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Section 98A CCA and incorrect notice


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Hi all

 

I am a very recent member of CAG. I have followed most of the threads regarding the contractual termination of credit agreements with view to the recent developments.

 

Any advice would be highly appreciated.

 

I have a c/c agreement with Lloyds as of December 2004. I have never been in areas and up until now I have only 2 late payments registered. I usually maintain minimal payments on the account which is in the range of £6,000.

 

On 18th October 2011 I received a letter from Lloyds saying that as a responsible lender they are reviewing their lending from time to time. Following a review they have decided not to reissue a new c/c card when my current card expires and my account would be closed in 2 months.

 

T&C allow the bank to undertake the above course of action and contractually terminate my c/c agreement. The required notice is 2 months. We all know what S98A CCA says about this as well. The only issue here is that my c/c expires end of October 2011. A new one will not be reissued, which confuses me as to where I exactly stand.

 

S98A (3) (b) provides that :" the termination may not take effect until after the end of the period of two months". Am I right to assume that by not reissuing a new card the termination will take effect as of 1st November from which date I will not longer be able to benefit from the c/c agreement?

 

I would also make it clear I am not trying to avoid paying the debt. At the same time I am not attracted to the way Lloyds has treated the agreement. There is nothing in their letter explaining post -termination arrangement of the interest. They only state that I will need to make my monthly repayments until it's cleared.

 

I would highly appreciate your comments in this regard. Thank you

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Hi it's me again,

 

I just wanted to add a thing to my initial thread.

 

Furthermore, S98A (4) CCA provides that the creditor must must give reasons for the termination or suspension, and the reasons must be objectively justified.

 

Lloyds wrote to me:

 

"I do understand that this may come as a surprise so I would like to explain why. We made our decision in line with our commitments to responsible financial lending and the T&C of oyur account. It is something all banks do"

 

As I see it the bank is in breach of its own T&C by not providing the 2 months notice, in breach of S98A of the CCA as well. Furthermore, they seem not to cARE and at least honour me by providing personalized and objective reasons their decision , a requirement clearly imposed by the Act.

 

I am now left in a situation that my c\c agreement is effectively terminated in 2 days time and my option is to stay stuck with a loan facility at a c/c charges and interest.

 

I am not willing to sit and just accept my faith silently. I really rely on the advice that I can get from the people here.

 

What would you say my next step should be? Accepting unlawful rescission? Which at the very best may put us at the initial stage of the contract and I would still owe the balance but the question is weather the bank would still owe me all the charges and interest paid by me in the last 7 years?

 

Thank you so much for your help

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Piccerella for this you will need an Insurance Adjusters who suggest you regarding this

 

I thank you very much robin for your interest to my thread and problem but I am totally confused as to the relevance of your reply. There is no insurance issue involved whatsoever.....:-)

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piccerella

 

you say that you have 2 previous late payments, but you are/were not in default/breach at the time they wrote to you. so, they may be entitled to end as per the agreement (and relevant requirements of the cc act)

you mention s98 and 'objective' reasons. note also page 69 in the latter pdf here http://www.consumeractiongroup.co.uk/forum/showthread.php?306183-Consumer-Credit-Directive&p=3416469#post3416469

it seems that they have not terminated correctly by not providing reasons. but, it seems doubtful that this would be enough for a so called rescission for breach (and am not referring to the 'unlawful rescission' argument)? your call though.

maybe could do a letter to them advising them of their failure to comply with statute, and see what they do. could try for compensation for their 'mistake'.

do you have confirmation that the interest will continue with the monthly payments? possibly the contractual interest would cease/freeze.

