2nd Charge Fairness and Enforceability Part 8 And CCA s.140 B

[frettful38]

The Consumer Credit (Agreements) (Amendment) Regulations 2004 (No. 1482) - Statute Law Database

 

I have been trying to work something out for quite a while and have had no luck as of yet, wandered if any experts knew. On the top of a financial agreement whether it is CCA regulated or not should the top the agreement read what type of agreement it is?

 

 

I have been reading the above act and as I understand it all agreements must read either regulated by the consumer credit act 1974 or if not then partly regulated or this is an unregulated agreement.

 

Or is OK for a financial unregulated agreement to just read "THIS AGREEMENT" made between so & so? Any help would be great.

 

I have also been reading this

 

http://www.oft.gov.uk/advice_and_resources/resource_base/legal/cca/agreements/

 

The Consumer Credit (Agreements) Regulations The Regulations apply to all regulated consumer credit agreements and consumer hire agreements, including modifying agreements.

In particular, the agreement must contain certain financial and other information. This must be set out in a specified order, with sub-headings, and shown together as a whole. The information must be of equal prominence, and easily legible.

 

 

In the case of credit agreements, the required information is:

 

• nature of the agreement [what does this mean?]
  
  
• parties to the agreement
  
• key financial information (including the amount of credit or the credit limit, the duration of the agreement, the APR, the total amount payable, and the amounts and timing of repayments) [the words APR are not stated in my agreement just Annual Nominal Rate]
  
• other financial information (including a description and cash price of goods or services, any advance payments, the total charge for credit, the rate of interest, how and when interest charges are calculated and applied, the order of allocation of payments, and variable rates and charges) [My agreement does not show a box with other financial information in it, neither does my agreement state the Total Charge for Credit]
  
• key Information (including default or other charges, any security provided by the borrower, and prescribed statements of the protection and remedies available to the borrower), and
  
• a signature box, and other form of consent where applicable.
  

Both the borrower and the lender must sign the agreement. A copy of the executed agreement must be given to the borrower, either when he signs it or within seven days. A further copy of the unexecuted agreement may also need to be provided. If the agreement is cancellable (because it was signed off trade premises), notice of cancellation rights must be included in the copy agreement, and must also generally be sent by post or email to the borrower within seven days.

 

 

I have an unregulated loan and I did not have the option to cancel, my agreement was once signed is uncancellable.

 

 

Where it states in the case of credit agreements does that apply to all agreements? regulated or un-regulated?

 

 

Please could someone help,sue?

Edited April 25, 2010 by frettful38

[mrsiphone]

The Regulations apply to all regulated consumer credit agreements and consumer hire agreements, including modifying agreements.

 

guessing regulated only

[frettful38]

The total charge for credit regulations state that the total charge for credit with a list of constituent parts must now be given for ALL types of agreements.

 

What exactly does "total charge for credit" mean? and if the total charge for credit is not shown on an agreement then what happens then?

 

I have been reading the TCC regs and have found some very interesting stuff, but need to know when the TCC regs were made and applied. I believe they were in 05. If anyone has a copy of the latest TCC regs please post up or send a link.

 

http://www.consumeractiongroup.co.uk/files/AlansDocs/UsefulDTIdocPPI.pdf

 

 

 

"Paragraph 9 and 10 of Schedule 1 of the Regulations have been amended so that all agreements, will have to show the total charge for credit, the rate of interest and give a statement explaining how and when interest charges are calculated."

 

The above I have been reading and trying to find out exactly when this was applied? what are the consequences for the lender if they have not shown the total charge for credit on the agreement? I understand that my agreement is un-regulated post 2008 but the total charge for credit regs amendments apply to all types of agreements.

 

 

Yes ?

Edited April 26, 2010 by frettful38

[alisha2010]

The total charge for credit regulations state that the total charge for credit with a list of constituent parts must now be given for ALL types of agreements.

 

What exactly does "total charge for credit" mean? and if the total charge for credit is not shown on an agreement then what happens then?

 

I have been reading the TCC regs and have found some very interesting stuff, but need to know when the TCC regs were made and applied. I believe they were in 05. If anyone has a copy of the latest TCC regs please post up or send a link.

 

http://www.consumeractiongroup.co.uk/files/AlansDocs/UsefulDTIdocPPI.pdf

 

 

"Paragraph 9 and 10 of Schedule 1 of the Regulations have been amended so that all agreements, will have to show the total charge for credit, the rate of interest and give a statement explaining how and when interest charges are calculated."

