'valid' reasons for credit card interest rate alterations

[captain2]

Hi all ! My perambulation around these forums posts and threads has helped me take a very positive and increasingly 'moral high ground' approach to my onerous credit card debts. As a now inactive property developer - I cant sell anything - the make do and mend ethos starts with these nasty credit issuers.

 

That my £80,000 credit pile costs or did/would now cost me some some £20,000 pa just to stand still. At the interest rates most of mine were signed up to were - it was half of this - yet the margin above bank base much narrower than now. Not that i've paid any for several months.

 

I am intrigued to find at first what look as though they are enforceable agreements, maybe are, but not all is lost - I hope - the two main areas I am finding worthy of close scrutiny is the prescribed terms which are a customer signed agreement, credit limit,amount of credit, interest and payment details. Other key issues are legibility and due prominence of T&C's. Right to cancel.

 

Courts cannot enforce an agreement if any of the 'prescribed' terms are missing.

 

Section 20 of the 1974 CCA defined interest rate and allowed the OFT to further define. (see their web site for interest details). S.20 requires the total charge for credit to be stated - TCC. Charges typically for cash advances, payment holidays, consumer or card company choice of payment date can all skew the rate beyond the tolerance permitted by the OFT operating within the Act.

 

Sloppy card agreements seem to be so badly put together as to make finding some contradiction at least in my copy agreements quite easy.

 

One of the things which has incensed me is the right to alter interest rates.

In an agreement which can bankrupt a borrower later interest commencing at 1.2 apr per month then rising to 24 %apr per annum is a serious cause of such potential risk.

 

So what authority do card companies have to raise rates ?

 

None it seems - in that the ability to alter rates is defined with examples such as banking practices, codes, law etc. etc. and an attempted catch all for 'valid reason'. The former will in an era of falling interest rates give no validity in raising rates. So they would have to try and rely on 'valid' reason. As this is not defined or where it is not then the card company would have great difficulty in asking a court to enforce an agreement where the interest on hard core debt has been raised while bank base rates have declined.

 

The card companies may say the risks are greater and need higher rates to offset that. That is a convenient fallacy as the money owed already is going to be harder to pay if rates rise especially if the customer is in hardship.

 

They may say the cost of borrowing is higher it is isn't the LIBOR rate is not far from the base rate now.

 

They may say fraud and zero rate balances are causing the need to raise rates - these have always been about and like my cards many of them on special rates at the start the honey pot soon turns into a money blood letting bath.

 

However a google search revealed - 'Consumer Protection in Financial Service' by Peter Cartwright Google books pp 118 - 121 see. The author discusses what is 'valid' it seems little or nothing definitely is and my argument is the same. Some of the cards I have such as Egg have explained in term 12 in their T&C's explain when they will alter rates and then add and for 'valid reason'. MBNA dont even bother with reasons they just state 'valid reason'

 

If the courts interpret the valid reasons in the same way i.e. strike it out then the grounds for raising interest rates are effectively removed. Thus even if the APR is correctly stated so as to comply with the prescribed terms the rate increases may trigger refunds greater than the balance depending on how old the persistent core debt is.

 

Especially in my case when i then also found a box I had ticked for PPI on an M&S agreement and an MBNA agreement I didn't even know I had. So i'm hoping for refunded mis sold protection policy plus interest.

 

I am currently dealing with the four companies which have not provided copy agreements. While I'm waiting for the others to send further copies I asked them four months ago and asking Mint again has now produced a copy agreement which they did not at first send. Once Egg and MBNA send me theirs assuming they are the same as before I have letters waiting to go off.

 

Then off to the ombudsman if no satisfactory reply is received.

 

Then also to complain under Data Protection Act if defaults not removed while case considered.

 

I will keep all informed on here.

[blueotter]

Captain,

Captain,

I really think you’ve hit on something very important here as I’ve long wondered exactly what their interests rates are based on and why they can ratchet up the rate with impunity.

It’s an absolute disgrace that they’re answerable to no one, my interest rate on mbna and hfc credit cards went from 5% and 13% to 34% overnight without a genuine reason for the draconian rise.

Absolutely nothing and both of these rises have landed me in the situation I’m currently in as they’ve effectively tripled my payments ,in the case of mbna my interest charges went from £1350 per annum to £3500 per annum,what’s to stop them raising the rate to 75% ?? Nothing,that’s what.