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Hi Ford and thanks for your reply.A little pre-history. I have been with the bank since 2004. I had 2 late payments, one of wich in October 2010 and the second in September 2011. They both were paid dully on the next statement day, together with the £12 charges for late payments. At the time of receiving the letter for closing my account I was over the credit limit with £70 - I remedied this within couple of days and I also paid for the £12 charge in this respect. I received 2 letters both dated 18th Oct 2011 - with first the bank was demanding immediate payment of the amount over limit + ignore if you have already done so. Second letter informed me that they would not be issuing me with new card once my current card expired + you account would be closed in two month. There was no mention of any breach in the second letter. I was in breach, indeed, but I remedied it and paid my £12 for it!There is no mention in the second letter as to our future arrangement, unless please continue to pay until your balance is cleared. No objective reasons provided as per S98 A (4), apart from this is as per your T&C and it is something all banks do!They would not even do the effort and check when was the expiry date of my card .....I am considering writing to them and:1. Point out the obvious that I was not provided with the 2 months notice in breach of their own T&C + S98A CCA. 2. Point out that they have not provided me with "obvious reasons" as per the Act. 2. Request some enlightment as to our future arrangement - my ultimate goal would be freezing the interest. There is no mention of such in their "thank you goodbye letter". Therefore, shall I expect they would be still entitled to increase my rate of interest in, for example, 2 -3 months time? How would I keep up with payments on closed account?3. Request that they clearly explain to me how closing of my c/c account would reflect my credit report. Negative entry will definately put me inj disadvantage as to future obtaining a loan on a normal rate with which I could re-pay theit c/c interest rate arrangement. 4. I will also CCA request themAs for rescission - my thought the same , I really do not rely that I can show that their breach is fundamental....Any other suggestions? i will keep posted ...

Edited by piccerella
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if poss, see what their current terms say about late payments/going over limit.

it may be that a dn would have been required? maybe, that's one reason why they did not give any reason?

yes, a cca request, and maybe a sar?

if you do write enquiring/mentioning their non compliance, could ensure with that the issue of their breach/conduct is reserved?

they have asked for monthly payments? am thinking then that the interest would be frozen. otherwise, there may not be a reduction in the capital amount. but, as you say, would need confirmation.

see also for eg the ICO guidance on defaults, and the bankers Lending Code

Edited by Ford
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7.2. We will charge you £12 if you are over your credit limit at any time during the period

covered by your statement.

 

7.4. Conditions 7.1 to 7.3 will apply where we let you continue to use your Card (if we do let you)

despite you having broken these conditions.

 

No mention of DN. One thing is for sure now - following upon Brandon v Amex banks cannot do "mix and match", i.e. they cannot go ahead with contractual termination and then claim DN ...

 

What they said was: "We understand as a surprise so we would like to explain why. We made our decision in line with our commitment to responsible lenders and the T&C of your account. It is something all banks do".

 

S98A is quite clear that the lenders must give reasons and these reason must be objectively justified.

 

What I witness is arrogance on their side - non compliance with the CCA in terms of 2 months notice + reasons, neither with their own T&C.

 

I am in a process of drafting the letter to them - I would post it here as I would really appreciate your comments and suggestions in this respect.

 

CCA is silent as to post - termination arrangements, interest, payments etc...As if it was not they would have complied but still.

 

Their T&C say that following 2 months notice required for contractual termination the agreement will keep running until the balance is cleared. Which does not make sense to me at least...

 

CCA, SAR all the way, as if they keep the interest I calculated with min payments it will take me 18 years and a half and 22,800.00 repaid....I will fight until last drop of blood simply because clearly I don't have a choice:-(

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hi

 

what i meant by 'maybe a dn would have been required' is that if they ended by reason of any breach by you, then s87 should've applied. but, it seems that their terms allow for overlimit?

could try and claim those charges back.

it seems that their given 'reason' is the '..We made our decision in line with our commitment to responsible lenders and the T&C of your account. It is something all banks do". that you quote. whether this is enough though to satisfy s98?

for reference, also note the oft 'irresponsible lending guide' #118 here http://www.consumeractiongroup.co.uk/forum/showthread.php?84273-OFT-debt-collection-guidance/page6

Edited by Ford
typo
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Ford

 

I see your point now. Furthermore, in the T& C : "You must repay the amount of overlimits and arrears as soon as we ask you to. Any

payments you make will pay off the longest outstanding arrears first. If you miss a

minimum payment one month your statement for the next month will show that

month’s minimum payment together with the minimum payment you failed to make

the previous month". I agree, seems that T&C allow for going overlimit as long as I bear the costs.

 

I think S98A CCA provides for more detailed/personalised reasons rather the usual blah blah which consumers get anyway. That is why the Act to sets out specific requirements as to the "reasons".

 

As you stated, there is a chance that in my case the bank would not mention the reason going overlimit as their T&C allow for the same?

 

As per post - termination interest charges T&C states:

 

18.1 This agreement can be ended by you under condition 8 and by us giving you two months

notice, or immediate notice in exceptional circumstances. In both cases:

• you must stop making any Transactions, return all Cards and Cheques (cut in half) and

cancel instructions or authorities you have given others to charge your account; and

the agreement will continue until you have repaid all amounts you owe us including

Transactions, fees and charges added to your account after we received your notice, or

gave you notice.