 

The above I have been reading and trying to find out exactly when this was applied? what are the consequences for the lender if they have not shown the total charge for credit on the agreement? I understand that my agreement is un-regulated post 2008 but the total charge for credit regs amendments apply to all types of agreements.

 

 

Yes ?

 

Hi

Iam looking for information regarding unenforceable modifying a hire -purchase agreements which was entered into entered into before april 2007 ,could anyone give me any useful information please

[bach]

subbing and thanks for sharing info

Edited May 16, 2010 by bach

[frettful38]

Thanks

Edited May 18, 2010 by frettful38

[cher69cher69]

Am i Confused or can i not read that i can never upload stuff on here either unless its my eyes lol!!??

[cher69cher69]

Found this and I hoped it may help somebody sorry if it points out things you already know it just seemed a bit more explanitory and simple to understand although it is a bit long. sorry:)

cher69.

 

Important points when checking whether or not your agreement is enforceable.

 

FAQS

 

What type of agreement is caught by the Regulations?

a) Agreements applicable to cash loans or loans to purchase specified goods (typically vehicles). These agreements are categorised as Fixed-sum loan agreements, Hire purchase agreements or Conditional sale agreements.

b) Agreements applicable to overdraft, credit card and store card facilities. These are classed as Running account agreements and are categorised as Credit Card agreements or Credit agreements.

 

What type of agreement is exempt from the Regulations?

Generally agreements issued to incorporated companies, Charities, firms with more than four partners, certain specified overdraft accounts, Utilities and land agreements (mortgages specifically for the land and buildings).

 

For what reasons can agreements be unenforceable?

 

 

Pursuant to the Consumer Credit Act 1974, regulations to the form and content of documents embodying regulated consumer credit agreements ensure that the debtor is made aware of:

• The rights and duties conferred or imposed on him by the agreement;
  
• The amount and rate of the total charge for credit;
  
• The protection and remedies available to him under the "Act"; and
  
• Any other matters which it is desirable for him to know about in connection with the agreement.
  

A regulated agreement is not properly executed unless:

• A document in the prescribed form containing all the prescribed terms is signed by the debtor and the creditor;
  
• The document embodies all the terms of the agreement, other than implied terms; and
  
• The document is, when presented to the debtor for signature, in such a state that all its terms are readily legible.
  

What if my agreement appears to be non compliant with the Regulations?

 

The Regulations contains requirements as to the form and content of documents embodying regulated consumer credit agreements. If these requirements are not complied with, the agreement is not properly executed and is enforceable against the debtor only with a court order. The court must dismiss a lenders application for an enforcement order if it regards that prejudice has been caused to any person by the breach in question, and the degree of responsibility for it.

 

The Regulations also provides that certain terms are 'prescribed terms' and must be contained in the "agreement" if it is to be properly executed. If any of the prescribed terms is missing, or incorrect, the "agreement" is not enforceable against the debtor and the court is precluded from making an enforcement order in such cases.

From 6th April 2007 the Financial Ombudsman Service offers you mediation and conciliation scheme to cover consumer credit disputes. Decisions will be made using guidance from the Office of Fair Trading as to possible infringements of the Consumer Credit Act 1974 and the Regulations. The scheme is free and is referred to as the Alternative Dispute Resolution (ADR).

 

All Consumer Credit Agreements regulated by the Consumer Credit Act 1974 are only enforceable by order of the court. In the absence of such an order, the lender may not take steps to enforce the agreement or to reclaim goods or security that are covered by the agreement.

 

What if my agreement seems to be enforceable?

If the agreement technically complies with the most important Regulations and would therefore probably stand up in court in favour of your lender. However, there might be other aspects such as the interspersing and prominence rules that may breach the regulations. In this case you should consider legal advice. So they can properly analyze the agreement fully.

 

PLEASE NOTE The above is just a guide to try and make some sense out of the legal jargon contained within the acts and to give an idea on what you should be looking for within your agreement, which could make it unenforceable.

 

Quote made by Lord Justice Clarke (McGinn v Grangeworth Scurities Limited (2002))

"These appeals raise a number of issues under the Consumer Credit Act 1974 ("the Act") which has recently provided so much work for the Court. Like others, this case demonstrates the unsatisfactory state of the law at present. Simplification of a part of the law which is intended to protect consumers is surely long overdue so as to make it comprehensible to the layman and lawyer alike. At present it is certainly not comprehensible to the former and is scarcely comprehensible to the latter."

