Taz11 v MBNA Enforceable ??

[angel_1]

hello everyone

 

im subbing Taz11 if i may because im really intrigued in this, like you say i smelt a whiff of possible fraud and im not going anywhere now until we resolve this lol

 

i like the idea, and while maths is not my strongest point, i like to use any arguments outside the box, so yes i like that idea of tangling mbna so they dont even know their own figures,,,,

 

keep up the good work and if i have any smart ideas 8-) ill throw a snippet in for you to look at,

 

keep the faith laters angel x

[macie]

I don't want to discourage you but I think you are headed down a blind alley.

 

MBNA is allowed a tolerance by virtue of The Consumer Credit (Total Charge for Credit, Agreements and Advertisements) (Amendment) Regulations 1999.

 

Statutory Instrument 1999 No. 3177

 

"6A. The annual percentage rate of charge referred to in regulation 6 above shall be rounded to one decimal place as follows-

 

(a) where the figure at the second decimal place is greater than or equal to 5, the figure at the first decimal place shall be increased by one and the decimal place (or places) following the first decimal place shall be disregarded; and

 

(b) where the figure at the second decimal place is less than 5, that decimal place and any decimal places following it shall be disregarded.";"

 

I think it is covered elsewhere but I can't find my notes.

[angel_1]

thanks macie

 

guess it was too good to be true,,,oh dear and i really slept well last night

 

anyway if you can find your notes that would be ace thank you

 

also everyone

 

 

have you seen this thread some across it yest

http://www.consumeractiongroup.co.uk/forum/mbna/181964-information-regarding-mbna-bank.html

 

 

laters angel x

[pelham9]

MACIE No no no!

 

6A. The annual percentage rate of charge referred to in regulation 6 above shall be rounded to one decimal place as follows-

.

 

You are mistaken. I made the same mistake when I researched all this and it puzzled me for some time.

 

If you look at your link carefully you will find that the 'annual percentage rate' referred to is the %APR ( what else would you expect?). The fact that the %APR can be rounded to one decimal place is the whole basis of the [problem]. The prescribed term 'the rate of any interest to be charged ' cannot be givem by the %APR because the rounding makes certain it is not accurate enough to be used thus.

 

Have you looked at the horrendous equation in 7. No wonder lawyers steer clear of the subject. It is complicated because of the need to take into account not only varable amounts and periods of payments but also any compulsory charges which may vary in their amount and periodicity. Fortunately when dealing with credit card interest the simple equations in this thread can be used because there are no added fees and interest is added monthly every month.

 

The %APR is never the figure that can be used to calculate monthly rates. Only the actual annual rate can be used and there is no allowed rounding for the AAR.

[pelham9]

guess it was too good to be true,,,oh dear and i really slept well last night

 

Sleep well tonignt after you have read my reply to macie! He has got it wrong.

[macie]

Pelham etc.

 

You may have a point about the tolerances and MBNA may have slipped up by rounding the monthly rate up to 2.5293% rather than 2.5292%.

 

As regards the equation. It can be worked out like this in excel, lets take the example of 2.5261% and 2.52931% monthly.

 

=EXP(12*LN(1+0.025261)) this gives 1.349004 (ie 34.9004% APR)

=EXP(12*LN(1+0.25293)) this gives 1.349509381 (ie 34.9509381% APR)

 

The monthly rate can be worked back from the APR, lets assume an APR of 34.94999% as follows

 

=EXP(LN(1+0.3494999)/12) this gives 1.0252924 ( ie 2.52924% monthly )

 

34.94999% is pertinent as it is the max value that can legally be declared as 34.9% (though it cannot be called 34.90%).

 

MBNA may have caught themselves out in their own rounding errors.

Edited February 5, 2009 by macie
error in calculation

[holley]

MBNA havent bothered to repy re my request for a CCA so I'm sending out the second letter copy got from this site putting the account into dispute, some people are requesting SAR or similar and sending cheques for £10 err what are they? havent been doing this for long and trying to get my head around it all - thanks

[Taz11]

You may have a point about the tolerances and MBNA may have slipped up by rounding the monthly rate up to 2.5293% rather than 2.5292%

But they haven't rounded it up. On my statement it says monthly rate is 2.5292%, which from the previous equations in the thread =34.94935863186% so in effect are they not charging 34.9493....., but legitimately only have to show to one decimal place. I am not being charged 34.9 but 34.94935863186. This will get it as close to 35% as possible without actually stating it. Am I correct with this???

