Militant Consumer challenges Egg Card Repayment Protection purchased online

[militantconsumer]

I have decided to help a friend challenge Egg Card Repayment Protection (their name for PPI) which was taken out through the Egg website at the same time that the Egg Card was applied for. This was in 2002.

 

After exchanging several letters we have reached the point where the Egg staff member investigating is "unable to provide any further information or evidence to support my rejection of your complaint".

 

This means that I will be starting off by seeing what the Financial Ombudsman Service thinks about what happened.

[militantconsumer]

Here are a few quotes from Egg's main line of defence regarding the online process in which we allegedly signed up for a PPI policy:

 

"We do not provide an advisory service as part of our on-line sales process."

 

"Egg is an information only provider. All necessary product information is displayed in order for the customer to make an informed choice. No opinion or advice was given about the policy and the product was displayed in a transparent manor [sic]. If all information is provided with a clear dialogue regarding the nature of a product including the terms and conditions and with no sales person involved, it would be very difficult for a product to be missold. If all that is given is fact then there is no area of doubt."

 

Now, I don't really know much about this non-advisory "information only" way of selling PPI insurance, but I did ask Egg what was displayed on their web page at the time that the policy was taken out.

 

They have sent me what they claim is a "screenshot of the application page" about which I note the following:-

 

1. There is a question reading "Would you like to insure your card balance?" with a 'yes' or 'no' option (neither is apparently pre-ticked).

 

2. Next to 'yes' it says "I would like to protect my repayments against accident, sickness and unemployment (I understand that by clicking on this box I confirm that I have read and agree to the terms of Egg Card Repayment Protection)".

 

3. There seems to be a link to "legal information" below the question. This might have contained the terms and conditions.

 

4. Next to the 'no' option there is a sentence which includes the phrase "I understand that it will be my responsibility to keep up my repayments should I fall ill or lose my job".

 

5. There is no mention of the possibility of taking out a PPI policy elsewhere with another provider.

 

6. Alongside the yes/no question there is a box headed 'your questions' in which there is only one 'question', and this called 'Benefits of taking out repayment protection'.

 

I have to say that I can't see how Egg can claim that they only provided facts and information. It seems to me that they emphasised the benefits of taking out their PPI policy and implied that not taking it out would be financially risky. They also provided only partial information by not mentioning that a policy could be taken out elsewhere.

[militantconsumer]

Another element to our complaint is that Egg defaulted the account in June 2005 but continued to charge PPI for a further two years. The account was on a Debt Management Plan at this point and the level of PPI charged was actually higher than the monthly repayments, causing the debt to grow in size rather than reduce.

 

When we complained about this, Egg at first claimed that it was allowed in their terms and conditions. We challenged them to show us where this was permitted and they made the following comment:

 

"...we would not cancel a policy unless you had specifically requested this. It would be best practise for an adviser to discuss this with you but we are under no obligation to do so."

[pinknico]

Was this the card that had the wrong figures/information on the application screen like mine?

[militantconsumer]

Correct. It showed our financial outgoings as zero.

 

When I challenged Egg about this they replied:

 

"You were not questioned around the income and expenditure because we ask for this information as a guide, if you fall short in other areas of our criteria. As you did not, this was not questioned."

 

This doesn't seem like responsible lending to me!

[pinknico]

Exactly the same reply I got to the fact it showed I earnt £10340 a month(i wish) and it showed I had 3 credit cards but no outgoings!

[militantconsumer]

This is what Egg's "screenshot of the application page" looks like:

 

 

No prizes for guessing whether Egg was looking for "yes" or "no" answers here to these questions.

 

If this is their "information only" process then I would love to see their sales pitch!

 

In all seriousness, is this really a fair way to present the choices to add a second card holder, to choose to withdraw cash on a credit card, and to sign up for a payment protection insurance policy?

[militantconsumer]

From MoneySavingExpert:-

 

Did you buy online?