 

First of all

 

 

• Check the wording is correct.
  

When checking your agreement the wording has to be correct there should not be any other wording or left blank. For example, If the exact wording ’Total Charge for Credit’ is not shown do not assume other words mean the same.

 

• Check the Title of the agreement
  

At the head of the agreement there should be the title.

 

 

For example – Fixed-sum loan agreement regulated by the Consumer Credit Act 1974.

Or Hire purchase agreement regulated by the Consumer Credit Act 1974

Or Conditional sale agreement regulated by the Consumer Credit Act 1974

Or Credit agreement regulated by the Consumer Credit Act 1974

If the title is not an exact match make a note of what it actually says.

 

Parties to the agreement

 

immediately after the title there should be details of the parties to the agreement.

This should be the debtors (borrower) name and postal address make a note if this is missing.

Note: If there is more than one debtor, the name and postal address of each debtor must be shown

 

 

Then also check the (lenders) name and postal address is also on the agreement. If it is missing make a note of this because this also must be shown

• Date that you received the loan?
  

Make a note of this

 

The date that you received the loan is the date that you actually received money into your account/hand, when you received goods or when things were paid for on your behalf.

It may be important if you received the loan before 31st May 2005, and also after that date up to April 6th 2007. Then after the 6th of April 2007 to now. Because these are dates when regulations changed or were amended.

 

• Amount of credit
  

Make a note of the amount that is shown under ‘Amount of credit’. It may be that the credit (amount borrowed) is shown as ‘the amount of borrowing’, ‘amount of cash loan’, ‘Loan’ or a culmination of ‘loans’. It is permissible for the lender to phrase the ‘Amount of credit’ as something else but it has to be clearly defined as to it being credit and nothing else. Ie: the amount that you have actually received. The credit is the total cost of the goods, land or buildings (less any deposit or advance payment), or; the actual amount that you received in your bank account or pocket as a cash sum.

If the amount of credit or amount of loan etc is missing make a note of it.

 

• Total cash price
  

If the wording ‘Total cash price’, or the amount, is missing make a note of this.

 

• Duration of the agreement
  

The duration of the agreement must be shown and should be stated by the number of months. It might be that the whole duration is not shown on its own. However, a breakdown of the duration might be shown under the payments section in the agreement. The duration might be referred to as the term. If it is incorrect or missing make a note of this.

 

8. APR

 

The APR should be shown (eg: 12.5 for 12.5%). The APR has not to be confused with the interest rate. The APR is the Annual Percentage Rate that expresses the true reflection of the cost of the credit. Ensure that the interest rate is shown

If the APR is missing make a note of this

 

• Rate of interest
  

The interest rate (eg: 12.5 for 12.5%). The rate may be expressed on a monthly basis where as it should be expressed on an annual basis. If it is expressed ‘monthly’ then multiply the rate by 12 and make a note of it, if it is missing also make a note . The interest rate has not to be confused with the APR.

 

9. Fixed or variable rate

 

 

 

It should be stated on the agreement whether the Interest rate is a variable rate or whether it is fixed. It may be stated anywhere within the main body of the agreement but should be located next to the Rate of Interest. It is common for the lender not to show whether the interest rate is fixed or variable. However, it might be shown that the APR is variable. If this is the case then the interest rate will be variable. This is an important point please make a note of this.

• Total charges/fees
  

‘Total charges’, ‘charges’, ‘fees’ etc. This has not to be confused with the ‘Total charge for credit.’ That should also be shown.

If the wording ‘Total charges’/‘Total fees’, or the amount, is missing make a note of this.

 

• Total charge for credit
  

There should be an amount shown under the title ‘Total charge for credit’. This has not to be confused with ‘Total charges’, ‘charges, ‘fees’ etc.

If the wording ‘Total charge for credit’, or the amount, is missing make a note of this.

 

• Debtor name (Borrower)
  

Make a note of the borrowers name exactly as it appears on the agreement. It should be located immediately bellow the title of the agreement.

 

• Creditor name (lender)
  

 

Make a note of The lenders name exactly as it appears on the agreement. It should be located immediately bellow the title of the agreement.

• First payment
  

Make a note of the date, and the amount that might be shown under a first payment. It may be stated on the agreement that a fee or a charge is payable with the first payment, if so, ensure that you add this to the monthly payment if it is not already included.