 

Can they can add interest charges on account which is closed ?

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.......As you stated, there is a chance that in my case the bank would not mention the reason going overlimit as their T&C allow for the same? what i was hinting at there also (from a cynical point of view) was that maybe they didn't want to give more 'specific' reason 'cause if what they say is construed as being because of a breach, or is shown to be because of a breach, then there may be an argument that they should've used s87? and so, have used the incorrect procedure? if that all makes sense? :)

 

.........?

 

as there have been previous late payments and an overlimit, it may be that they are trying to use something along the lines of that reason mentioned in the pdf i mentioned in post 5 (at para 15.6) re risk of future non payment. but, as it says, that would require a 'significant increased risk' of such?

as you say, there is also the issue of the 2 months.

 

would think that interest would stop. but, as you say, would need confirmation/evidence of that.

Edited by Ford
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Hi allI just spoke to my bank and this is what I was told:1. Interest and charges re: late payments will still be running following the closure of my account2. The bank can at any time increase my interest rate after closing my account!3. They can withdraw my right to use credit at any time and without giving any reasons for this!I will be sending a letter to them today as I would like to have all this in writing. I cannot imagine they even reserve the right to increase the interest rate on the closed account........

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as donkey says, it is odd.

they say they can end under 18.1 (s98) and continue as normal but just stopping the credit facility and so continue with the interest re the monthly statements.

yet, if they end under a default notice (condition 18.2?) then it is likely that the interest would stop once they make their formal demand for the total balance after and it goes to a dca! as seems to be the case in most cases! eg, it goes to a dca with the total amount outstanding, an amount is agreed with debtor in final which is to be paid off monthly, no future interest is charged!

no good words to say about loyds!

there is the poss issue of a default. have they recorded anything on your credit files?

do the cca, and sar. maybe consider token payments. if you're up for challenging?

Edited by Ford
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  • 2 weeks later...

Hi all

 

Update on my thread. I CCAd Lloyds with a letter which had three points.

 

1. I pointed out that they are effectively in breach of their own T&C by not providing me with the 2 months notice - Lloyds completely ignored this in their reply would not mention or comment anything

 

2. I also requested that they confirm whether they hold any original copy of my agreement as per CPUTR 2008 - same result as above, my request was utterly ingored

 

3. Now for the S77 CCA they provided:

 

3.1. Copy of application with my signature on the front and "bank copy of cc agreement" at the back. It clearly states that this copy does not include all the terms which are to be found in the customer's copy.

 

APR shown for three types of c/c card: classic, gold, platinium; no credit limit as a figure only

 

The surprise was that the PPI box was ticked! But I am pretty sure I never noticed PPI charges on my monthly statements

 

3.2. Reconstituted copy of my agreement, supposedly the "customer copy", no credit limit as a figure, APR shown for the three types of c/c

 

3.3. Signed statement of account

 

3.4. Copy of my current T&C. The odd thing was that this document was headed this is a copy of your agreement for you to keep and in force as of 15th January 2011

 

I will try and upload these tomorrow and I would really appreciate your comments.

 

I am gutted the way they have ignored my complaints for the breach , the least they owe me is an explanation,. S98A CCA is clear that they have to provide their objectively justified reasons when they serve the notice for termination - they did not and they would not even when i further disputed the same.

 

And, yes, I am up for the challenge - if I had any doubts until now , they are all gone following the way my bank treated me.

 

I shall now further proceed with SAR....

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Sometimes the silence or lack of response tells you all you need/want to know :)

 

BTW the credit limit doesnt have to be figures, or even numbers... a statement telling you that they will determine the credit limit and may adjust from time to time will suffice for the regulations.

 

S.

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Hi the shadow and thanks for your clarification re: credit limit.

 

I noticed my old agreement "customer copy" specifies APR for three types of c/c (classic, gold, platinium)but des not specify which type is my card - that is only pointed on the front page of the "bank copy". At the same time my new agreement as of 15th Jan 2011 has one figure for the APR which clearly applies to my c/c - any thoughts?

 

And, yes, I intend to write another letter asking the same questions. Their reply was full of warnings not to use claim managements companies etc etc as if if one request a copy of their c/c agreement this indicates intentions to avoid debts.....

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Hi the shadow and thanks for your clarification re: credit limit.