- If you bought your loan or credit card online, reclaiming’s more difficult as the full T&Cs are usually available there.

- An exception to this is if you purchased from a lender using pre-ticked boxes, meaning you had to opt out of the insurance rather than opt in. In July 07 all lenders agreed to stop doing this but if you took out an agreement before this date check your policy for insurance.

 

When questioned about pre-ticked boxes, Egg specifically told me that "this was not pre-selected".

[militantconsumer]

Note to self: how to win or lose this case in court!

http://www.consumeractiongroup.co.uk/forum/egg/31939-scrambled-egg.html

[militantconsumer]

Egg's initial rejection letter for this claim includes a print out which they call "a copy of your real time application in the data collation format it is transposed to". This is what we are referring to in posts 4, 5 & 6 above.

 

Egg state that they have kindly "blocked out some of your personal information on the application screens for security purposes, in order to protect your full identity".

 

I notice they have also blocked out the field "Campaign Code". I wonder why they have done that? Did this contain the name of their sales pitch? Was it something embarrassing? Say, ooh, I don't know, "Operation sell as many PPI policies as possible without asking questions" for example?

 

Hang on a minute - if they are only providing information and facts, why would this be called a "Campaign" at all? One online dictionary describes a campaign as "a connected series of operations designed to bring about a particular result". Are they talking about a PPI selling campaign, or a just an Egg Card selling campaign?

 

Can somebody explain this "information only provider" excuse to me??? I just don't get it!

[bathgatebuyer]

This is what Egg's "screenshot of the application page" looks like:

 

 

No prizes for guessing whether Egg was looking for "yes" or "no" answers here to these questions.

 

If this is their "information only" process then I would love to see their sales pitch!

 

In all seriousness, is this really a fair way to present the choices to add a second card holder, to choose to withdraw cash on a credit card, and to sign up for a payment protection insurance policy?

 

MC, what they have sent me contains only the PP yes or no options and not the bit about the opportunity to win a prize or the PIN details.

[Mistermind]

It is not clear if this is a screen print before or after the applicant has input personal preferences. You would have thought Egg has software in place to ensure the question "Would you like a PIN" to be ticked either yes or no, and ditto PPI enrolment intention, before allowing the applicant to move off this screen.

 

Here is an absence of evidence, which in law is always weaker than the evidence of absence. The cardholder does not have evidence to say he did NOT want PPI. The onus is on Egg to produce evidence of cardholder consent.

 

Equally embarassing for the cardholder however, the judge will almost certainly ask, "If you did not consent to PPI, why did you not protest once after PPI monthly charges were levied 60 times?"

[bathgatebuyer]

I suppose the reponse is, when we first became aware of our consumer rights to object. I'm sure not many people objected to the mis-sale of endowments until such time as we became aware that it was possible to be mis-sold.

[Mistermind]

Pensions were mis-sold by salesmen and so-called Independent Financial Advisers. The pensions and products sold by Equitable Life went into stock market investments selected with spectacular poor judgement. If the products sold had made good returns for the pension funds, it is doubtful if there would have been cries of wolf over mis-selling.

 

As for PPI my gut feeling is that a lot of credit card applicants felt that if they signed on for PPI protection then Egg would have looked more favourably on their application, and possibly allowed a higher card limit. Egg did nothing to disabuse customers of that illusion.

[bathgatebuyer]

The majority of people only realised there was an issue when it was raised by the media, hence the comparison I made with PPI cover.

 

And this will only get worse. If the unemployment figures forecast actually do occur, then there will be more people trying to claim on PPI cover, and more people finding out it is worthless is a large number of cases.

 

Those who are covered have less issue - again, similar to endowments.

[Mistermind]

 

The majority of people only realised there was an issue when it was raised by the media, hence the comparison I made with PPI cover.

 

And this will only get worse. If the unemployment figures forecast actually do occur, then there will be more people trying to claim on PPI cover, and more people finding out it is worthless is a large number of cases.