I’m currently in receipt of a default from mbna and think I should start tackling the issue with a bit more vigour by writing to my MP and bringing these immoral practices to his attention.

If I could get t+c out of these companies I’ll be able to check out some more information on their obligation regarding the wholesale rigging and ratcheting of interest rates.

The media should be investigating these practices but perhaps its not in the interest fg big business !!

[InformedSearcher]

'Captain' - Compliments on a great post! ...

Personally I'm dealng with my wife's CC and the hike from 15.9% to 20.9% which I initially thought was due to her age and (their stealth way) to get her to close the account to retain APR at the original rate. On speaking (on her behalf) on the phone I was told that this was 'scored' according to a factor such as the amount of products we held. One think that should be noted is that banks are clever by changing the 'goalposts' dependant on on what they wish to warrant or achieve.

The reason when I pressed the gentleman was as said, the number of products held. When I stated they had not changed in years he attempted to change the sunject - that was a mistake on his half! He claimed he'd investigated her complaint and his suggestions where so silly and my saying that he'd done nothing by his response 'popped' him into 'I will refer this to me supervsor' mode.

The end result is actually a letter that solves nothing and the matter was not referred - but it will be now! Weare dealing here with HSBC (aka in certain areas as the worlds thieving bank).

Michael

[captain2]

Hi All - what we should do is organise a flying picket in Derby at Egg, in Chester at MBNA M&S, Essex at HSBC and MINT all convenitently clustered in groups or pairs, someone acting as spokesperson and plenty of placards the local MP and locals and the Media will soon take an interest in it esp if the credit card company staff wandering past or in and out of the buildings are pressed to discuss it and shamed into working for the despicable cowboys. Anyone up for it ?

[captain2]

Hi again Peter Cartwrights book is actually P108 - 122 approx not from 118. Consumer Protection etc. Google it and you will be able to read the whole book.

I have more info I will be posting tonight about this matter.

[car2403]

I don't think this is as important as is made out here, IMHO.

 

The APR on an agreement is set by the Creditor. The Creditor holds the power, simples.

 

If the Creditor increases the APR to make the debt unaffordable for the debtor, the Court will take the view that the debtor should repay the debt and not borrow further.

 

The implication here is that the debt owed is beyond the capabilities of the debtor to repay - increased interest rates, or otherwise.

 

I can't see how any of these would affect the enforceability of the agreement, on the basis mentioned above.

 

If this leads to an unfair relationship, or the terms are deemed unfair under the UTCCR, than that's a different story.

 

Buyer beware...

[blueotter]

Would it not be classified as unfair practice ? As i posted above whats to stop them raising interest rates to 70% or more ?

Whilst i understand this is no longer an etical or moral business,if indeed it ever was,surely there should be guidelines as to what's acceptable.

 

If i take out a credit card and use the credit limit in its entirety at an apr of 9.7% and its increased to 34% wouldn't that be classified as a form of entrapment ?

[captain2]

its good to have debate but if that view was to be taken you wouldn't find out - in my Mint agreement the APR is FIXED at a margin of 9.41 above base. So as there are no grounds for raising it other than seemingly trying to change it for their own gain I cant see how they can. The agreements all vary e.g. the Egg agreements in their condition 12 'changes' will not be detrimental to the borrower and grounds for raising the interest are cited and would tend to follow the base rate not double or treble the margin above base. As there seems to be little to go on in precedents then no reliably predictable route can be planned. All manner of attack has to be put forward. A rise for any unspecified 'valid' reason is not likely to be acceptable without some sort of terms of reference. This seemingly regulated business would fail in my business if I were to be allowed to double the charges to clients after first agreeing that would not happen. I don't agree its buyer beware or caveat emptor.

[captain2]

Hi Ive read the rules and my description of lenders is a little subjective and in future I will not include that type of comment although I see references made quite commonly in many other posts about such practices - however that is the feeling generated in my realising how much they have raised interest rates unjustifiably. I have also tried to find the introduction area once more to be able to file my details - but finding it is not that easy. Perhaps a link could be provided ?

[InformedSearcher]

Well dependant on T&C's issued there's little to stop a bank increasing interest rates if they believe they can do it. The real factor is that to them they are dealing with individuals who will 'not' speak out. In other words as I believe in my wife's case the APR was increased by 5% and when questioned you are given incredable reasons none of which are acceptable. The fact is that most customers (like 99.9%!) never say anything and just accept it.

