Defaulted HBOS AA loan from 2004 sold to Cabot

[AndyOrch]

The Consumer Protection (Distance Selling) Regulations (the “DSRs”)  have been in force since October 2000.

[Peterbard]

On 09/04/2019 at 12:41, Andyorch said:

The Consumer Protection (Distance Selling) Regulations (the “DSRs”)  have been in force since October 2000.

You mean the Distance Marketing regulations, These came into force 31 October 2004.

 

Distance Marketing

27th November 2011, 23:39:PM

 

Wrote this in 2007 seems fairly correct still so i thought i would put it here


Distance marketing

Distance marketing has been with us now since October 2004 but has not really become the object of much discussion on here; I think many of us just kept our heads down and hoped it would go away, just another complication.
There is a general confusion about what exactly it is and how it will affect the good old CCA1974 I have attempted to show here the situation as i understand it.

Firstly the distance marketing regulations are a completely different animal to the distance selling regulations

Distance selling (from the distance selling regulations 2000 updated in 2006) relates to any transaction or purchase that does not involve credit so direct sales made by distance means, mail order by the internet, mobile phone and other hire services are covered by this.

The Distance Marketing Directive is applied to agreements that are covered by the Consumer Credit Act 1974
The official definition is” As is defined in Reg 1(2) of the Information Regulations as any regulated agreement made under an organised distance sales or service-provision scheme run by the creditor or owner (or by an intermediary of the creditor or owner) who, in any such case, for the purpose of that agreement makes exclusive use of one or more means of distance communication up to and including the time at which the agreement is made.”

The two main differences between distance and conventional credit agreements are the cancellation clauses and the pre-contractual information we will get to this in a bit.

Firstly let’s look at who the new regulations apply to. The distance marketing regulations apply to anyone who executed a credit agreement after 31st October 2004 and did so without any direct contact with the creditor. This is not a simple as it sounds because it conflicts with the definition.

The common consensus is that any agreement made after that time that meets the criteria is a Distance contract and applicable for all its cancellation rights.
The official definition says “made under an organised distance sales provision” which would infer that it would only apply to a contract that was a purpose built distance contract, but the opinion of the OFT is that any agreement made after 31st October 2004, that was made without any physical contact is a Distance Contract.

The reason for this is that there is no definition of the term “under an organised sales provision” so it is taken to mean any sales.

This means that all the Credit Card applications or on line Agreements that have been made after this date, that you thought didn’t have any cancellation rights due to section 67 of the Consumer Credit Act, will have had a 14 day cancellation period under the D

Now if we go back and look at what the cancellation rights are under a distance contract. The DMD regulations say that you get 14 days from conclusion day that is either the day you sign or the day you receive the last piece of pre-contractual information (T and C’s) the T and Cs are usually with the contract so it is usually the former simple as that.
This means that the copy 2 that must be sent after the creditor executes the agreement in a CCA would not be necessary in a DMD agreement.

As a consequence of this it is possible to conduct and execute a DMD over the phone (unlike other CCA agreement) there is a shortened version of the schedule 1 information (Schedule 2) that can be used for this but the debtor must get a full copy of the schedule 1 in plenty of time to be able to cancel if they so wished after completion.

If we look at cancelability from the aspect of the consumer credit act, any agreement signed without prior face to face contact was uncancellable, well now it is via the DMD.

An interesting consequence of the above is the effect on debtor creditor supplier agreements made after 2004. The initial version of the description of this directive did not contain the bracketed ,”or of a intermediary of the creditor only” in it, so for instance car dealerships who sold on credit would be subject the directive, since the debtor would have no face to face contact with the creditor(finance provider).
If the car is sold on HP the seller is the hire purchase company and the dealer is an intermediary of the seller not the credit provider so in theory these are covered even if the agreement is signed at the trader’s premises and therefore are cancellable under the DMD. This has to my knowledge yet to be proven in court but most dealers are amending their agreements to adopt the cancellation rights on the DMD.

The only agreements that you could say are uncancellable are those none distance contacts signed on the creditor’s premises or secured on land (mortgages).

As stated earlier the bulk (cancellation periods and some of the pre-contractual stuff) of the Distance Marketing regulations came into force on October 2004.
The full implementation of the directive and all the pre-contractual requirements however did not come into full force until 31st May 2005. The reason for this was that this was the date the amended agreement regulations came into force (2004/1482) and with them the new concept of pre-contractual information for none distance contracts embodied in the 200/1481 S.I(There are transitional details of this in section29 of the DMD.

This delay allowed these two sets of information to be released at the same time thus simplifying the guidelines for the issuance and formatting given to creditors.

The pre-contractual information given should be the information listed in schedule 1 of the DMD it should be on a separate sheet to the agreement and contain no other writing and headed pre-contract information.

There are still a lot of grey areas in the implementation of the directive that will only be resolved through future litigation and subsequent case law. As far as we are concerned I think if in doubt as to weather an agreement is covered by the DMD we should argue that it is and let the creditor try and prove it isn’t.