 

Those who are covered have less issue - again, similar to endowments.

 

Pensions were mis-sold mainly via an intermediary salesman. The remedy laid down by the FSA after the horse had bolted, was to oblige the selling institutions to set out their selling literature clear in plain English without misleading claims.

 

Where Egg PPI was sold online there will not be the issue of a pressure telesalesperson. Either the online description was clear and truthful, or it was not. the online text printed off for court will form a substantive plank of the claimant's case -- that Egg passively sold a pup but this was not realised until a PPI claim situation arose. There will be a limited amount of time to convince the judge, so the claimant's case needs to be articulated well, as on the other side will be an Egg barrister.

 

If Egg had levied PPI for years but now fails to provide evidence of claimant enrolment, then the claimant's case would be far stronger. That embarrassing question remains - why did the claimant not protest about her non-enrolment before?

[militantconsumer]

Thanks for your contributions again, Mistermind.

 

Where Egg PPI was sold online there will not be the issue of a pressure telesalesperson. Either the online description was clear and truthful, or it was not.

 

I don't agree with Egg that they only supplied facts. I think the policy was presented in a misleading way with the benefits over-emphasised. And I think this is clear from the print screen above - positives prominently placed in a big bold box next to the question, but legals in smaller print on a different page. Ok, so not a pressure salesman, but in the internet age why not a pressure website?

 

This is why I keep asking what the "information only" way of selling financial products actually means in practice. Does this exempt Egg from providing the information clearly as they would have to face-to-face?

 

That embarrassing question remains - why did the claimant not protest about her non-enrolment before?

 

The only reasonable answer to this question is the true one - because she didn't understand the complicated financial product that was never explained to her. When it appeared on the statement she assumed it was just how the credit card worked. Just like the interest charges.

 

 

 

In our specific case I think we will use everything I have identified in my thread so far (including Egg's behaviour after the default) plus the fact that the agreement is properly unenforceable, as described in this thread:

http://www.consumeractiongroup.co.uk/forum/egg/177463-response-our-egg-cca.html

Hopefully this will be enough ammunition to reach some kind of agreement with them.

 

We are ready to stop paying and challenge it, but my friend is worried about getting a fresh new default and having to wait another six years for it to drop off:

http://www.consumeractiongroup.co.uk/forum/data-protection-default-issues/181230-defaulted-more-than-once.html

[Mistermind]

PPI mis-selling will be for the judge to rule on, no doubt each case on its own merits and presentation. Besides the 5 known Egg PPI battles there have been many more detailed in the PPI Forum.

 

With Late Payment and Overlimit charges now repeatedlly reclaimable, Egg have no other persuader left. Going by their form DN for a non-payer looks a certainty.

 

Court appearances would be months away -- if either party wants to go there. Contract unenforeceabillity is for the judge to rule on, not FOS, OFT, TS, FSA -- IF the creditor ever tries to enforce repayment through the courts. Going on form, delay and a Mexican standoff is the most likely outcome, in the mean time the DN is likely to be issued. The Mexican standoff will end when or if Egg fancy their chances of obtaining a CCJ.

 

Egg choose to comply easily with charges reclaim because they decided inhouse to do so, probably around January 2007. There was no softening-up under a hailstorm of blows from campaigners.

 

I cannot see Egg being impressed by DIY essays on PPI and unenforceability.

Edited January 31, 2009 by Mistermind
typo

[bathgatebuyer]

Pensions were mis-sold mainly via an intermediary salesman. The remedy laid down by the FSA after the horse had bolted, was to oblige the selling institutions to set out their selling literature clear in plain English without misleading claims.

 

Where Egg PPI was sold online there will not be the issue of a pressure telesalesperson. Either the online description was clear and truthful, or it was not. the online text printed off for court will form a substantive plank of the claimant's case -- that Egg passively sold a pup but this was not realised until a PPI claim situation arose. There will be a limited amount of time to convince the judge, so the claimant's case needs to be articulated well, as on the other side will be an Egg barrister.