 

The point I'm trying to make........and probably very badly...lol, is that a monthly rate of 2.5292 as stated on the statement does not = 34.9 but 34.94935863186.....which is over and above the figure they state you are being charged at.

 

 

 

I'm getting slightly confused with all this now.........lol

 

thanks

 

Taz11

Edited February 5, 2009 by Taz11

[macie]

I would say that since they charge interest monthly they are entitled to a rate of 34.94% annually and yet declare it as 34.9%. The regulations I posted state that they only have to quote 1 decimal place, and the regulations state that they are entitled to round it down if it is fractionally below 0.5%.

 

That's my opinion and I think Pelham will disagree.

[angel_1]

okay everyone

 

im really trying to keep up with everyone lol honest, i thought id got it then i didnt then i felt i could see the figures and then the mathmatics just blew me away

 

however, its something i feel needs further study as such, and i raise my glasses with wine of course to all who are giving us all something to think about more

 

many thanks, laters angel x:cool:

[pelham9]

34.94999% is pertinent as it is the max value that can legally be declared as 34.9% (though it cannot be called 34.90%).

 

 

Macie you are confusing the terms and in this argument you have to be very exact in what you mean.

 

This would be correct

 

'34.949999....% actual annual rate is pertinent because it is the max value of actual annual rate that can be called 34.9%APR. It cannot be called an actual annual rate of 34.9% because 34.949999% cannot (has never and never will be) equal to 34.9.

 

The basic mistake you are making is that you think the annual percentage rate %APR is the same thing as the actual annual rate that wiill be applied to calculate interest .

 

I will gladly sort this with you either in a thread that you could start or by PM but I do not think it right to continue this 'discusssion' on abusiness thread the owner of which has grasped the principles a lot better than you.

[macie]

Pelham,

 

You may find this useful.

 

http://www.oft.gov.uk/shared_oft/consumer_leaflets/credit/oft144.pdf

 

I maybe confused, however, I believe it's best to argue the matter out on an open forum, as, at the end of the day it will be argued in court and its best to have addressed everything that the opposing counsel may throw into the mix on what is a confusing issue.

 

I will concede that on the scanned current terms and conditions at 2a where it says "your total charge for credit under the agreement would be £257.87 which is calculated using the Annual Percentage Rate shown in paragraph 1c..." is incorrect as they do not actually use 24.9% to calculate that figure. If 24.9% was used it would be £257.54.

 

However, the interest of £257.87 is correct when compared with the monthly interest (2.5292%) rate contained on the statement. I think it's down to allowable tolerance contained in the Regs.

 

I will say that the other side are going to rely on their ability to present rounded figures under the regulations. You definitely have a point. Whether it's enough to convince a judge.....?

Edited February 6, 2009 by macie
addition

[Taz11]

Hi Macie,

 

Would you agree with the following argument, albeit very basic, it is the basis of an argument I would put forward if necessary.

 

If they state that an indidviduals rate in t&c's is 34.9%, in black and white, then using the basic formula, the monthly percentage rate should be 2.5261 ?? yes ??

 

If a statement shows a monthly rate of 2.5292 on that same individuals statement, then they must be charging over the 34.9% as stated.

 

Wether they are legitimately hiding the fact of 2 decimal places or not, they are still deceiving that individual into thinking he is paying 34.9%

 

I'm not trying to make an argument.I'm just trying to put it in laymans terms that they are still increasing the % under the cloak of not showing the further decinal places. Do you see my point.

 

If this were to be used, what do you feel their defence would be ?? This is where I am getting lost, as I'm not sure what their argument/explanation would be??

 

***I just read your last sentence before posting***

 

Its all certainly making it an interesting thread.

 

Thanks

 

Taz11

[macie]

Taz

 

"If they state that an indidviduals rate in t&c's is 34.9%, in black and white, then using the basic formula, the monthly percentage rate should be 2.5261 ?? yes ??"