If there is no reference to a first payment or there are no charges or fees payable with the first payment make a note of this

 

• Constant payment
   
  There should be an amount that is shown to be the monthly payment. This might be expressed as the subsequent, regular, constant payment etc. It may be that a fee or a charge is payable with the payment, if so, ensure the entry reflects it. Make a note of what it says.
  

• Last payment
  There might be an amount being shown under a last payment. It may be stated on the agreement that a fee or a charge is payable with the last payment, if so, ensure the entry reflects it. Do not include any deferred or balloon payment that might be shown. Make a note of this and if there is no last payment make a note of this.
  

• Deferred or balloon payment
  

Make a note ofthe amount that relates to a deferred or balloon payment. I.e. the residual element of the capital that is due at the end of the term (duration).

If there is no deferred or balloon payment make a note of this.

 

• Advance payment
  

‘Advance payment’. The advance payment is any payment that the debtor has to make before he is provided with credit or enters into the agreement. It includes any deposit or part-exchange allowance.

 

 

If the advance payment is missing make a note of this

• Total amount payable
  

‘Total amount payable’. This has not to be confused with the ‘Total payments’.

If the wording ‘Total amount payable’, or the amount, is missing make a note of this.

[Mark Wilson]

I am fully onboard with the rationale put forward in this thread.

 

As a First Plus customer, I have complained to the FLA, FSA, OFT and FOS with regards to their actions:

 

Putting repayments UP when base rates have plummeted

 

Clearly breaching UTCCR regs by maintaining high rates as their own costs have lowered, in an attempt to add gain to their bottom line. This is clearly forbidden in regs with contracted customers.

 

Refusing to answer clearly how their interest policy works in order to gain an understanding for the remaining time period of the loan

 

Completely dismiising links to any base rate when advertising literature preached it 5+ years ago and their trends at that time meant ALL changes UPWARDS in BOE rate were mirrored by increases in loan rates. They only stopped mirroring base when it FELL!!

 

The FLA have allowed FP to not answer questions about calculation of interest rate when their own guide states they must do so.

 

The FSA say FP are not regulated for teh sale of loans by them, only PPI, so they will not comment on UTCCR, passed me to the OFT

 

The OFT will not deal with individual complaints re UTCCR

 

The FOS will only deal with FP acting within the meaning of their terms (which are vague and say they can do as they please) and will not judge on fairness

 

There are those condencending sorts out there that will say "you signed it" etc but this lender has acted out of line with the literature it used to sell its loans.

 

They know it is not a "mortgage" and falls under a grey area of regulation, well a black hole actually.

 

This is not just about now but about the future.The trading performance of FP means that they had to create a gap in excess of £150m between their interest cost and interest income to stop shipping massive losses and cover the loss of £100m that PPI used to give them.

 

Manipulation of their interset rate clause has allowed this and they have used the reduction in base rate (that their own lending is tagged to) to create the gap without putting rates up massively to cover it, which was the only option. As the gap is now created, they cannot reduce it so when base rate goes up, they have no choice but to pass rates on.

 

As we can see, regulators are apathetic in essence and the future is bleak for many. If rates return to 4%, which is where they were at the start of my loan, my repayment will be over £700 pm compared to £350 at the start of the loan when all underlying costs will be the same.....

 

Unfairness, you bet and I am trying to find somoeone prepared to listen or take on the case.

 

The disadvantage is the lack of current case law but the sheer weight of eveidnece makes me think also that they would never want to set foot in court on the off chance they may lose, which will not help the masses but sooner or later this matter has to come to a formal head and the increases in base rates that may happen later this year could be the trigger!!!!

[frettful38]

Hi MW, I have read what you have written and taken aboard all. I can also understand how frustrated you must be feeling when knowing your are right and finding hard to get someone to listen and act.

 

I think the Unfair Relationship is a good way of challenging anything in our agreements and contracts that we believe are unfair, I mean that is why they have called it UNFAIR ain't it?

 

What you need to do is study the Unfair Relationship as much and in detail as possible. You will most certainly find things in their to support your grievances, trust me.

 

Here is a link and please let me know what you think and how you get on.

 

Unfair Contract Terms | Consumer Information

 

Consumer Protection From Unfair Trading Regulations 2008 | Consumer Information

[Mark Wilson]

My feeling on all of this will centre around the ability of the customer to exit the contract. A loan agreement has a cancellation clause, you are allowed to settle at any time and thus if you do not like the "price" then take your business elsewhere.

