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DarnSouth

HSBC business loan without business

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Hi

 

In 2007 I had a successful business as a sole trader and was also a director in a limited company which dealt with similar products. My business was on line and the limited company was a shop and online. Mid 2007 the limited company folded due to problems with the rented property it was based in.

 

I continued my business as a sole trader. In 2008 I really started to feel the effect of the recession and orders started to dry up. By the end of 2008 it was clear I was in a position that I could not recover from. I ceased trading and found a full time job. The bank was aware of this. To "Help" me they offered to consolidate the money I owed the bank into one secured loan. Through desperation I accepted this. The bank set this up as a flexible business loan even though they knew I had ceased trading.

 

The loan was shown in my insolvency paperwork, along with all other out goings.

 

I was officially discharged from bankruptcy at the beginning of last year. During my bankruptcy and up to present day I've struggled to find the money to pay my mortgage, bills and the loan. I have recently been informed that the bank may have breach guidelines when they started the loan. I have been told they may have failed in the following areas (and possibly more) :-

 

  • They were supposed to have an independent valuation of my property to ensure I had the equity to cover the loan. They have a figure which is approximately £50K above the figure the receivers had (the same amount as the loan :!:). We were never aware of anyone other than the receiver's agents carrying out a valuation.
  • They were supposed to act in the best interest of both parties. By adding a £50K (less than half the money remaining on our mortgage) loan, they doubled the amount we were paying to bank per month. We asked for it to be added to the mortgage but they said that was not possible.
  • The bank "Bullied" me and my wife into taking the loan explaining that the house would be at risk if I didn't take it and with my current credit rating it would not be possible to get finance else where. It may seem strong to describe it as bullying but it wasn't the first time it had happened at that branch. I had complained about my business manager and had the complaint upheld by their manager. When I stated that I was considering approaching the ombudsman over the matter, the senior manager stated that whilst I was entitled to do this, if I did it could damage the relationship between the bank and myself and this would mean that the want would cancel all the credit they were offering me.

My wife has submitted two SARs to the bank with no success. After reading this forum I've got a better idea as to how to apply the SAR and so I will be doing this in the next few days. My wife has also asked the bank to investigate how this loan was drawn up. They have said that they will investigate within 24 hours. This was two weeks ago and as of yet there has been no reply.

 

Does anyone have any thoughts on this matter? Do you think the bank have acted inappropriately ?

 

Thank you for taking the time to read this.

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Would also like to add that the bank have 'created' a partnership business between myself and my husband that never existed. We have an apology from them for this and they blamed an 'admin error'. Basically they have taken the name of the Ltd company that we were both directors of and was dissolved legally without owing anything after the loss of our trading premises. I then went and got a job and hubby continued his sole trader business. The loan is in the name of 'DarnSouth and Newstart T/A and the name of the Ltd company without the Ltd' We were backed into a corner and I signed as I couldn't face the threats they were directing to my husband. The business manager knew he had a BR hearing booked for 3 weeks later. The paperwork says it's a managed loan, but when I spoke with them a few weeks ago they call it a flexible business loan.

 

Can anyone advise???

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anyone please? If this is the wrong place for advice can a mod move it please??

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It would be useful to have some more details about the loan. Am I right in thinking that the unsecured loan was converted into a secured flexible business loan, you went bankrupt in 2010, you were discharged from bankruptcy early 2011 and are currently repaying both the mortgage and the secured loan? Am I right in thinking that you are now in negative equity?

 

I have to say that, unfortunately, I am not convinced by your explanations of what the bank did wrong. Banks are supposed to have independent valuations to protect themselves not to protect borrowers. They do not have to act in the best interests of both parties if they otherwise comply with the lending code. I am not sure about the bullying thing, if you didn't repay the mortgage then yes your house would be at risk and you probably would not be able to get a loan elsewhere. Unfortunately this is the risk you take when you borrow. There might be something here but its difficult to know without more details.

 

What are you hoping to get with the SAR? Make it clear what documents you want.


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What happened was my husband lost his business and had no alternative but to declare bankrupt. His business manager was aware of this in January 2009. The bank told him they would take the house if he didn't secure the loan on the property. The bank were fully aware we were in negative equity. Their 'valuation' would have given us £60,000 equity. I was not involved in any of the initial conversations with the bank but I was able to see the damage it was doing to my husband. He is a traditional 'man is the breadwinner' type and had used his entire gratuity after coming out the military to try and ensure a future for us. I would like to point out I was not involved with my husbands business, he was a sole trader and I was in fulltime employment. The paperwork was posted to us. The loan is described as a 'managed loan', it was only recently during a conversation with the bank that we were told it was a flexible business loan. The bank have myself and my husband down as a partnership, despite the fact we never were. There was no independent valuation done on our property apart from the one the Official Reciever had 3 weeks later. My husband was backed into a corner and remembers very little of this time and for the first time in his life he got diagnosed with depression. 3 weeks after the paperwork was signed my husband was declared BR - the bank were aware this was happening and advised he go straight to the branch with the court order when he had seen the judge. It is only recently we learn that the bank could not have taken the house of us, nor prevented his bankruptcy. We are in negative equity now but only because of the loan. so to summarise

  • The bank told us it was a managed loan and the paperwork reflects this - yet it is a flexible business loan
  • The paperwork is showing a partnership that has never existed and we have a letter of apology blaming admin error for this
  • The bank was aware at the time of preparing the loan that my husband was going BR and this amount would fall into the bankruptcy
  • They exerted extreme pressure on my husband, threatening to take our house and stop his BR application if he didn't agree
  • They didn't speak with me, I signed as they had convinced my husband this was our only option
  • They didn't get a valuation, the loan was on the basis that we did but we never got it done.

He has asked for everything that bank hold for him, business, personal, etc.

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The banking code of practice

why you want to borrow the money; He didn't, my husband was told it was the only option

your business plan and accounts; The business was closed

your business’s cash flow, profitability and existing

financial commitments; As above

any personal financial commitments which may

affect the business; as above

how you have handled your finances in the past; Fine on our personal account - not so good on the business when the recession hit, it was 'robbing Peter to pay Paul'

information held by credit reference agencies

(CRAs) and, with your permission, others, such as

other lenders and your landlord (if this is relevant); CCJ's from suppliers were being awarded weekly at that time

credit-assessment techniques, such as credit

scoring; and His credit score at that time was 1 out of 5

any security provided. We had no equity in the house, as confirmed by the OR on 9th Feb.

They are also supposed to ensure affordability. How is is affordable for me to pay £620 a month on top of the mortgage of £590 when I'm only taking home £1100 a month?

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Can this thread please get moved to business banking as I think, from the lack of replies, it's perhaps in the wrong place

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Can this thread please get moved to business banking as I think, from the lack of replies, it's perhaps in the wrong place

 

Having a look / thread moved.


 
 

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Hubby finally recieved the details requested in the SAR. I'm ploughing through them and am shocked to see they have painstakingly blacked out all reference to me apart from one entire file, which details their debt collecting activities on an account he isn't named on - it's in my name (although that's a cock up as it should be solely in his name but the bank keep denying it so I am ignoring all their efforts) There are also the most rediculous valuations of our property - up to £250k at one point. In March 2007, less than one month after the OR had valued the house for his BR, the bank have valued it as just over £60k more somehow, apparently in a drive by valuation. If that was the case the OR would have taken the house from us or forced me to try and buy his share of the equity. They've got a number of references to us being partners, yet other notes where he has corrected them and they have noted he is not in partnership with me but is a sole trader. We have 2 big file boxes to work through and just about half way through one so far.

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