales people and did not include all the terms needed to make them understandable. More recently, they have refused to disclose information that I need to establish how much money I owe them, and they have used debt collector threats to try to make me pay more than I owe them.

[militantconsumer]

Calculations of Amounts which may be owed

1. The court may disagree with my arguments in the areas of the Default Notice, Multiple Agreements, Secret Commissions and the Unfair Relationship, finding that the agreement is enforceable.

2. In this case it will be necessary to determine the exact amount (if any) owed to the Claimant.

3. Despite numerous requests, the Claimant did not send me any statement of account until 25th June 2010, after proceedings had been commenced – Exhibit KA3 – Reply to CPR Letter from Claimant.

4. These statements suggest that the PPI amounts refunded by the Claimant in November 2009 do not accord to the amounts in the agreement.

5. The Claimant has provided no calculation to support the PPI amounts refunded, and I dispute that these are correct.

6. The refund of £132.64 – described by the Claimant in their witness statement (point 7) as a refund of PPI – is described in the loan statement as “Principal Credit Adj” rather than a PPI amount. It is unclear what this relates to or whether it is for the correct amount.

7. There is not enough information in the loan statements to determine whether the two previous top-ups in 2003 and 2004 were correctly calculated and whether the PPI amounts were fully refunded or rolled into the new loan.

8. The statements also suggest that the Claimant continued to charge interest in 2006 after claiming to have issued a default notice terminating the agreement. If the Claimant did issue a default notice then the agreement would have been terminated and interest should not have been charged, and should not form part of the Claim.

9. Finally, the Financial Ombudsman Service informed me on 23rd September 2010 that Egg had decided to settle with me in regards to my complaint for PPI mis-selling on an Egg Card and that I would be receiving a cheque from the Claimant. Exhibit KA22 – Egg Card Settlement

10. I have not received any money from the Claimant and request that this is deducted from any judgment against me.

11. This statement is true to the best of my knowledge and belief.

[signed]

 

This statement is dated the 21st day of November 2010 and is filed on behalf of the Defendant

[militantconsumer]

Any questions?

[mystery1]

That looks like a lot of work to do all that. £9.25 an hour is not enough reward but it'll sure help

 

Nice work.

 

M1

[andrew1]

militantconsumer, I had missed this claim of yours altogether until I saw your post on the Multiple Agreement thread of which I have much experience in fighting against another lender - all be it for an Unregulated agreement.

 

What you have done here during these past 3 yrs or so is a demonstration to people claiming that a) it is not easy, b) you need to understand what you are doing and c) you take nothing for granted.

 

What you have shown here is the determination to get this right and the clarity which you have achieved to get that result has meant a phenominal focus to detail which 99.9% of LIP's would never attempt.

 

It takes balls (sorry if your a lady! LOL) to go this far with someone like Egg or any of these companies and I congratulate you for the consistency and professional way I can see you have applied to this claim.

 

You have covered every aspect and I particularly like your clarity on the Multiple agreement aspect which many loan and card companies are getting away with more recently as a result of the Heath vs Southern Pacific case which rolled all these s.18 issues into one loan in many cases. However, PPI is still a major s.18 issue which is being missed by many so well done on that.

 

I cannot see, having read this Witness Statement how Egg could have even dreamt they would get this past a Judge other than relying upon his or her lack of CCA knowledge as we know only too well many Judges do not have.

 

Well done, you are a great example to the thousands of us who flock to CAG and other forums on how to get it right and not cut and paste from the internet like that Judge thought you were doing.

 

I must just add one note here about Internet cut and pasting and the defendant won't mind me saying this (she's Cabot fan Club family! LOL).

 

A Claim against her other half was taking place by a card company and she accompanied her OH into court. Claimant barrister plied their trade and then pulled OH's witness statement out and a copy of a thread on CAG with almost identical wording. The barrister tried to humiliate the defendant by showing the judge these two similarities and a post by someone called 'Elizabeth1' and stating that the defendants obviously had cut and pasted this from the internet and clearly didn't understand what they were claiming against his 'client' as this WS was professionally prepared by someone who knew the law.

 

Innocent looking wifey squeaks - " I am Elizabeth1 your Honour" -

 

Barristers jaw dropped, Judged laughed and threw out Calimants case congratulating 'Elizabeth1' on her presentation.

 

Just shows that the Judges can never be too sure these are all cut and pasted and Egg just learned that with you. Well done again.

Edited February 8, 2011 by andrew1

[militantconsumer]

Innocent looking wifey squeaks - " I am Elizabeth1 your Honour" -

 

LOL!!!

 

We couldn't have achieved any of this without the help and experience of many other posters on this site (including Elizabeth1).

 

In my excitement to post the result I forgot to thank everybody, so here is a big:

 

Thank you

to everybody else who has contributed to this story !

 

PS The ironic thing is that this WAS a rolled up loan as it combined various other Egg loans and Egg card agreements, which might have been enforceable on their own, into one big topped up loan. But they got greedy and tried to add some PPI onto it without telling us, and that was their undoing.

[caro]

Many congratulations on a well deserved win. Thank you too for posting all the information which I'm sure will be invaluable for many people on CAG. It's just the kind of thing that makes this site work so well.

 

Well done for sticking to your guns over the default too. As someone (can't think who:razz:) said to me recently, it's often a case of who blinks first, and it sure wasn't you.

[citizenB]

Well deserved win.

[questioner]

I think an awful lot of this applies to fun I have had with HBoS (this firm seem expert at rolling multiple agreements onto one page) over the last few seasons.

[militantconsumer]

What a pity that a key part of the story has been deleted from this thread at some point in the last 24 hours.

 

Perhaps those couple of posts broke the forum rules, but I haven't received any kind of message explaining this.

[angry cat]

Congratulations!

 

Nice to see the rotten egg throw the towel in, again.

 

AC

[spamheed]

What a fantastic result, one more to the little man (and woman :o) )

[caro]

Thread moved to successes forum.