'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.

[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.

[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 ?

[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 ?

[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. .....

[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 % !

[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 -.

[captain2]

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

[captain2]

Thank you Egg Sterminator - I just hope it has some grounds in court ! But an agreement/contract is just what the terms and conditions tell you there's no magic preconceived template that says its enforceable or not - at least outside of the prescribed terms being enforceable that is. My own company has terms and conditions and I am always mindful that the court may find against me if they are unfair or biased towards me - and I'm sure they would find that if they were - so why should banks be any different.

All the best !

[captain2]

Hi there - its going no where fast for either side - I'm waiting to drop my 'depth charge' so to speak and they wont put me in the position of being able to use it as they just will not reply to letters ! Still no copy agreement sent despite several reminders - i have copy agreements already but im just wanting to see what they send again ! Same with MBNA except they are pleading for me to make a full and final offer - which i'm looking at doing at 12 per cent paid over 3 months in 'without prejudice' format. Then if they accept I will tackle them about the mis-sold insurance ticked box at that point - if they don't accept i will be off the trading standards dept.

How are you doing ?

[captain2]

Online signatures I think were post 04. According to site team member approved limit is not credit limit - and been upheld in a county court but off to high court in March re that definition. So tread water till then maybe......

[captain2]

Hi Steve **EDITED** - i know its easier said than done but don't worry about it ! They wont bankrupt you otherwise they will lose their consumer credit licence for not sticking to the Banking Code (thats what Payplan told me anyway ) - its their fault they shouldn't have lent the money so easily - consumers and money are like junkies and drugs its habit forming ! Looking back now on my own position and yours did anyone SANE really expect to be able to repay all that ? The irony is had interest rates not been hijacked we probably at least had a chance of bringing it back down again in due course so thats also their fault. Anyway the agreements you have may well be unenforceable do you know if they are yet ?

Edited November 24, 2009 by car2403
Why?...

[captain2]

Hi if you read the Banking Code they are not supposed to lend irresponsibly and in case of difficulties they are supposed to be fair and sympathetic -

they cant take you to court under the code if you have been cooperative and paid what can be afforded under a DMP or token sum if you have negative income.

 

While that is going keeping them at bay the enforceability route can be checked with a no win no fee agreement lawyer auditor - then once you know you are on firm ground get a declaration of unenforceability.

 

Then consider buying them off in exchange for CRA statement of full satisfaction and even removal of defaults if possible so your record can start to repair itself .......

[captain2]

hi it depends on your circumstances - if u ever need future credit i would rather do without it and i dont need it - my auditor is no win no fee specialist - my own case im going to look at paying £2 a month to each - if its not enforceable the recent court ruling was it could stay on file even if unenforceable and never paid and overpayment of interest in some of my arguments which would require court appearance and if successful may reduce or extinguish claims at which point the CRA's would have to show perhaps it never existed -

[captain2]

Hi there ! I mean 'unenforceable'' the recent case with Royal Bank of Scotland and McGuffrey recently where the borrower had never made any payments under a loan agreement and he sued via his claims advisor on grounds he could not be defaulted if agreement was unenforceable - judge held that even if the agreement is unenforceable the debt is still there and thus can be reported to the CRA's. It is potentially unfair and much depends on having good credit rating. I have a mortgage so as long as I can keep up with that I don't need any more credit my job now is to hang onto what Ive got. It sounds a tough situation arising in your case can you get help somewhere or a housing association place ?

[captain2]

Hi I know its disgusting - the credit industry is the only one where they can ruin a persons future without a court hearing - especially now !

 

At least until that recent RBS court hearing there was always the chance you could get the file wiped -

 

thats why i changed my stance slightly in that making a token payment at least showed a payment. Then if agreements were found to be unenforceable, to challenge and use that as a bargaining chip in wiping file clean for small one off settlement -although I'm not sure they can or will be able to do that -

looking at posts on here that seems too much to expect unfortunately -

 

Its also true a private landlord's agent will credit score so you might need to try and register as voter somewhere else such as at a friends' and try to build a new file at new address - that will need time - or use the situation as tool to get housing association flat where credit file shouldn't be a problem ? I don't know where you live or your circumstances but there are in towns often nice association properties available in OK areas -

 

It should be a political solution as disaffected voters when the implications of adverse credit files being so much more widespread after this debacle will be a consideration.

 

There should be some procedure put in place to help consumers just as they helped the banks.

 

The politicians used OUR money to help the Banks so let them help us - for a change -

 

Maybe a protest and friendly picket outside the CRA agencies and the Banks doors would draw media attention to it I have suggested it on here before but failed to get sustainable support though it did draw a few supportive comments ---

[captain2]

You could also send your explanation in to the CRA and they have to publish that too - if for instance the accounts were in dispute because you did not agree with the balance due or interest charges or any mis-sold PPI that would at least present a reasonable explanation and a balance to it -

[captain2]

Anyone know if bank charges are subject to VAT ? For example in a business account a VAT registered account holder could at least claim the VAT back ?