 

If enough people say something then they start up their PR section to work out the damage limitations. As can be seen by the big bonus schemes still in operation the general attitude of a bank is that they are special and you are, in their eyes lucky to have the priviledge of having them. Not cynical but the honest truth. Of course they invariably ruin that conception by using India, Malaysia and the such when things go wrong. There again they, at that point don't really want you around any more!

 

Michael

[basa48]

I too think this is a very important observation. Like car2403 I'm not convinced on its own it would be a valid reason to make an agreement unenforceable.

 

However, it most definitely does already form part of my defence to a claim if and when a judge asks me why I came to question the validity of my agreement(s).

[blueotter]

Totally agree,on its own it may not stand but put it with the other pieces of the jigsaw and the defence becomes far weightier and another bit of moral high ground is taken.

I think its a great idea to include this as part of any defence because its easily understandable and in my view a genuine reason for challenging the legitimacy of any agreement.Without the original t+c how do you know what the lenders entitlement is to raise interest rates ? I'm sure many an agreement has been taken out with little realisation of exactly what a 20% hike in interest rates can do to a 10k limit that's been greedily offered by the lender.

(Take virgin mbna for instance,they made a big deal of offering customers 0% apr and in my case increased my limit to 13.5k after a matter of months,in due course that apr became 34% ,It's a whole new ball game then ) Whilst i recognise that virgin may have buried this in a footnote somewhere my original mbna "agreement" for my other card made no such mention of it.

 

I see captain has his agreement with Mint and it sounds to me that they've made a mistake in specifying a fixed apr of 9.41 above base,a big mistake in this day and age.

 

The problem for a lot of us is that we need the t+c to be able to identify if there are grounds beyond the moral/ethical issue with which to challenge the rates. Most of us don't have any original t+c's and neither do the so called "responsible" lenders by the looks of things.

My current reqest for a cca from mbna for an account dating backing to 2002 has the t+c for this year so i'm snookered and effectively so are they.

 

more thoughts/ideas/opinions welcome.

Edited September 16, 2009 by blueotter
re-written

[car2403]

Hi Ive read the rules and my description of lenders is a little subjective and in future I will not include that type of comment although I see references made quite commonly in many other posts about such practices

 

We'd very much appreciate it if you could report these types of post to the site team by using the red triangle, on the bottom left of each post, over there

 

It's in all our interests to protect this site from potentially libellous comments, for the benefit of all.

 

I have also tried to find the introduction area once more to be able to file my details - but finding it is not that easy. Perhaps a link could be provided ?

 

Not sure what you're asking there?

[car2403]

I think we have a bandwagon on the go!

 

Reject credit card rate hikes: How to fight unfair rate-jacking...

[egg-sterminator]

Hi Ive read the rules and my description of lenders is a little subjective and in future I will not include that type of comment although I see references made quite commonly in many other posts about such practices - however that is the feeling generated in my realising how much they have raised interest rates unjustifiably. I have also tried to find the introduction area once more to be able to file my details - but finding it is not that easy. Perhaps a link could be provided ?

sure i've come across this somewhere something about an unfair relationships act which would apply also to cards post apr 2007 ? the big firms fighting the card companies seem to be gearing up to this as the next big thing .

[captain2]

hi egg agreement says rates not altered unless in line with banking practice etc and any other valid reason the valid reason is unfair

Mint rate on mine from 98 fixed at 9.41 above base and their alter for any other reason thus unfair

Capital one complete contradiction on their documents as they haven't got the original but promised 'long term rate of 11.9%' -in application form

Monument under £5k so Im going to let them take me to court if ombudsman cant help - no agreement only signed reply card with no terms etc

 

Last week there was a case in South Shields where MBNA had balance cancelled as inadequate agreement and refund of PPI in cash -you read about that yet ?

