HSBC Managed loan CCA - is it enforceable?

[cadencealex]

 

 

 

 

 

 

 

 

 

 

 

 

 

Edited February 7, 2009 by cadencealex

[Castlebest]

Hiya cadencealex and welcome to the HSBC forum

 

I've looked over what you have posted and unfortunately it looks to have all of the information they are required to put in the Managed loan agreement I hope someone else can spot something you can take them to task over :-| sorry

 

 

pete

[cadencealex]

Hiya cadencealex and welcome to the HSBC forum

 

I've looked over what you have posted and unfortunately it looks to have all of the information they are required to put in the Managed loan agreement I hope someone else can spot something you can take them to task over :-| sorry

 

 

pete

 

 

 

Thanks Pete!

 

 

I would like to pay it off early, it's a 12 year loan.. they forced me onto this with bank charges and I was so desperate for money back then I had no choice

[Castlebest]

Unfortunately your not the only customer HSBC have done this to. Managed loans are awful things, nothing short of financial slavery, I think you will find its quite expensive to get out of too .

 

You could try going to see your branch manager and asking why this loan has never been reviewed (they are supposed to review managed loans regularly, thats the managed bit) and ask if it can now be placed on a regular personal loan basis. Then, when you have got rid of the early repayment penalties pay it off after a few months.

 

pete

[cadencealex]

Unfortunately your not the only customer HSBC have done this to. Managed loans are awful things, nothing short of financial slavery, I think you will find its quite expensive to get out of too .

 

You could try going to see your branch manager and asking why this loan has never been reviewed (they are supposed to review managed loans regularly, thats the managed bit) and ask if it can now be placed on a regular personal loan basis. Then, when you have got rid of the early repayment penalties pay it off after a few months.

 

pete

 

 

Hi, thanks again.

 

Well nobody has reviewed it. A quarter of the term is 36 months so if I could afford the 2k I can pay it off right now. Might be worth doing if I could save that much

 

 

They haven't notified me EVER of interest rate changes and I know they have gone down - my interest is much less right now.

 

It was their fault I was forced onto a managed loan, and looking back I don't see why. I had never missed a payment on the credit card I had wth them and only ever late with a couple of payments on the other loan.

 

 

I would love to screw them over but I don't think I can

[Castlebest]

I think its worth asking the question why hasn't the loan been reviewed in accordance with its terms and conditions.

 

The reason the Banks do this is easy, and also one of the reasons why we have just had bank meltdown

 

Banks lend each other money based on the value of their assets, overdrafts and credit cards don't qualify to be listed as a banks asset but loans do so the bank converts anything it can into a loan to boost its assets and therefor its value.

 

The problem is that these managed loans are generally given to people who are struggling financially anyway so are quite likely to be defaulted against, if this happens enough you get the American sub-prime melt down and the current situation we have where non of the banks actually trust any of the other banks published value because a big proportion of this is likely to default.

 

pete

[cadencealex]

Thanks

 

I think it's a fair enough agreement provided you can pay it off after a quarter

 

Which isn't looking likely yet.. but I will try. It's having it over 12 years that is annoying!

 

And is it trashing my credit file, just by saying it's a managed loan?

[atwozee]

This is an interesting agreement – I suggest you double check the figures because the monthly repayments don’t quite add up – here’s why

Total charge for credit = £2095.78

Amount of loan = £2350.00

Total amount to pay back is therefore the above added together which = £4445.78

Now add up the 144 instalment amounts which are 143 x £30.88 = £4415.84 plus 1 final payment of £28.54 = £4444.38

There seems to be a discrepancy between the 2 amounts and actually it is slightly in your favour – but you could argue that the repayment schedule (which is a prescribed term) is misstated – and misstated is deemed the same as missing – and if a prescribed term is missing then the agreement is unenforceable.

A starting point might be to write to the bank asking them how they have worked out the total charge for credit – only problem is you might just be alerting them to the problem with the payment schedule.

One thing’s for sure – the figures don’t add up

[cadencealex]

This is an interesting agreement – I suggest you double check the figures because the monthly repayments don’t quite add up – here’s why

 

Total charge for credit = £2095.78

Amount of loan = £2350.00

 

Total amount to pay back is therefore the above added together which = £4445.78

 

Now add up the 144 instalment amounts which are 143 x £30.88 = £4415.84 plus 1 final payment of £28.54 = £4444.38

 

There seems to be a discrepancy between the 2 amounts and actually it is slightly in your favour – but you could argue that the repayment schedule (which is a prescribed term) is misstated – and misstated is deemed the same as missing – and if a prescribed term is missing then the agreement is unenforceable.

 

A starting point might be to write to the bank asking them how they have worked out the total charge for credit – only problem is you might just be alerting them to the problem with the payment schedule.