 

That is easier said than done and 2nd charge loans are situated in the subprime definitions of the market. Rule of 78 makes settling penal, the mass withdrawal from lenders and changes in house prices also makes the ability to escape nigh on impossible thus they have a captive audience and they know it.

 

Legally they will argue that the contract "allows" you to escape, factually and realistically the truth is different. For me, this is where a central part of the argument will sit.

 

Having been through UTCCR, FP fail on numerous levels, their actions are indefensible. Also the OFT guidelines about not increasing rates when your own costs have not increased have also been breached.

 

What if FP are found to be wrong - a £3.5bn Barclays owned loan book couild be in peril. I am sure the regulators would ensure that does not happen. The damage to an already fragile banking system would be serious.

 

What if nothing happens - many people will be paying double the monthly payments they did 6 years ago and either muddle through or default in houses worth little more than they were all those years ago.

 

Here is a sobering thought....at the start I was contracted to 300 x £350pm that is a total amount payable of £105000. My payments are already £450 pm and my estimate is that by yr 10 of my loan, repayments will reach £700 if bank base returns to 5%. At that point I will have 15 yrs left at £700 minimum, ie 180 x 700 - that is £126000 STILL to pay as a minimum.

 

"Variable rate" means your loan works like a mortgage - hmm really....misleading?

 

"We can change our rates to reflect any change that has occurred or that we can expect to occur in interest rates or to ensure our business is run efficiently, prudently and competitively" - no longer lending so no competition, over £100m in losses (prudent?), efficiently (redundancies, staff cuts, £9m in bailout from Barclays and now a "going concern")

 

Their term is so vague it technically allows them to do as they please and it shoved rates up when markets went that way then did nothing when markets went down. No-one in their right mind would commit to a loan knowing that but no-one was told that would happen day one, you were just told it works like a mortgage - a mortgage none of us have ever seen unfortunately.

 

I deem this UNFAIR and I am desperate to see how anyone in this position can have a lender say they are fair. I did an interview for Moneybox and they were adamant the loan agreement and FP actions meant the loan was unenforceable, FP insisted "they were doing nothing wrong"!!!!!!

 

The day of reckoning will draw closer.....

[frettful38]

My feeling on all of this will centre around the ability of the customer to exit the contract. A loan agreement has a cancellation clause, you are allowed to settle at any time and thus if you do not like the "price" then take your business elsewhere.

 

That is easier said than done and 2nd charge loans are situated in the subprime definitions of the market. Rule of 78 makes settling penal, the mass withdrawal from lenders and changes in house prices also makes the ability to escape nigh on impossible thus they have a captive audience and they know it.

 

Legally they will argue that the contract "allows" you to escape, factually and realistically the truth is different. For me, this is where a central part of the argument will sit.

 

Having been through UTCCR, FP fail on numerous levels, their actions are indefensible. Also the OFT guidelines about not increasing rates when your own costs have not increased have also been breached.

 

What if FP are found to be wrong - a £3.5bn Barclays owned loan book couild be in peril. I am sure the regulators would ensure that does not happen. The damage to an already fragile banking system would be serious.

 

What if nothing happens - many people will be paying double the monthly payments they did 6 years ago and either muddle through or default in houses worth little more than they were all those years ago.

 

Here is a sobering thought....at the start I was contracted to 300 x £350pm that is a total amount payable of £105000. My payments are already £450 pm and my estimate is that by yr 10 of my loan, repayments will reach £700 if bank base returns to 5%. At that point I will have 15 yrs left at £700 minimum, ie 180 x 700 - that is £126000 STILL to pay as a minimum.

 

"Variable rate" means your loan works like a mortgage - hmm really....misleading?

 

"We can change our rates to reflect any change that has occurred or that we can expect to occur in interest rates or to ensure our business is run efficiently, prudently and competitively" - no longer lending so no competition, over £100m in losses (prudent?), efficiently (redundancies, staff cuts, £9m in bailout from Barclays and now a "going concern")

 

Their term is so vague it technically allows them to do as they please and it shoved rates up when markets went that way then did nothing when markets went down. No-one in their right mind would commit to a loan knowing that but no-one was told that would happen day one, you were just told it works like a mortgage - a mortgage none of us have ever seen unfortunately.

 

I deem this UNFAIR and I am desperate to see how anyone in this position can have a lender say they are fair. I did an interview for Moneybox and they were adamant the loan agreement and FP actions meant the loan was unenforceable, FP insisted "they were doing nothing wrong"!!!!!!