 

Actually, in my opinion they are entitled to charge upto 34.94999%

 

"If a statement shows a monthly rate of 2.5292 on that same individuals statement, then they must be charging over the 34.9% as stated." --

 

--- Actually, no because 34.949999% is 34.9% when the allowed tolerances are considered

 

"Wether they are legitimately hiding the fact of 2 decimal places or not, they are still deceiving that individual into thinking he is paying 34.9%"

 

---- I agree

 

"I'm not trying to make an argument.I'm just trying to put it in laymans terms that they are still increasing the % under the cloak of not showing the further decinal places. Do you see my point."

 

--- I agree that the argument has to be expressed clearly to a judge, who is unlikely to be a mathematician.

 

If they state that an indidviduals rate in t&c's is 34.9%, in black and white, then using the basic formula, the monthly percentage rate should be 2.5261 ?? yes ??

 

----- No, I don't think so

 

Wether they are legitimately hiding the fact of 2 decimal places or not, they are still deceiving that individual into thinking he is paying 34.9%

 

---- I agree

 

Its all certainly making it an interesting thread.

 

---- I agree

 

Though the T&Cs do seem to be flawed as 34.9% is not used for the calculation of interest. Though the figures in the worked example they have provided are correct.

 

----- I really don't know how a judge will take to the argument. I would say that an expert's report would be necessary to convince him of the calculations. Then it would be down to whether the judge accepts or even understands the tolerance issues.

Edited February 6, 2009 by macie
clarification

[pelham9]

Taz11. You have expressed it very well in layman's terms.

 

A).As regards the equation. It can be worked out like this in excel, lets take the example of 2.5261% and 2.52931% monthly.

 

B)>=EXP(12*LN(1+0.025261)) this gives 1.349004 (ie 34.9004% APR)

=EXP(12*LN(1+0.25293)) this gives 1.349509381 (ie 34.9509381% APR)

 

C)The monthly rate can be worked back from the APR, lets assume an APR of 34.94999% as follows

 

D)=EXP(LN(1+0.3494999)/12) this gives 1.0252924 ( ie 2.52924% monthly )

 

E)34.94999% is pertinent as it is the max value that can legally be declared as 34.9% (though it cannot be called 34.90%).

 

F)MBNA may have caught themselves out in their own rounding errors.

 

Marcie On your head be it !

 

A) OK but why thise monthly rates? The second one does not come from MBNA

 

B) Can you explain the mathematics that you and Excel are using. APR is NEVER quoted other than to one decimal place. You are using the term when you mean actual annual rate.(AAR). Stop saying APR in this context.- it makes for clearer thinking.

 

The results you give for those monthly rates are correct. They are the AARs for those monthly rates. Rounding to one decimal place to get %APRs you get 34.9%APR and 35%APR - not an error that MBNA will have made.

 

They used 2.5292% monthly which is an AAR of 34.9493...%. This rounds to 34.9%APR.

 

When they are working the [problem] they start with an AAR of 34.949999.. % or if you like 34.95% (it makes no difference) and arrrive at a monthly rate of 2.52924....% . The must TRUNCATE this figure otherwise thay will in many cases (try 15.95) arrive at an AAR that has to be rounded up. In the case of 15.95 rounded UP to 16% not what they want. This is an artificial an dishonest process. If they started with an AAR of 15.9 (15.9%APR) they would arrived at a monthly rate as you have shown of 2.5261%. The difference between 2.5292 and 2.5261 is the measure of the [problem]. They get pennies extra in interest every month - not much for the punter but millions over many accounts.

 

C) That is nonsense. The %APR is never accurate enough to to work back to a monthly rate. You can only work back frrom an AAR which yyou cleary mean.

 

D) Correct calculation for an AAR of 34.449..... ! You have clearly arrived at figures which desribe the [problem].

 

E) this is nonsense with the terms you use. There is no provision for the rounding of an AAR except to arrive at %APR.

 

F) They have not rounded anything - they arrive at the monthly rate by truncation not rounding so that the AAR they are in fact charging can be rounded to the desired APR of 34.9%, Punters will be reassured because they like you consider that the APR is what they charge when they are in fact charging a higher rate AAR (34.94999.,,) which is designed to roundd down to 34.9%APR.