 

One thing’s for sure – the figures don’t add up

 

 

Wow you are so clever!

 

I thought the amounts didn't add up but it was down to the two figures at the bottom being the same!!

 

I am not the sharpest tool in the box when it comes to adding up!!

 

 

 

I have the original signed agreement here... well a copy of it.. how can alerting them to it make them do something about it? What could they do?

 

 

If I can worm out of this one, immoral or not, I would most definitely love to because they completely kicked me when I was down.

 

 

 

ETA: They amount of APR isn't right either. It says an annual rate of APR which is 12.7% variable.

 

Well this would be 144/12 = 12 (12 years)

 

£2350 x 12.7% = £298.45

 

And 12 (years) x £298.45 = £3581.40

 

 

How have they got their figure of £2'095.78 ? That is their interest figure.... which is much better than mine.. but how have they done it?

 

 

 

 

 

EDIT AGAIN: All my calcs above are of no weight - THEY are using an APR of 12% per annum... but still works out at £3384 and not what they have said?!?

 

confused.com

Edited February 8, 2009 by cadencealex

[atwozee]

The moral argument doesn’t come into it – since when have banks had morals?

What you need to do is to get the bank to hang themselves if possible. At the moment there is a discrepancy within the terms of the agreement and the bank could argue that the payment terms are correct and the TCC is the wrong figure and you need to confirm the other – there is no leeway in getting the instalment figures wrong once they have committed them to writing because they are one of the prescribed terms regarding s127(3) of the Consumer Credit Act 1974.

You need to play it a bit dumb – it might be an idea to write to them and ask them how they have worked out the total interest on the loan using an APR of 12.7% and ask them to confirm if £2095.78 is correct. Keep it simple and don’t mention the instalments.

If they say it is correct and you get that in writing then the repayments have to be misstated – if they say that the TCC is wrong then they need to give you the correct workings and that needs to match the repayment schedule.

I’ve never seen a mistake like this TBH so don’t know what else to advise you – maybe someone else can add something.

[cadencealex]

The moral argument doesn’t come into it – since when have banks had morals?

 

What you need to do is to get the bank to hang themselves if possible. At the moment there is a discrepancy within the terms of the agreement and the bank could argue that the payment terms are correct and the TCC is the wrong figure and you need to confirm the other – there is no leeway in getting the instalment figures wrong once they have committed them to writing because they are one of the prescribed terms regarding s127(3) of the Consumer Credit Act 1974.

 

You need to play it a bit dumb – it might be an idea to write to them and ask them how they have worked out the total interest on the loan using an APR of 12.7% and ask them to confirm if £2095.78 is correct. Keep it simple and don’t mention the instalments.

 

If they say it is correct and you get that in writing then the repayments have to be misstated – if they say that the TCC is wrong then they need to give you the correct workings and that needs to match the repayment schedule.

 

I’ve never seen a mistake like this TBH so don’t know what else to advise you – maybe someone else can add something.

 

 

The thing is though.. the interest doesn't add up.. but it is in MY favour

 

 

Arguing about it will make me look like a fool wont it.. because I have got away with over £1k worth of interest?!

 

 

I might move this somewhere else and seek confirmation .. I wonder if anyone else has the same problem?

 

Thanks for your help.., I really hope I have a case! xx

[cadencealex]

From what I have worked out... the actual Interest they are charging me according to their agreement is approximately 7.6 %

 

 

Not a bad rate

 

 

Am I right??!

[atwozee]

The way you’ve calculated interest isn’t how the bank works it out – how they work it out is over the length of the loan and applying the interest rate on a daily basis – so on day one of the loan the daily amount of interest will be more than day 365 (for example) because the principal sum is reducing all the time.

That’s why I say you need to get them to say that the figure is correct – if they do that then they can’t say that the instalments are correct – they are only out by a small amount but they should be exact – it’s basic stuff really and they should get it right.

What if the error was the other way round – you would be over paying then – and what if they made that mistake with thousands of peoples agreements – over the years this could work out to be an awful lot – for them or against them is irrelevant – they shouldn’t be getting it wrong.

TBH this agreement makes the bank look foolish – a bank that can’t add up instalments – now that is comforting isn’t it.

[cadencealex]

The way you’ve calculated interest isn’t how the bank works it out – how they work it out is over the length of the loan and applying the interest rate on a daily basis – so on day one of the loan the daily amount of interest will be more than day 365 (for example) because the principal sum is reducing all the time.

 

That’s why I say you need to get them to say that the figure is correct – if they do that then they can’t say that the instalments are correct – they are only out by a small amount but they should be exact – it’s basic stuff really and they should get it right.