[egg-sterminator]

hi egg agreement says rates not altered unless in line with banking practice etc and any other valid reason the valid reason is unfair

Mint rate on mine from 98 fixed at 9.41 above base and their alter for any other reason thus unfair

Capital one complete contradiction on their documents as they haven't got the original but promised 'long term rate of 11.9%' -in application form

Monument under £5k so Im going to let them take me to court if ombudsman cant help - no agreement only signed reply card with no terms etc

 

Last week there was a case in South Shields where MBNA had balance cancelled as inadequate agreement and refund of PPI in cash -you read about that yet ?

what year /month is your agreement and what is the egg address stated on it ? not heard about that one , big case in manchester on 8 th worth watching

[captain2]

Hi there ! thanks for reply - both agreements identical and dated august 02 and june 04 - address on both is 'new application' Basildon SS 14 9AA - condition 12 called 'changes ' not in agreement only contained in the accompanying generic terms where it outlines 'change' and refers to rate alterations in line with banking practice codes etc - neither agreement has the right to cancel - but i cannot find in CCA where this is required but presumably it must be somewhere as every other creditor has it in a prominent place. .....

[InformedSearcher]

Banks pay fortunes to legal people to ensure (after copying someone else's) that their T&C's are in order. There is little one can do to challenge it as I found out myself. How many times in frustration has some person from a bank when you do not accept something have they daid 'It's in the Terms and Conditions'? It seems 'Egg' varied their T&C's and looking at the thread they must now regret it big time but they are an oddment in the normal course of events it would seem.

Michael

[captain2]

Hello ! thanks for that comment but I can't agree with that I have found so many errors in all my agreements e.g. MBNA typographical errors section 8(1) referred to when no section 8(1) only section 8 (a) another refers to section 14 but no section 14 stops at 12, they also failed to state the APR for goods only for cash advances when the Total Charge for Credit has to be stated anyway.. etc etc etc....... I realise a lot of the time they get it right like bank guarantees, unfortunately, but these credit card agreements leave you wondering who they have used - if they got them right they would all be nearly identical and they're far from that. Another one Mint fixes the margin of interest at 9.41% above base so having done that they have a big problem then trying to get it up to 19% when base is now 0.5 % !

[blueotter]

Hmm Problems for mint at the very least,interesting thread developing here and what's teh case on the 8th ? is it an egg cca being challenged in court ?

[captain2]

Also while card agreements are reg. with certain prescribed terms - the other terms and conditions are contractual thus a contract dos not allow one party to simply behave how they feel like without the others agreement. An agreement implies just that - not agree to let one side behave detrimentally towards the other. So maybe unfair terms but also any vague conditions are interpreted in favour of the party who has not made them as far as i can remember -.

[basa48]

I think this is the relevant passage (part of a proposed defence I lashed up):

 

Should the court feel there is any ambiguity at all in the interpretation of the meaning or intent of the documents presented as an agreement I urge that the rule of ‘contra proferentem’ prevails.

 

I offer extracts from a judgment by Mr Peter Prescott QC in the High Courts of Justice, Chancery Division Patents Court in the case of Oxonica Energy Ltd v Nueftec Limited [2008] EWHC 2127 (Pat) who discusses contra proferentum:

 

“In Tam Wing Chuen v. Bank of Credit and Commerce Hong Kong Ltd [1996] 2 BCLC 69, 77, P.C. Lord Mustill said that:

 

'the basis of the contra proferentem principle is that the person who puts forward the wording of a proposed agreement may be assumed to have looked after his own interests, so that if words leave room for doubt about whether he is intended to have a particular benefit there is reason to suppose that he is not.'

 

The trouble is that the maxim is itself ambiguous. Who is the person who "puts forward" the wording? In 'The Interpretation of Contracts', 4th edition, page 261, Sir Kim Lewison says:

 

 

It might mean:

 

(1)the person who prepared the document as a whole;

(2)the person who prepared the particular clause;

(3)the person for whose benefit the clause operates.”

 

It is clear in this case the claimant is all three of the above and should not benefit from any ambiguity of the document. I therefore urge that the claim be dismissed and the remedies as asked for by the defendant be allowed.

[captain2]

A learned argument ! A common law remedy re presented in the Unfair Contracts Terms Act .......

[InformedSearcher]

...However in real terms there's really nothing to stop a CC company referring you to their T&C's and saying 'there it is, we can do this'. The fact we consider these terms does not reflect the fact we invariably signed them.

The real argument is that 'Okay you can do what you like but with a fair and level understanding'. That's really the crux of the matter. Personally i find it all to often these days that a CC company entices you (into the trap) and then decides to 'up' the APR with totally (often) silly reasons (as in not residual to your circumstances) for doing so. You are then left in the area of either accepting it, complaining about it or simply closing the account to retain their original APR to pay it off.

Michael

(in a voice of reasoning/business mindset tonight LOL)