 

I would say that since they charge interest monthly they are entitled to a rate of 34.94% annually and yet declare it as 34.9%. The regulations I posted state that they only have to quote 1 decimal place, and the regulations state that they are entitled to round it down if it is fractionally below 0.5%.

[/quote

 

Yeah your right I do disagree. If you read the the regulations carefully there is no provision for them to round an annual rate (AAR) of 34.94% to get an annual rate of 34.9%. They can round the AAR only to get a %APR which is then not accurate enough to use in the calculation for monthly rate. They are obliged to use the unrounded AAR (34.94%).for the calculation because AAR cannot be riunded in this context.

 

The regulations allow rounding of the AAR to one decimal place to arrive at the %APR. Please get it out of your head thta the %APR is equal to the AAR. It is not except in rare curumstances.

 

A number of scenarios to try out.

 

The prescribed term for credit card interet is ' the rate of any interest to be applied.'

 

Do these agreennts satify the prescribed term for interest. Note that there is case law that requires the interest rate to be shown accurately.

 

1, Bo interest rate shown - very easy

 

2. %APR shown only'

 

3. 1.2372% monthly 15.9%APR

 

4. 1.2408% monthly 15.9%APR

 

5, 1.2372 monthly 15.9% per annum

 

6 1.2408% monthly 15.9% per annum

 

7. 1.2372% monthly 15.9% per annum 15.9% APR (very unusual combination -why?)

 

8 1.2408 monthly 15.9% per annum 15.9%APR

 

9 15.9% per annum

 

10 I5.9% per annum 15.9%APR

 

11 1.2372% monthly.

 

12 1.2408% monthly

 

 

Some of these are obvlous one way or the other. Some are doubtful until you check up on the rate charged, This is sometimes found on sttatements or in the figure for the 'cost of borrowing' that has to be shown in more recent agreements.

[macie]

Pelham. The terms and conditions are covered by the Consumer Credit (Agreements) Regulations 1983 (1983 No 1553) so any reference to APR represents a "disclosure" under these Regulations. (Note - it is schedule 6 of this document which deals with prescribed terms)

 

Schedule 7 states

 

+++++++++++++++++++++++++++++++++++++++++++++++++++

 

"SCHEDULE 7

 

PROVISIONS RELATING TO DISCLOSURE OF THE APR

 

Regulation 1(2)

 

Assumptions about running-account credit

 

In the case of an agreement for running-account credit, the following assumptions shall have effect for the purpose of

calculating the APR in place of the assumptions in Part 4 of the Total Charge for Credit Regulations that might otherwise

apply--

(1) in any case where there will be a credit limit but that limit is not known at the date of making the agreement the

amount of the credit to be provided shall be taken to be £1,500 or, in a case where the credit limit will be less than

£1,500, an amount equal to that limit;

(2) it shall be assumed that the credit is provided for a period of one year beginning with the relevant date;

(3) it shall be assumed that the credit is provided in full on the relevant date;

(4) where the rate of interest will change at a time provided in the agreement within a period of three years beginning with the date of the making of the agreement, the rate shall be taken to be the highest rate at any time obtaining under the agreement in that period;

(5) where the agreement provides credit to finance the purchase of goods, services, land or other things and also provides one or more of--

(a) cash loans;

(b) credit to refinance existing indebtedness of the debtor's, whether to the creditor or another person; and

© credit for any other purpose,

 

and either or both different rates of interest and different charges are payable in relation to the credit provided for all or some of these purposes, it shall be assumed that the rate of interest and charges payable in relation to the whole of the credit are those applicable to the provision of credit for the purchase of goods, services, land or other things;

 

(6) it shall be assumed that the credit is repaid--

(a) in twelve equal instalments, and

(b) at monthly intervals, beginning one month afafter the relevant date.

 

Permissible tolerances in disclosure of the APR

 

1A For the purposes of these Regulations, it shall be sufficient compliance with the requirement to show the APR if there is

included in the document--

(1) a rate which exceed the APR by not more than one; or

(2) a rate which falls short of the APR by not more than 0.1; ..."

 

 

+++++++++++++++++++++++++++++++++++++++++++++++++++

 

A credit card is running account credit

 

MBNA by showing a properly calculated repayment schedule, ie the £1500 loan repaid in 12 equal installments of £257.87 they have fulfilled all the obligations of schedule 7. You will see that the calculation is done by MBNA exactly as it is laid down in Schedule 7 and they can do this "in place of the assumptions in Part 4 of the Total Charge for Credit Regulations that might otherwise apply".