 

If Egg had levied PPI for years but now fails to provide evidence of claimant enrolment, then the claimant's case would be far stronger. That embarrassing question remains - why did the claimant not protest about her non-enrolment before?

 

As I said earlier, they will not be aware that their cover is useless until they try and claim. If, as forecasts suggest, unemployment reaches 3 million, that's a lot of people to be claiming on various insurance policies. Particularly if 84% of claims are refused (From memory, that figure came from the CC report).

 

As for not protesting before, that's the same in pretty much all PPI cases, not just cases against Egg online. You find out when you claim, or when the media raises the issue (as with other financial products).

 

Certainly in my case against the Halifax (which was resolved via legal action), I only became aware that the policy was useless when I needed it most.

 

If the advice is that this case and Egg's barrister too far beyond me as a consumer, then I'll have to have think about giving in.

 

Thanks for the realism. Looks like they've won

 

 

Edit - Sorry, looks like I'm posting on someone else's thread about my case. Sorry to the OP.

Edited February 1, 2009 by bathgatebuyer

[militantconsumer]

Going by their form DN for a non-payer looks a certainty.

 

NO CCA=NO PAY

this also means they cannot default, pass on or add to the debt.

 

tell her to stop worrying.

 

dx

 

Just to clarify, Mistermind, are you saying that a debt that was already defaulted 3.5 years ago is going to be defaulted again if my friend now disputes the debt based on unenforceable CCA, and stops paying in accordance with the payment plan?

 

I have been reading all over the site and asking for advice/opinions but not found a definitive answer yet.

 

Sorry, looks like I'm posting on someone else's thread about my case. Sorry to the OP.

 

No worries BGB, it's all interesting stuff.

[Mistermind]

If an account was DN'ed in 2005 and passed to collections, I see no reason for a repeat DN.

 

Another element to our complaint is that Egg defaulted the account in June 2005 but continued to charge PPI for a further two years. The account was on a Debt Management Plan at this point and the level of PPI charged was actually higher than the monthly repayments, causing the debt to grow in size rather than reduce.

 

When we complained about this, Egg at first claimed that it was allowed in their terms and conditions. We challenged them to show us where this was permitted and they made the following comment:

 

"...we would not cancel a policy unless you had specifically requested this. It would be best practise for an adviser to discuss this with you but we are under no obligation to do so."

 

The onus is on the cardholder to choose to purchase PPI, and to terminate it any time she wants to, as has been done by others who got into difficulties. Some may have reason to continue with PPI, it is their choice. If careful reading of the T&Cs reveals that in a DN'ed situation continued participation in PPI will demonstrably not achieve any claimable benefits under any circumstance, then there would be a very strong claim indeed for refund of PPI subs from that point on.

 

Some cardholders conscientiously read the T&C, others do not. The real difference with Egg is that they do not send out monthly statements. Everything is online, this is known to all who sign on. Even logon is not easy, this is not known to many. Some applicants without PC at home, who go to an internet shop to apply for an Egg card, do not subsequently check their statements online for years, so that problems mount up without their knowing -- such non-communication is specific to paperless Egg. I would say the blanket not sending out of monthly paper statements has had awful consequences. Banks do suppress the sending out of paper statements, but only if customers so request.

 

There is a recurrent theme here that Militant thinks Egg has been irresponsible in lending money to innocents and not holding their hands through the process. This however has been the same for 2 million Egg cardholders. It is for the judge to rule on any charge of not holding hands.

 

As for over-lending and over-borrowing and over-mortgaging so that the UK became the most indebted major nation on earth, that is a nationwide problem and the chickens have now come home to roost. We are now over-printing money and the sterling crises of the seventies look like returning.

Edited February 1, 2009 by Mistermind

[militantconsumer]

Thanks again Mistermind for your useful and interesting contributions.