 

The day of reckoning will draw closer.....

 

 

Hi MW am I correct in believing that you have a problem with the interest rate applied to your loan. I have been trying to find out about variable interest rates and how they can/should be applied.

 

I have been collecting bits and pieces all over the place and saving them to word doc, below I have attached a link and hope that it is useful. The thing is that we have to keep searching and finding the right information that we need to defend. I know that you have been doing and have done a lot of work and complained to the relevant bodies, with no luck at present but don't despair their are things that can be done just a matter of time.

Hope this helps,

advice about interest rate fos decison.rtf

[Mark Wilson]

The key points that we all refer to are the same.

 

The reason we are able to justify UTCCR is also based on their trading performance. I will copy relevant info below.

 

The charts that many have put together show that upto the a couple of years ago, their rate movements mirrored movements in base rates, their letters indicated "changes in base rate" etc whereas now they have simply used the wording "changes in our costs"....their accounts show that their £3.5bn loan facility with Barclays is linked to BBR and thus their greatest cost, ie their own interest bill has plummeted.

 

Linking this to UTCCR and the accounts is the key point that,for me, makes it impossible for them to escape UTCCR.

 

The stance of First Plus currently seems clear. They are adamant that their interest rate policy follows no rate trend and that their decisions are based purely upon their “commercial judgment”. I have attached a chart that plots interest rate movements since the inception of my loan and the trends are clearly apparent. The accounts provide an insight into their commercial judgment and some salient points need raising:

1 the notes to the accounts reference the fact that the business is now noted as a GOING CONCERN and that the auditors have requested written support from Barclays for the business

2 Page 31 of the accounts state that Barclays own funding is linked to Bank of England base rate, thus its own interest charge during 2008 decreased in line with downward movement. Interest expense dropped from £200m in 2007 to £174m in 2008. Note also the significant falls in base rate did not occur until early 2009 which will make even bigger savings to their interest expense.

3 Interest income for the business, as no new loans are now being taken on, increased from £254m to £268m but is now only likely to change with movements in their customer interest rates.

4 Additional income from the sales of PPI, went from £132m in 2006, to £101m in 2007 down to £27m in 2008. This is a huge fall in income and one that is having to be compensated for in other areas. The only other area of income they have any control over is the interest income determined by the rates they charge current customers.

5 The drop in their own costs and the avoidance of passing these savings on to customers has seen them increase the gap between interest income and expense from £54m to £93m. The gap for 2009 will be even bigger with base rate at 0.5%. This gap has been created to enable the business to survive knowing the market conditions dictate that few customers are able to settle their contracts by cash, remortgage or other resources, thus we are, in essence, captive.

6 The change in status of the accounts to GOING CONCERN has meant they have had to note previously “denied” events, such as the fiduciary duties regarding the payment and receipt of commissions for the sale of PPI. They are also being heavily targeted for the misselling of PPI and have had to put aside £8m as a provision for the year. Barclays have had to put £9m liquidity into the balance sheet and the losses posted for the year to 2008 would have been well in excess of £20m had they not manipulated £40m of additional income through the non-passing on of interest rate falls.

All of the above has massive implications when reference is made to Unfair Contract Clause Terms. First Plus clearly state they can do as they please in the application of their commercial judgment and will not disclose to anyone the nature of their interest rate clause that would enable customers to plan and budget for the future ( as their literature alludes to also). Action has already been taken against Barclays Investments and Woolwich for clauses within their products (one investment, one mortgage) where the argument for “reasonableness” in the justification of action is simply too vague. The FSA acted against Woolwich over a mortgage term that stated that they could vary rates for any valid reason (http://www.fsa.gov.uk/pubs/other/barclays.pdf ). The ruling was that the term gave the firm excessive discretion in varying interest rates. First Plus behaviour and term is no different. The investment product scenario was very similar.

[Mark Wilson]

Fundamentally you have regulators running scared about the impact of deciding against the "second charge lenders". The interest rate clause is not just FP specific but is mirrored across the board from my knowledge.

 

AS long as FP can say they are acting "efficiently, prudently" or trying to be "competitive" then they can do as they please to their interest rates.

 

Going forward, we are at the bottom of the interest rate cycle. They will produce their accounts for last year shortly which should show them returning to profit due to the gap they created between interest income and expense. Now they have retrieved their position at OUR expense, they will maintain their position by mirroring interest rate increases and passing them on to US.