 

The rest of it is covered by the permissible tolerances in disclosure of the APR.

 

So by providing the amount of interest repayable on a £1500 loan repaid in 12 monthly installments they have (indirectly) notified you of the exact interest rate (surprisingly to within 5 decimal places of the percentage monthly rate*). Though it is indirect it is fully acceptable under regulation 7. This is then backed up by notification of the interest rate in the form of the APR toleranced in accordance with Schedule 7. So you have been notified of the exact rate and the APR.

 

If the equal installments had not been quoted correctly then the outcome maybe different.

 

I dislike MBNA with a passion and I would love to be wrong, but, I wouldn't like anyone to go into court with a weak argument.

 

* the value of £257.87 is to within £0.002 of the value arrived at using 2.5292% and the error would be on the 5th digit after the decimal point. To be pedantic the actual rate arrived at by use of £257.87 of interest would be 2.5291799%. The court would consider it exact as they have shown the calculation to the nearest penny, which is the smallest amount payable.

Edited February 6, 2009 by macie
clarification

[pelham9]

Macie

 

You are using all the arguments that MBNA will use and they are a lie. I will try to make the main argument as simple as possible - I am hoping for a "Eureka" moment from you. You clearly have not worked through those scenarios I gave in my last post so look at 7) and 8) only

 

7) Monthly rate 1.2372 Annual rate 15.9% APR 15.9%.

 

8) Monthly rate 1.2408 Annual rate 15.9% APR 15.9%.

 

They are clearly different - the monthly rate is higher in 8) than in 7).

 

Now do the arithmetic for 7)

 

1.2372......% gives an actaul annual rate of 15.9% which can be 'rounded' to 15.9% APR. So 7) is correct in every respect. It is not a [problem].

 

I gave you the clue that this is very unusual and asked why, The reason they are unusual is the figures are true & correct and there is no [problem] and the [problem] is the usual scenario.

 

Now do the math for 8)

 

1.2408...% gives an actual annual rate of of 15.9489 which can be rounded to 15.9% APR.

 

Note carefully that the AAR is 15.9489....%

 

This is the [problem] because 15.9489 does nor equal 15.9%. The AAR is not allowed to be rounded with the exception that it can be legally rounded to obtain the %APR.

 

They use this rounding to get the APR to maintain that as the APR is indeed 15.9% the AAR is 15.9% also. What they are in fact saying is that 15.9 = 15.9489 and this is the lie -the [problem]. They have consistenttly maintained for almost 40 years that 15.9 = 15.9489 by saying that as the APR is 15.9 the AAR must be 15.9% also. You believe them because you think the annual percentage rate is the AAR. It sounds as if it ought to be so and it is defined legally so it must be so. BUT it isn't.

 

 

Do you see now or are you still on the side of MBNA and nearly all the other credit cards.?

 

I will comment on the very useful quotes you give from the regulations in my next post.

[macie]

pelham,

 

you've got it. My arguments are exactly the kind of arguments mbna will use in court. Best to know head of time.

 

i am afraid we'll have to agree to differ. Schedule 7 provides them with latitude. If you think you can argue your point in court and convince a judge then good luck.

[pelham9]

OK. So I do not now have to post any more on the main argument?

 

In th past (and of course again after you posted it) I have read Schedule 7 many times. I agree that it gives them latitude but how do you interpret it. We cannot agree to differ unles we know each other's position on it. You do not know what I think as I have not discussed the matter on this thread - it could well be the same as you though somehow I doubt it.

 

Scedule 7.

 

A) It is about the APR?

 

B) It is about the value of APR that they have to disclose

 

Remember that the value of the %APR is defined elsewhere - that horrendous equation. Refer to definitions within the Regulations.

 

C) the circumstances in which there is need/no need to disclose the %APR

 

If you read Schdule 1 for credit card type loans it says that the interest rate should be shown as an annual rate together with the way interest is calculated from that rate. It also the says the %APR should be shown.

 

Bearing that in mind what do you think the object of the latitude is and what is the nature of the latitude? The language is typical legalese !!!