 

What if the error was the other way round – you would be over paying then – and what if they made that mistake with thousands of peoples agreements – over the years this could work out to be an awful lot – for them or against them is irrelevant – they shouldn’t be getting it wrong.

 

TBH this agreement makes the bank look foolish – a bank that can’t add up instalments – now that is comforting isn’t it.

 

 

 

But they themselves are giving me a simple rate of calculation - which doesn't add up to the figures they have given !

 

Interest rate of 12.000% per annum.

 

There are 12 annums

 

And that interest amount quoted is about £1800 less... so in my favour

 

 

It is in black and white on their Terms and Conditions.

 

Or am I missing something?!

[atwozee]

I’m not the best on interest rates but the way they work it out is like this –

Amount of loan = 2350.00

Interest rate is 12% and it’s charged on a daily basis to the outstanding balance – the outstanding balance reduces each month - so day one of the loan the outstanding balance is 2350 and interest is applied to that amount – so it’s 12% of 2350 divided by the term of the loan – but on day 28 the outstanding balance reduces because the first instalment is applied to the loan and part of that instalment reduces the balance outstanding on the loan – in your case the balance reduces by approx £16 each month (2350.00/144 = £16.32) over the term of the loan – so after 12 months the balance of the loan is now approx £2150.00 and interest is charges accordingly.

So after each month/year the balance on the loan actually reduces and therefore so does the amount you pay in interest. That’s why you can’t apply a simple interest calculation.

Hope that makes sense.

[cadencealex]

I’m not the best on interest rates but the way they work it out is like this –

 

Amount of loan = 2350.00

Interest rate is 12% and it’s charged on a daily basis to the outstanding balance – the outstanding balance reduces each month - so day one of the loan the outstanding balance is 2350 and interest is applied to that amount – so it’s 12% of 2350 divided by the term of the loan – but on day 28 the outstanding balance reduces because the first instalment is applied to the loan and part of that instalment reduces the balance outstanding on the loan – in your case the balance reduces by approx £16 each month (2350.00/144 = £16.32) over the term of the loan – so after 12 months the balance of the loan is now approx £2150.00 and interest is charges accordingly.

 

So after each month/year the balance on the loan actually reduces and therefore so does the amount you pay in interest. That’s why you can’t apply a simple interest calculation.

 

Hope that makes sense.

 

 

 

Ah of course.. I told you I wasn't too bright

 

 

So the only thing I have to complain about is the £1..40 difference between loan amount and charge for credit...

 

 

Right, so what would you say to them?

 

 

And what would you do, if this was your loan agreement?

[atwozee]

What you need to do is to get the bank to hang themselves if possible. At the moment there is a discrepancy within the terms of the agreement and the bank could argue that the payment terms are correct and the TCC is the wrong figure and you need to confirm the other – there is no leeway in getting the instalment figures wrong once they have committed them to writing because they are one of the prescribed terms regarding s127(3) of the Consumer Credit Act 1974.

 

You need to play it a bit dumb – it might be an idea to write to them and ask them how they have worked out the total interest on the loan using an APR of 12.7% and ask them to confirm if £2095.78 is correct. Keep it simple and don’t mention the instalments.

 

If they say it is correct and you get that in writing then the repayments have to be misstated – if they say that the TCC is wrong then they need to give you the correct workings and that needs to match the repayment schedule.

 

If it were my agreement I would query how they have reached the total charge for credit – play it dumb – I would say that it should be something like £1995.35 and ask them to confirm if their figure is correct.

 

See what they come back with – TBH I don’t see how they are going to get out of it – they’ve misstated a prescribed term – it doesn’t matter that it’s slightly in your favour – it would still be unenforceable – harsh but that’s how it is.

[cadencealex]

If it were my agreement I would query how they have reached the total charge for credit – play it dumb – I would say that it should be something like £1995.35 and ask them to confirm if their figure is correct.

 

See what they come back with – TBH I don’t see how they are going to get out of it – they’ve misstated a prescribed term – it doesn’t matter that it’s slightly in your favour – it would still be unenforceable – harsh but that’s how it is.

 

 

What if they write to me and tell me that their figure is correct.. but don't give me the correct figures? Lying about it?!

 

 

 

What will they do when they find the figure isn't correct? Write to me and apologise and tell me that they don't want any money from me?

 

 

Hmm.. I shall get this letter done tonight.. I don't think there is a letter template for it is there?

[atwozee]

What if they write to me and tell me that their figure is correct..

 

This would be the best outcome and then you can dispute the agreement - not before.

[cadencealex]

This would be the best outcome and then you can dispute the agreement - not before.

 

 

Having recently requested a copy of my Consumer Credit Agreement, I notice that the amount of payments I will make over 144 months does not add up to the amount you have quoted.

 

Can you please confirm how you have calculated this amount and clarify whether you have added the correct amount of interest please?