[cher69cher69]

Hi Guys

Just thought I would pop some more info on for you to peruse! These are extracts from the mortgage conditions which apply to my loan with sppl/capstone. I am sure I am not the only one who never read most of what it said before I signed it. The reason being that I was very nieve to think that a loan provider who was regulated by the FSA would ever try to back you into a corner or be unfair in the

way it treats its customers. I soon woke up to that one!!!!!

Here we go anyway- these are just bits that seem unfair!

Firstly they refer to the Property Law act 1925 section 103 in the actual act it states the following

A mortgagee shall not excercise the power of sale conferred by this Act unless and until:

 

a notice requiring payment of the mortgage money hasbeen served on the mortgagor or one of two or more mortgagors, and defaul has been made in payment of the mortgage money, or of part thereof, for three months after such service: or

b. Some interest under the mortgage is in arrears and unpaid for two months after becoming due: or

c. Ther has been a breach of some provision contained within the morgage deed or in this Act, or in an enactment replaced by this Act, and on the part of the morgagor,or of some person concurring in making the mortgage,tobe observed, other than and besides a covenant for payment of the mortgage money or interest thereon.

But SPPL have inserted their own take on this Act and have put the following:

The mortgage conditions give by SPPL that the statutory power of sale applies to the mortgage free from the restrictions in section 103 of the Law of Property Act 1925

In other words in the mortgage conditions it means that SPPL/Crapstone do not have to comply with the above regulations. They have made up their own rules which are as follows: extracted

from my agreement.

THE LENDERS POWERS

The statutory power of sale will arise on the occurence of any of the following:

1. If you the borrower, fail to pay in full any payment due under the mortgage .

2. If you are in breach of any of your obligations under the mortgage and you do not remedy that breach within 7 days of receipt of a notice from the Lender demanding that the breach be remedied.

3.If you commit any act of bankruptcy or make arrangements with any other creditors .

4. If the borrower dies whereupon the power of sale will arise 6 months after the date of death.

These are just a few of the rules and below a few more to do with the Power of the lender

We may excercise the powers mentioned whether or not it actually makes demand for payment under the Loan Agreement and whether or not it would be required by the Consumer Credit Act 1974 to give notice before making such a demand.

 

Then further down it states this about the charges

Any costs and expenses due under any loan agreement secured by the mortgage we will be entitled to recover all of our expenses from you and you must pay all the expenses on demand and if you do not pay these expenses they will be added to your mortgage debt and will bear interest at the interest rate from the date when they incurred until the date they are repaid.

 

Surely these can not be standard terms and conditions because they dont sound very fair to me??????

What do you guys think???

Edited June 3, 2010 by cher69cher69
added somehting

[Mark Wilson]

When you fall outside the protection of the CCA then you are at a lenders whim as to their ts and cs, which is why every signature box contains the words "I have read and understood" etc, when many are simply rushed through down to the bottom line.

 

Aside from any of the individual vagueries one company may have over another, no-one would expect a detail that is contained within a leading lenders document to expose the customer to a huge potential threat to their home where the balance of control over payments, rates and so forth is not set out in a mechanical manner but one which gives the lender free reign to do as it pleases.

 

Thankfully they all produced supporting literature yrs ago that contradicts what they say today, they all have rate change letters with wording conveniently changed to suit their own agenda. In the case of FP we have their accounts that label their actions "guilty as charged", whereas I cannot comment on others in the market.

 

With others, the securitization angle comes in to play and if you are now in the hands of what are essentially hedge funds, then their agenda is not for the long term, it is purely about return. A default and an ability to get out quick suits them down to the ground and rushin people through court before they realise they have grounds to challenge makes much of what we face unfair.

[frettful38]

Excellent reading below

 

Important County Court decision could impact on lenders and brokers - Bridging And Commercial

[AnimalMagic]

I guess s140 cases are starting to come through...

 

I previously posted that mortgages were exempted by s16, but they are not. I missed s16 7A "Nothing in this section affects the application of sections 140A to 140C.” which was added in 2006 and enacted from Apr 2007.

[frettful38]

Great news for caggers who now know that using this argument can be successful AM.

[jjnn88]

Apologies first time on these forums - I am looking for help with first charge mortgage with Lancashire Mortgage (Blemain etc - yes I know big mistake) but not sure where to find info

[maybelline]

Practitioners will be aware that sections 137-140 of the 1974 Act made detailed provision for the re-opening of extortionate credit bargains so as to do justice between the parties, and that these provisions applied irrespective of whether the bargain in question was a consumer credit agreement regulated by the Act, and irrespective of the level of credit provided.