 

The first part of the schedule deals with the total charge for credit on thE £1500 loans and there is no latitude in this. I can be very useful to us because it can be used to calculate the monthly rate they will actually use and this can be a means to the AAR. which will ofen be a [problem] vaalue.

[macie]

As I indicated the total charge for credit on the £1500 is £257.87.

 

This is to within £0.002 of the value arrived at using 2.5292% (the figure on the monthly statement). Working the interest back from the charge for credit provides 2.5291799%.

 

However, they can only indicate interest to the nearest penny so they could not indicate £257.872 in the Terms and Conditions. £257.872 would give them bang on 2.5292%.

 

Would you realistically have them indicate £257.872 in the calculation?

 

If the £1500 example suffices to indicate what they would have you pay under the agreement then you are stuffed. I think it does when it is provided together with an APR properly toleranced in accordance with Schedule 7.

[pelham9]

They do not get the total cost calculation wrong - or I have never seen it wrong so you can accept the figures. Figures to the nearest penny are acceptable.

 

What it does show is the monthly rate they intend to charge and this is at the [problem] level. The only showed %APR at 34.9 and 34.9 annual rate. The monthly rate figure comfirms the [problem] was being used when these Ts & Cs were written.

 

Is this the latitude to which you referred? I assumed that you thought Schedule 7 gave them latitude in quoting the value of %APR or even the AAR. The latitude concerms the %APR and allows them not to quote it in certain circumstances- which happens to be nearly always for credit cards.

 

They quote it when it is not required to cover the [problem].

[pelham9]

If the £1500 example suffices to indicate what they would have you pay under the agreement then you are stuffed. I think it does when it is provided together with an APR properly toleranced in accordance with Schedule 7.

 

I have just read this in your previous post which I think you have retracted.

 

There are no tolerances in the value of the %APR allowed in schedule 7. The only tolerance in the %APR is the rounding to one decimal place allowed in the previous regs.

 

The %APR cannot be used in the total cost for credit calculation so your "together with" is wrong.Only the AAR and its derivative the monthly rate can be used - see my previous post for the importance of a [problem] level monthly rate. The calculation simply confirms the scan monthkly rate has been used so we are certainly not stuffed - it helos us.

[macie]

I haven't retracted anything.

 

Go for it ! Let me know what the judge thinks.

[pelham9]

So Macie was acting as a devil's advocate all along! Angel fell for the argument in the very next post ! So be strong.

 

He does illustrate the kind of loose thinking that MBNA will throw back at you when you tackle them . But there is plenty of mileage in the delay that you can gain with the argument with MBNA over interest rates.

 

On the other hand Macie's arguments though wrong are the kind of arguments MBNA will use to a judge who in any case is wanting to enforce your agreement. He is very likely to be misled particularly if he compares the 'expertise' of MBNA and you. He will have his own iideas on the meaning of %APR - and he has been bombarded with the banks propaganda that AAR% = %APR ever since he was a young man.

 

It might be that as MBNA know that this is fraud they might not wish to risk exposure of it in court.

[summerbreeze]

Subbing to this post although my brain is boggling with all the maths.

 

Taz I want to tell you that I also have an alleged CCA from 1996

 

It is a copy of an application form for Visa Gold Card

It has the same sqiggly signature of Anne [ could be middle initial T ] and then last name beginning with N ? scrawled across and has a similar line above it that looks as if it was stamped onto the application form.

 

It has a round date stamp

 

There is also discrepency between style of writing in the ref numbers on the 2 sheets

 

On the front application page it also refers to ' conditions of use [ as set out overleaf etc etc.]but no TERMS

 

With this app form they have sent me some T and C from 1996 [ well there is a code on the bottom LA-7-96-37-N ]

 

I have previously posted up scans of these T and C but cant get definite views about enforcability because they are unreadable

 

 

These Tand C are different to the ones you got ..they dont have a box with various APRs on although there is some reference to monthly rates and APR

 

My T and C have almost definitely been retrieved from microfiche as they are almost toally illegible.

 

The letter that came with them refers to the copy being the best copy they can provide although it is not very clear [ big understatement ]

 

I have written back and requested a legible True copy just to see if they can find anything else.

 

I will continue to watch your thread with great interest and good luck with the Math

 

Summer