British Credit Trust Late Payment Charges

[batman1956]

Hi we have a loan with British Credit Trust for a car which is basically paid up to date, however when we recieved a statement from them we noticed a number of charges of £25 for late payments (usually a few days) and extra interest charges had been added to the account. I phoned to query these charges and was very rudely told that they were part of the agreement that we signed and would stand. My view is that these charges are punitive and as such are not legal. The loan will be paid in full in the stated period of time(48 months) and in my view these charges will effectively alter the % of APR which has been charged on the account. Advice please

[dx100uk]

load of old cobbrers!

 

reclaim them + interest.

 

dx

[batman1956]

Just had a look at the paperwork and a separate sheet shows these charges so maybe they can charge them after all. What do you think.

[cashins]

Just had a look at the paperwork and a separate sheet shows these charges so maybe they can charge them after all. What do you think.

 

Doesn't matter.

 

The charges were listed in credit card contracts as well and they are being reclaimed all the time. You can put what you like in a contract - the test is, is it fair and is it lawfull.

 

David

[batman1956]

Thanks to the original poster of this letter adapted for my needs

 

date xx/xx/xxxx

 

 

Agreement number : xxxxxxxx

 

Dear sir,

 

REQUEST FOR REFUND OF CHARGES

 

 

My request

I am writing to ask you to refund the charges which you have levied from my account since inception. I now understand that the regime of fees which you have applied to my account in relation to arrears, letters, and so forth are unlawful at Common Law, Statute and recent consumer regulations. If you say that they are not, then will you please demonstrate this by letting me have a full breakdown of the costs to which you have been put by as a result of my breaches, in order to reassure me that your penalties really do reflect your costs.

 

I am of the view that your charges represent a penalty and are therefore unrecoverable at Common Law. In the Scottish case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. (1904) 12 SLT 498; the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract. This is also the position in English law: Wilson v Love [1896]; Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79; Ford Motor Co v Armstrong [1915]; Bridge v Campbell Discount Co. Ltd [1962]; Murray v Leisureplay [2004].

 

Your charges do not reflect any actual loss; instead they appear to represent a lucrative profit-making scheme. The actual loss is the cost of automatically sending me a computer generated letter. I would respectfully submit that is valued at no more than 50 pence.

 

UK banks have recently given evidence to the House of Commons Treasury Committee on how bank charges are calculated: "The costs are going to pay for all the people we have who pursue debt, collect debt, speak to customers and chase payments. The way these charges are arrived at is by taking these total costs and making some assumptions about the volume that is going to come through to arrive at the individual charges" (2nd report, 25 January 2005, paragraph 50).

 

Accordingly, the charges applied to my account are not a reasonable pre-estimate of your loss in relation to my account. Your charges would appear to represent a device to recover global losses (for example, loan defaulters, bad debt write off, including commercial lending in, and outwith, the UK).

 

On a separate note, your charges appear to represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). My account falls within the scope of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as I am a consumer. Your charges constitute an unfair penalty under reference to paragraph 1(e) of schedule 2 of the said regulations:

‘Indicative and non-exhaustive list of terms which may be regarded as unfair - 1. Terms which have the object of effect of - (e) requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation’.

 

0n 26 July 2005, the OFT stated that 'a charge is likely to be disproportionately high if it is more than a court would be likely to award if the lender sued the account holder for breach of contract'. Because your charges include a large profit margin, in addition to actual loss, they are unrecoverable as an unfair term in contract. I believe that your charges require me to pay a disproportionately high sum in compensation for incurring transactions which are ultimately prepared by an automated computer system. In addition, it is unfair to require me to subsidise your global debt recovery costs and debt write-off.

 

It has now been confirmed that your particularly high level of penalties are considered to be unfair per se by the OFT who reported on the 5th April 2006 and are therefore presumed to be unlawful in the absence of specific proof to the contrary.

Your responsibilities

I would draw your attention to the terms of the contract which you agreed to at the time that I opened my account. It is an implied term of that contract that you would conduct yourselves lawfully and in a manner which complies with UK law.

 

I am frankly shocked that you have operated my account in this way as I had always reposed confidence in your integrity and expertise as my fiduciary. I consider that your repeated representations that your charges are fair and reasonable are deceptive and that they have deceived me into agreeing to pay them. Your concealment of the true nature of your charges has prevented me from asserting my right until now

 

What I require

I calculate that, as at today’s date, you have taken a nett total of £xxx.xx in these fees. I request that you refund this amount in full and enclose a schedule of the charges which I am claiming with this letter.