Under section 138(1), a credit bargain was extortionate if it (a) required the debtor to make payments which were grossly exorbitant or (b) otherwise grossly contravened ordinary principles of fair dealing.

 

Sections 138(2) to (5) then set out various factors to which the court was to have regard including, in relation to the debtor, interest rates prevailing at the time when the credit bargain was made; the age, experience, business capacity and state of health of the debtor and the degree to which, at the time of making the credit bargain, he was under financial pressure, and the nature of that pressure. An in relation to the creditor, the degree of risk accepted by him having regard to the value of any security provided; his relationship to the debtor; and whether or not a colourable cash price was quoted for any goods or services included in the credit bargain.

 

Section 139 then set out the basis and extent to which the court might re-open a credit agreement with a view to reliving the debtor or a surety from payment of any sum in excess of that fairly due and reasonable.

 

Sections 137-140 of the 1974 Act are to be repealed on a date to be appointed.

 

Sections 19-22 of the 2006 Act introduce a new scheme of judicial control by inserting new sections 140A to 140D.

 

The amendments introduce a new concept of "unfair relationships" between creditors and debtors.

 

The court is empowered to make an order under s 140B if it determines that the relationship between the creditor and the debtor arising out of a credit agreement is unfair because of one or more of the following:

(a) any of the terms of the agreement or of any related agreement;

 

(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;

 

© any other thing done (or not done) by or on behalf of the creditor (either before or after the making of the agreement or any related agreement).

OFT unfari relationships.

[maybelline]

Short answer is Yes

 

 

Long Answer is:

 

The unfair relationships provisions apply to credit agreements whether regulated or not, and regardless of the amount of credit extended.

 

The sole exception is where an agreement is exempt under section 16(6C) of the 1974 Act because it is a regulated mortgage contract under the Financial Services and Markets Act 2000.

In all other respects, the provisions apply to exempt agreements including those which will be exempt by virtue of section 16A (high net worth borrowers) or section 16B (business lending for more than £25,000) of the 1974 Act.

 

The above is taken from

 

http://www.newham.gov.uk/NR/rdonlyres/5FDEE9F6-7EEF-4B26-B53C-A419BC5C8D41/0/OFTUnfairRelationships.pdf

 

forgive the misunderstanding - if the lender is regulated by FSA but is a sub prime lender and does fit the Unreasonable fairness test, i.e. pressure tactics, etc,etc, who or what would deal wtih this scenario? since FSA does not look at individual cases and FOS still state old position i.e. over 25K is not regulated? so will not deal with unfairness? - Ok

 

BEEN LOOKING AT THIS AGAIN, SILLY QUESTION I NOW SEE IT!!

Edited May 2, 2011 by maybelline
did not read reply properly!!

[ronnie11]

Ok..............first I'll apologise if this has already been discussed here but I need urgent advice regarding a 2nd charge over my property relating to a business loan (business insolvent 2007). HSBC have now coming knocking on my door so to speak demanding £105,000.00 or they will seek a possession order. Right then the paperwork for the 2nd charge is for £75,000.00 'guaranteed'....as it states in the terms of facility letter. Security is a guarantee for £75,000.

 

There now seems to be a misunderstanding on the part of HSBC drafting team who have drafted a legal mortgage so that the charge purports to secure the debt of my old company (which they now claim is £105,0000.00 due to added interest etc).

 

Now I've happily offered to put my property on the market along with a 'one off lump sum payment' without predjudice as full and final settlement to them. So my property on sale would allow me to pay back approx £50k (due to equity in it). I've just recieved another letter today saying now that obviously they'll be a short fall and how do I propose to pay of the rest of the debt.

 

So where do I stand etc?? Someone mentioned to me that once the property has been sold then the rest of the debt for HSBC becomes unsecured....is this true?? Is there any other way I can get them off my back (without bankcrupy).....as I have a young daughter and am separated . The house is soley in my name and my partner signed over his interest some time ago.

 

Now you can all have a laugh as in my last correspondance I asked for them to have a little compassion and not make me and my daughter homeless..............................now there's a laugh...banks and compassion in the same sentence!!!

 

Anyway all help advice welcomed.

 

Further more in regard to latest info about PPI's.......would HSBC have applied a PPI to business loan secured as a 2nd charge on a property??

 

Looking forward to any help and advice.

 

Thanks in advance all