Mis-selling

[christim01]

Have been an avid reader of CAG for some years and

 

am interested to know your thoughts on mis-selling of consolidation loans.

 

We are well aware of the PPI scandal.

But of even greater harm is the banks mis-selling of conslidation loans.

 

My wife was sold one 'under best advice', when she clearly had insufficient income to manage it.

Lloyds have admitted this.

They also stated in their 'agreement that they would be responsible for clearing any lloyds group debts from the consolidation loan. (Credit card/overdraft).

 

They neglected to do this.

 

My wife, being one of those people who trust authority figures totally, f

elt she had done something wrong when she couldn't make the repayments

and used the money left in her account to cover the loan/credit card and overdraft payments.

(itwasn't long before she had used up the monies left in her account,

extended her credit card spending and overdraft to cover the mounting debt payments.

 

She has already suffered a stroke through worry and stress caused by lloyds and is now considering bancruptcy.

 

Something has to be done about this practice.

 

The banks give people who cannot afford the repayments a consolidation loan,

knowing full well that it is not 'best advice' and that it is adding to that persons poblems.

 

I have been through the oft sharade,

they found in favour of the bank and said they could not comment on legal matters.

 

The bank have agreed to repay interest charged, but it is not enough!

 

I do not see why they should get away with a clear mis-selling and subsequent breaches to BCOBS.

 

My questions are;

1) How many more customers have been mis-sold conslidation loans.

 

2) Does it not breach BCOBS

 

3) Is it common practice to break loan agreements by not clearing other debts and leaving the monies for this purpose

in a current account wher they know it will get used.

 

Then neglecting to cancel credit cards/overdrafts that made up part of the consildation package.

 

4) If all goes wrong and as in my wifes case- she panicked and used the monies to cover debt payment shorfalls,

and the debt spirals upwards.

Is it common practice for the banks to turn round and say, well you spent it, you have to pay it back!

 

Any comments would be greatly appreciated. I know you guys are overworked.

[citizenB]

HSBC were heavily involved in Managed Loans.. which is pretty much the same thing.

 

What these do is to remove the protection that you had on the original debts and tucked you up nicely into word perfect contracts should you then fail to meet the liabilities on the new loan. They pretty much only ever took into account the borrowing from the bank offering the consolidation loan.

 

If your wife was told the original loans / credit cards would be cleared with the new monies and they didnt do this - I think the bank should accept some responsibility.

 

Was the response from the FOS a first tier adjudicator or did you ask for it to be reviewed by the Ombudsman proper ?

 

Was there any Payment Protection Insurance added to the new loan ?

[christim01]

Hi citizenB

thanks so much for your swift response.

Yes my wife was told that the bank would clear these debts and the bank have admitted their mistake.

They have yet to state in writing that they mis-sold theconsolidation loan. They cannot find the original/copy of the financial planner whic was completed by the salesman at the original interview. However they haveadmitted mywifes income was insuffacient to manage the loan.

I persued the case to the Ombudsman proper.

No she did not take out PPI. She is very niave and trusted the bank over and above my advice. They did 'advise' her to take out health insurance. Which lapsed before her stroke, because she couldnt pay the premiums!

WE have lived below government hardship guidelines for several years, live in rented accomodation and have no assets. I would advise her to go bancrupt but it seems so injust!

[christim01]

Why can a bank be brought to justice for mis-selling PPi when their mis-selling tactics on consolidation loans can prove much more harmful? There must be thousands of people who were pressured into this by greedy salesman more interested in their comission than giving customers best advice. I would love to conduct a survey of bank customers and find out if this is a 'banking normal practice', ( I strongly suspect that it is). What can we do to stop it. There must be something...

[citizenB]

That Financial planner will be the key and will prove one way or the other if they dealt with the loan in the correct manner.

 

I am not sure what can be done about the "mis selling" of this type of product, especially where the bank absolutely knew they were setting someone up to default

 

I think this is now covered in the Lending Code where banks can be taken to task for irresponsible lending.

[christim01]

Thanks citizenB

I have not as yet gone down the SAR route, and don't know what it would achieve even if they could not find a

copy of the 'Personal Financial plan'. Is there anything you can suggest. It is obvious from my wifes current acount statements of the time that she was some £100 short of the monthly repayments. She had increased her borrowing on overdraft and credit a number of times prior to the consolidation loan and was clearly severly struggling. The debts were in the region of £17000 and that was the consildation loan amount. This has reduced to £13000 but the credit card and overdraft have increased to make a total of £26000. A massive amount for someone coping in hardship. Is bancruptcy her only option. I have been fighting this for over 5 years. I don't know if I should force the bank to take her to court, then counter-claim, or take the easy way out and go for bancruptcy?

[citizenB]

I have asked others on teh site team to look in on you

[christim01]

Thanks again citizenB for your time, I do appreciate it very much.

By the way have been reading your notes on HSBC. It is so sad that people put so much trust in these organizations.

only to be stitched up and left for the vultures to pick at. A lot has been said about PPi mis-selling but this consolidation loan/managed loan [problem] has to be stopped. Selling loans to a person in debt is like selling a bullet proof vest to someone standing in front of a firing squad. You know they'll sign anything to get them out of immediate danger. Who wouldn't!

[Klandestine]

Why can a bank be brought to justice for mis-selling PPi when their mis-selling tactics on consolidation loans can prove much more harmful? There must be thousands of people who were pressured into this by greedy salesman more interested in their comission than giving customers best advice. I would love to conduct a survey of bank customers and find out if this is a 'banking normal practice', ( I strongly suspect that it is). What can we do to stop it. There must be something...