 

I noticed my old agreement "customer copy" specifies APR for three types of c/c (classic, gold, platinium)but des not specify which type is my card - that is only pointed on the front page of the "bank copy". At the same time my new agreement as of 15th Jan 2011 has one figure for the APR which clearly applies to my c/c - any thoughts?

 

If the old agreement has the correct apr% on it then that should be sufficient, I'm assuming thats a copy of an application, these tended to say they would offer you a card but not guarantee you'll get the card you apply for, thats why they give the other card apr%'s.

 

And, yes, I intend to write another letter asking the same questions. Their reply was full of warnings not to use claim managements companies etc etc as if if one request a copy of their c/c agreement this indicates intentions to avoid debts.....

 

It would have been a template letter edited to add a few extras in

 

S.

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I can see and it perfectly explains three types of APR on the application but on the reconstituted "customer copy" agreement with the full set of terms ...not so sure. Supposedly the agreement was provided to me following their approval to issue a card and by that time they should have known the type of my card....Or they do this as they reserve the right to variations let's say in case my card from gold becomes platinium....makes sense and thanks

 

I will keep posted re: my main issue why would they not comply with the 2 months notice as per their own T&C and S98ACCA

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.......On 18th October 2011 I received a letter from Lloyds saying that as a responsible lender they are reviewing their lending from time to time. Following a review they have decided not to reissue a new c/c card when my current card expires and my account would be closed in 2 months.

 

T&C allow the bank to undertake the above course of action and contractually terminate my c/c agreement. The required notice is 2 months. We all know what S98A CCA says about this as well. The only issue here is that my c/c expires end of October 2011. A new one will not be reissued, which confuses me as to where I exactly stand.

.............

 

reading back to this.

it seems that a suspension of credit s98A(4), which is what they seem to have done also, is not subject to the 2 months notice. (s98A (1) (3) makes no mention of suspension). but, they would still have to give the required objective reasons re a suspension and/or termination. s98 (4).

so, the actual termination s98A(3) should be 2 months from receipt of notice, but a suspension of credit can occur before. s98(4)?

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Hi Ford

 

I see and I agree with what you say in your previous post. I also explored that option.

 

What struck me was they would not care to explain it - there is no mention of suspension of credit facility, just we have decided to terminate and no card will be issued.

 

My point is why would CCA provide certain requirements in this respect when my bank would not even care to explain with an additional sentence this to me in a first place. I do not argue , they are within their rights to suspend and then terminate. But they are also under duty to explain, it would not hurt them if they have made it clear. Moreover, when I requested an explanation, the bank completely ignored my questions in this respect.

 

Let's not forget I am the consumer here and it is more likely for the bank to be familiar with the current legislation and regulation of c/c agreements.

 

I would still write to them asking to explain to me. "Responsible lenders" formula was widely used by the financial institutions before the implementation of the EU Directive or S98A. It is clear that the statute implies for more personalized and detailed objectively justified reasons - the parliament cared to insert three subsections specifying the nature of the reasons.

 

Sadly, the statute is silent as to the further arrangement once terminated....According to My T&C they can still apply interes tif charges which indeed puts me in a worse position that if the account was defaulted.

 

Another way , I default and let them bring proceedings and explain to the judge I have defaulted on purpose so I can somehow freeze the interest........would he treat this as unfair?

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hi

i agree, they should provide objective reasons in either case.

what i was getting at also is that they gave notice of termination (2 months) but also suspended the credit by saying that they will not be renewing the card, the renewal of which happens to be before 2 months. so, the actual date of termination is still 2 months and not the date of the suspension of credit (which is the renewal date of the card).

i know what you mean. it is odd. but generally where there is a default and it goes on to dca's, the interest is usually stopped at some point. eg someone defaults at 6k, it goes out to dca's, they demand 6k, someone says ok 6k but at a fixed x per month, they agree! ie no further interest! (a reduced total amount could even be negotiated as well!)

did you check your credit file?

Edited by Ford
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Therefore:

 

1. option 1 : I default, my account sent to dca, interest freeze and I repay the amount, £6000, by installments and 6 yeas of bad credit history

 

2. option 2: Keep on paying my minimum payments + the interest which will take me 18 years and £20,000 in total... + possible bad credit history

 

Nothing shows on my credit file for the moment..Do you suggest it may still be effected even if non default termination occur?? I must check when the two months expire - if that is the case, I must be insane to follow option two !

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