 

If an account was DN'ed in 2005 and passed to collections, I see no reason for a repeat DN.

 

This is our primary concern now, and it is useful to hear another view. My reading around this subject suggests it's a very grey area, with financial institutions free to enter pretty much whatever data they like on consumers' files with very limited risk of any sanction for the damage it causes, even when it was false or at the very least unfair.

 

Nobody seems to be able to tell me whether they are actually allowed to enter a second default for the same debt, or even if it would be normal practice to do this. There is a serious issue here when people feel forced into paying a debt that is probably enforceable because of the real or implied threat of a default - that in itself is false or defamatory, but for which the customer has no legal comeback.

 

There is a recurrent theme here that Militant thinks Egg has been irresponsible in lending money to innocents and not holding their hands through the process. This however has been the same for 2 million Egg cardholders. It is for the judge to rule on any charge of not holding hands.

 

You are right, and this was particularly evident from my friend's Subject Access Request which showed phoning Egg for a simple enquiry about ISAs or to change her address resulted in being transferred to their loans department for a sales pitch. But I am grateful to you for pointing this out as I do need to assess the merits of our case on cold, hard facts rather than my personal views.

 

As for over-lending and over-borrowing and over-mortgaging so that the UK became the most indebted major nation on earth, that is a nationwide problem and the chickens have now come home to roost. We are now over-printing money and the sterling crises of the seventies look like returning.

 

This is certainly the way the press are portraying it at the moment. Let's hope the current OTT coverage is the new Y2K/bird flu/global warming scare story and things won't be as bad as they are predicting!

Edited February 1, 2009 by militantconsumer
minor edit

[Mistermind]

 

This is our primary concern now, and it is useful to hear another view. My reading around this subject suggests it's a very grey area, with financial institutions free to enter pretty much whatever data they like on consumers' files with very limited risk of any sanction for the damage it causes, even when it was false or at the very least unfair.

 

 

The 2005 DN was the legally required precursor for Egg to demand immediate repayment of the outstanding balance. I infer that since the DN issue Egg came to an informal arrangement of £x payment per month. It is this latter arrangement that is under consideration for stoppage from your side. This latter arrangement was private and did not have legal backing, and I cannot see Egg issuing a second legal DN for the same breach.

 

Although record of the formal 2005 DN will drop off CRA registers in 2011, there is likely to be lingering records since showing the last 36 months payments/non-payments, e.g. 33443344.... etc, is such showing on Experian? If so, then the informal black marks will linger past 2011.

[militantconsumer]

It is this latter arrangement that is under consideration for stoppage from your side.

 

Of course, such arrangements typically only last about six months anyway, so we are not even reneging on such an agreement, just opting not to agree a new one.

 

Although record of the formal 2005 DN will drop off CRA registers in 2011, there is likely to be lingering records since showing the last 36 months payments/non-payments, e.g. 33443344.... etc, is such showing on Experian? If so, then the informal black marks will linger past 2011.

 

It is rather hard to tell how the report will look in future because at present we have a current status rather than monthly updates.

 

If the "informal black marks" continue until 6 years after the whole matter is resolved (rather than 6 years after the date of default), all the more reason to reach a settlement now. Otherwise, on the current payment plan, we are looking at clearing the balance in 2018 and then the file not "clean" until 2024!

 

If the "informal black marks" don't continue in this way in the interim, and everything will be fine after 2011 anyway, then we have nothing to lose.

[Mistermind]

 

If the "informal black marks" continue until 6 years after the whole matter is resolved (rather than 6 years after the date of default), all the more reason to reach a settlement now. Otherwise, on the current payment plan, we are looking at clearing the balance in 2018 and then the file not "clean" until 2024!

 

Fantastic forward planning, Gordon Brown can learn something from this. The government have donated so much of taxpayers' money to bankers that the UK is not expected to get back to normal until 2030.