 

By the way have been reading your notes on HSBC. It is so sad that people put so much trust in these organizations.

only to be stitched up and left for the vultures to pick at. A lot has been said about PPi mis-selling but this consolidation loan/managed loan [problem] has to be stopped. Selling loans to a person in debt is like selling a bullet proof vest to someone standing in front of a firing squad. You know they'll sign anything to get them out of immediate danger. Who wouldn't!

 

Hi christim01

 

I appreciate that this is quite a distressing time for you and your wife but try not to get carried away and let the emotion of it get in the way of the facts.

 

The problem here isn't consolidation loans themselves. Such loans can actually help customers because they:

• Pay off existing debts (e.g. a credit card, loan, overdraft) and make things easier to manager because now only 1 loan has to be paid, monthly payment are fixed & there is a specific end date for the debt
  
• And hopefully reduce your monthly expenditure because the loan is at a better rate than the existing debts
  

 

The Lending Code actually encourages banks to talk to customers about restructuring existing borrowing into a loan because of these reasons.

 

Please correct me if I've misunderstood something, but from the information you have given I understand that:

 

Your complaint is that they:

1. Didn't fully take into account your wife's affordability for the loan.
   
2. And then they didn't actually use the loan to pay off existing Lloyds group debts enough this was in the agreement.
   

 

It sounds as though they have admitted to both aspects of your complaint. And they have offered to refund the interest which was charged but understandably you are not happy with this.

 

Now you have asked the Financial Ombudsman Service to look at your complaint. How far along in the process is this?

[christim01]

Thanks for your reply Klandestine.

Appologies for letting off steam. It's just very frustrating. I have fully completed discussions with the Ombudsman, who although sympathetic sided with the bank, 'they cannot consider possible legal issues, have stated that the bank have made errors, and more or less suggested that I accept their appologies and their offer to repay interest'.

 

I do fully understand that In the right situation, consolidating a persons/bussiness' debts is a viable and useful financial tool (I use to be a Commercial finance broker).

Yes I do understand that the banks are encouraged to help through consolidating where appropriate, but I don't think they're to happy about mis-selling...

 

My issue is that my wife did not have,( and I can prove it), sufficient income to cover the consolidation loan repayments. She had in fact a £100 per month shortfall.

So the loan was mis-sold

Had she accepted my advice, she would have got the banks to freeze interest, accept a suitable monthly repayment amount that was within her budget and, she may have now been in the position where her debt was only a few thousand rather than 25!

THe debt repayments on the conslidation loan were compounded when the bank neglected to clear credit card and overdraft debt. Thus making my wfes monthly shortfall approx £130-150 and rising.

So yes. Your points 1 and 2 are correct

Thanks for your logical approach, and again appologies for 'overheating'.

Look forward to any further thoughts as to how or what to do...

[BankFodder]

If the debt is the high level that you say it is and if you have no assets, then frankly I would have thought that bankruptcy would be the natural and welcome route to take. You know your asset position better than I do, but if it is just a question of stigma, then I think that those days are long gone. We have received lots of reports of how sympathetic and non-judgmental bankruptcy counselors are - and what a wonderful relief it is for people to put it behind them and to start over again.

Especially with your wife's poor health - it seems to me that this has to be worth exploring.

The alternative will be trying to lock the bank in to argument, litigation, sacrifices over many years to try and pull back a situation for the sake of a corporate creditor which has no personal stake and which frankly doesn't really care and which will write a substantial portion of the debt off to tax anyway.

[christim01]

Thanks Bankfodder for your insights.

 

Our assets are minimal/non existant, and your notes on bankruptcy are logical.

It just annoys me so much that she has to take this course,when she acted in good faith and was placed in an impossible situation by the actions of a bank, who as you so politely put it, 'has no personal stake and doesn't really care'.

 

Oh well, such is life, (cruel as it is sometimes). Would love to have tipped my lance at a big windmill, show others who face similiar problems that there is justice...

I will, instead, concentrate on making bankruptcy as painless as I can for my wife and then share in the feeling of the utter relief that will no doubt come when this torrid saga ends..

 

Thanks for your advice and support

[Amozonia]

I feel for u, I have long standing problems with this bank and understand how u feel about the injustice. I also took my case to FOS but after 2 years of sending in evidence and proving that they had lied about what they had done the bank were not penalised and continued to pursue me.Was by now in a very difficult financial situation I appealed to my mp but he was unable to get my case reviewed, I was taken to a hearing, sent in my evidence prior to this, Lloyds did not attend, judge said that I should pursue bank for money owed, indicated that he felt I should take action against them and did not make any order for payment. Heard nothing from bank till 6 months later put charge on our home, I then had to accept that the only way to finally end this would be by taking legal action, fortunately due to an unexpected stroke of luck we now felt able to do so, not what bank were expecting, they have asked for a further 28 days to respond.

[christim01]

Thanks for your reply Amozonia,

yes it's been a tough time, I've been playing the waiting game at the moment, Bank has tried to sell the debts on to various organizations who have all been surprisingly patient as soon as I tell them our circumstances and the fact that the debts are in dispute. It amazes me that the Banks would rather sell the disputed debt,(for something like 10p in the pound), than sort it. Still, I would very much like to hear how you get on with litigation. If I had the resources I would go a similiar route. Just to bring attention and hopefully justice to the thousands of people mistreated and dumped on! The best of luck to you and keep in touch...