 

Targets to resolve this matter

I hope that you will enter into a sincere dialogue with me about this matter and write on the assumption that you will prefer to do this rather than merely respond with standard letters and leaflets.

 

You have 10 working days, from receipt of this letter to reply unconditionally accepting my request in principle and letting me know a date by which I will receive payment.

 

If you do not respond, or do not respond positively, within this time period, I shall send you a further letter before action allowing a further 10 working days in which to reflect. I believe that these targets are more than sufficient for a large company such as yours with dedicated staff and departments.

After that will be no further communication from myself and I shall issue a claim at the expiry of the second deadline.

 

I look forward to hearing from you by return.

 

Yours faithfully

 

 

Edited July 5, 2009 by batman1956
better letter

[batman1956]

The following could be useful in deciding if charges are indeed lawful and fair

Dunlop Pneumatic Tyre Co. Ltd. New Garage and Motor Co. Ltd. (1915)

Lord Dunedin set out some tests that are considered even in modern cases when the court is asked to rule on penalty charges. They are; 1) If it is "extravagant and unconscionable" i.e. that the cost incurred by the business because of the breach is lower than what the consumer is being expected to pay because of the breach. 2) It is also a penalty where the consumer is to pay a larger sum due to failure to pay a smaller sum. Ford Motor Co. v. Armstrong (1915)

Lordsvale Finance PLC Bank of Zambia (1996) QB 752

"whether a provision is to be treated as a penalty is a matter of construction to be resolved by asking whether at the time the contract was entered into the predominant contractual function of the provision was to deter a party from breaking the contract or to compensate the innocent party for the breach. That the contractual function is deterrent rather than compensatory can be deduced by comparing the amount that would be payable on breach with the loss that might be sustained if the breach occurred"

Bridge Campbell Discount Co. Ltd (1962)

The court held that the term that specified charges in the case of cancellation of a hire purchase agreement was a penalty charge and therefore it was unenforceable. Therefore where there is a term in a contract that is a penalty it can not be enforceable.

Murray Leisureplay (2005) EWCA Civ 963

English contract law recognises that, if the parties agree that a party in breach of contract shall pay an unjustifiable amount in the event of a breach of contract, their agreement is to that extent unenforceable.

[I've got no money]

Don't forget that the Unfair Terms in Consumer Contracts Regulations 1999 apply and that the charges are going to be imposed under an unfair term and therefore don't bind you...

[batman1956]

Thanks but the letter does mention that.The letter will be sent today and I will see what they say.

[batman1956]

Unbelievable I got a letter yesterday with another £25 charge for late payment even though the statement I got last week clearly shows that the payment was made before the due date.

[cashins]

I assume you have reported this to the OFT?

 

They are on record (2006) as sying they would take action against any compnay charging more than £12 anyway.

 

David

[batman1956]

I will report it but could you point me to where they say that they will take action against anyone charging more than £12 Iwould like to use it in my next letter to BCT by the way my wife has just had a phone call from them.

[cashins]

This is Credit Card charges, but the same principle applies to charges on loans

 

The Office of Fair Trading: Current credit card default charges unfair

 

David

[batman1956]

Many thanks that is a useful tool for my next letter

[batman1956]

Wow!!! Got a letter from them yeterday basically saying that they will refund a number of the charges. I am very happy with their offer and see this as a victory, British Credit Trust have gone up in my estimations ok their rates are high but I knew that when I started.

[cashins]

Wow!!! Got a letter from them yeterday basically saying that they will refund a number of the charges. I am very happy with their offer and see this as a victory, British Credit Trust have gone up in my estimations ok their rates are high but I knew that when I started.

 

Excellent start!!

 

Consider the position however if you took them to court.

 

They would need to refund the charges and credit you with all the interest on those charges, added to the account since the the charges were imposed.

 

You can legitimately charge them interest @8% on the sums involved from the time the charges were imposed.

 

Don't let them off too easy.

 

David

[batman1956]

I am happy with what I have got being too greedy might not be the best course of action.

[cashins]

You call

 

David

[batman1956]

Thanks for your help and advice I will think it over