 

I also note that you haven’t notified me of changes to the interest rates, yet you state that you will in the Terms & Conditions of the agreement.

I look forward to your reply.

 

 

Kindest Regards

 

 

 

So you don't suggest me sending this then?

 

Wish I could rep you again but I have to spread it around

[atwozee]

So you don't suggest me sending this then?

 

;-)

 

Perhaps something as simple as this -

 

Having recently requested a copy of my Consumer Credit Agreement, I notice that the total charge for credit is calculated at £2095.78. I have applied my own calculations based on the APR of 12.7% and my calculation differs to yours quite substantially.

Can you please confirm how you have calculated this amount and clarify whether you have added the correct amount of interest please?

 

I look forward to your reply.

[cadencealex]

;-)

 

Perhaps something as simple as this -

 

Having recently requested a copy of my Consumer Credit Agreement, I notice that the total charge for credit is calculated at £2095.78. I have applied my own calculations based on the APR of 12.7% and my calculation differs to yours quite substantially.

 

Can you please confirm how you have calculated this amount and clarify whether you have added the correct amount of interest please?

 

I look forward to your reply.

 

 

Right I will send that, will copy and paste onto my Word

 

I wonder what they say. I know it's only out by 140 but I wonder why it is? What that £1.40 could be for

 

Many thanks!

[cadencealex]

They stated on the agreement they would take the first payment on 01 February at £30.88.

 

And in 12 years, the last payment would be £28.54.

 

 

But they haven't done this.

 

First payment was £28.54

 

So they have done this in reverse

 

Now I wonder if this is another benefit for me to dispute their contract (figures don't add up also)

 

Or can they do this?!

 

I don't trust them one bit.

[BankFodder]

You are right not to trust them.

 

I don't really know the answer to your question. However, it is not ipossible that the £2.00 or so will be seen by them as an underpayment and that they will eventually consider that you have failed on the agreement in some way - with all the brewhaha that entails, such as negative credit file entries, threats etc.

Don't underestimate their capacity to get things wrong and their enthusiasm to pursue you to the grave.

 

At the vesy least, if you are always £2.00 behind in your payment, there will be extra interest accruing which in 12 years could amount to a basis for a dispute.

 

I sugest that you sort it out now. Complain to them. Do it all in writing unless you have a call recorder.

You want a written explanation and when you get it, don't lose the letter.

Franlkly, you can best conver yourself by making an extra payment of £10 straightaway which should protect you from any misunderstanding and which will always put you slightly ahead.

[cadencealex]

You are right not to trust them.

 

I don't really know the answer to your question. However, it is not ipossible that the £2.00 or so will be seen by them as an underpayment and that they will eventually consider that you have failed on the agreement in some way - with all the brewhaha that entails, such as negative credit file entries, threats etc.

Don't underestimate their capacity to get things wrong and their enthusiasm to pursue you to the grave.

 

At the vesy least, if you are always £2.00 behind in your payment, there will be extra interest accruing which in 12 years could amount to a basis for a dispute.

 

I sugest that you sort it out now. Complain to them. Do it all in writing unless you have a call recorder.

You want a written explanation and when you get it, don't lose the letter.

Franlkly, you can best conver yourself by making an extra payment of £10 straightaway which should protect you from any misunderstanding and which will always put you slightly ahead.

 

 

 

Thanks for your reply Bankfodder.

 

I have sent them one letter asking that they add up the interest again, and said I find it to differ from my own calculations.

 

I want them to trip themselves up as (its on another thread) another posted pointed out that the figures don't add up (he said misstated prescribed terms).

 

I sent the letter today from work (I noticed as I was leaving that all the recorded letters I had sent and franked, had then been redone with my solicitors logo on ). They are nothing to do with the Solicitors office I work in.. I just hope that can't go against me somehow.. anyways.. that's digression...

 

 

I am waiting for them to reply to this one - I have been reading the CCA 1974 (for a course I am studying as well as for personal use) and it states an agreement can only be enforced, when unenforceable, by the courts.. so I am wondering whether to push them too much over £1.40 difference and this.

 

HSBC have been responsible for most of my problems over the years and having looked at my credit file, I am wondering why they pushed me onto a managed loan when I hadn't missed a payment on the original loan, nor a credit card!

 

The thing is... these are all their mistakes.. as much as I would like to wriggle out of the managed loan.. I took it that it was enforceable and would have continued paying it.. but then their are two mistakes.

 

I notice in their literature it says to contact them before anyone, to put it right - I have done that, then it says you can go to the OFT or the FSA.

 

I really don't want to go to the FSA because of the link to the career path I have chosen

 

I am going to make the overpayment over the telephone tomorrow (you can't just transfer it on online banking for some reason) and I look forward to their reply!