Best regards

Peter

 

It's on here somewhere i think

 

Sorry but am V busy, will get back later.

 

DB(Peter)

 

Sorry didn't explain. Distance selling related to sales hire etc, like mobile phones fir instance.

 

Sorry so yes the the DCD was brought into use in 2005, I think i mentioned it earlier. Its all in my post.

 

I would include a claim regarding this being in force in Oct 2004 if this helps, as many do not know it was delayed for six months to coincide with the new1482 Agreement regs.

 

You say you won your PPI claim on this, what was your complaint?

 

Regarding the PPI, there should have been a separate and complete agreement for this, is this contained elsewhere in the copy?

Section 18 CCA. If there was not it would be considered as part of the loan which would make the total credit wrong.

 

Also the fifty pounds delivery charge, id this was compulsory this too should be included, but in the TCC figure, this would alter the APR.

 

 

[AndyOrch]

This Directive was implemented in the UK by the Consumer Protection (Distance Selling) Regulations 2000 (the “Distance Selling Regulations”), which came into force on 31 October 2000.  The Regulations were subsequently amended by the Consumer Protection (Distance Selling) (Amendments) Regulations in 2005.

 

Not sure whether the earlier version 31 October 2000. covered credit/loan agreements

[HSBCandMe]

On ‎06‎/‎04‎/‎2019 at 11:11, Dodgeball said:

 

 

1 A significant date as the format and new regulations changed in April of 2004. Should be in the "key facts" format, which became law in April of this year.

 

 

 I am trying to find out if my CCA is enforceable.

 

1. should it contain a cancellation clause?  It does not but it was signed in September 2004.

 

2. has the interest been pre-loaded and, if so, is this contrary to s.9?

 

3. Should HBOS have rebated the interest when they defaulted it in 2006 and passed it to J&J Collections on an AP?

 

4. Has the £50 courier fee affected the APR?  I attach correspondence from HBOS ('AA') about that.

 

5. if it is enforceable, is there anything else I can dispute? such as the sum claimed?  Any unfair t&cs the FCA or FOS can adjudicate on?

 

Attached is a copy of the payment schedule to default and copy correspondence about the charges.

HBOS.pdf

[Peterbard]

No, they were designed to cover different kinds of a bargain. 

[HSBCandMe]

and where does that leave me on the cancellation term?   Is the date of April 2004  incorrect? 

[Peterbard]

Won't apply, the sections you want didn't come into force until October 2004, see above.

I see from the enclosed letter unenforceability has been tried before. In the case of a fee, this has to be a compulsory charge, as I said before also.

 

The only matter unresolved is the PPI, was this paid up front from another loan/the same loan/from the credit before you received it, all relevant. Most importantly did the premiums bear interest.

 

 

 

 

[HSBCandMe]

No PPI in this one I'm afraid.

 

Where do I stand on the pre-loaded interest?

 

I haven't tried U/E before on this debt.  The charge was not compulsory, but was it ever sent by courier? 

 

Any mileage in a FCA complaint re unfair terms?

 

Is the APR correct?

 

Bummer about the October (not April) 2004 reg change.

 

Surely they should have rebated some of the preloaded interest, when the account was defaulted and passed to J&J Collections?

[Peterbard]

Was this a refinance of an earlier loan also?

 

You would have to have a look at all the transactions on the account and recalculate the sum remaining, to know how much and if it had already been done. The method of payment prescribed in your statement is no help, but it does mean some adjustment would have to be made to produce a correct figure for the sum remaining due or owed

 

APR is 9.9, near enough. Regulations say no more than .1% but it is only a minor beach, no court would bother over it. (deminimis.

[HSBCandMe]

Thanks.  

 

APR on the agreement was 9.5% though, so more like 0.3/4 out.  Make a difference?    I did an online and it said 9.8 nearly 9.9 also.  So a difference to their 9.5%.  

 

Relevant to me because all I’ve got is APR as prescribed term here.  That, and possible interest rebate (to dispute). 

 

Worth taking to FCA?

 

On 10/04/2019 at 19:17, Dodgeball said:

 

Was this 

APR is 9.9, near enough. Regulations say no more than .1% but it is only a minor beach, no court would bother over it. (deminimis.

 

APR is important because it prevents lenders from hiding additional costs, a provided a true representation of the borrowing / allows fair comparisons between lenders when took out loan.

 

Mis-sell? 

 

de minimis errors of 0.1% can be disregarded. 

 

Consumer Credit Law and Practice para 13.64 states as follows: 

 

“Anything more than a de minimis misstatement will make the default notice invalid... It also seems to follow that a substantial error in stating any of the other items listed will be fatal.”

 

43 In the same textbook, at para 5.168: 

“Unless the error or omission is minor, there is a breach of the Regulations. It must follow that the statement is invalid, and thus of no effect for all purposes”.

 

The question is: 

 

1. Is the APR out by 0.3 / 0.4%?  CCA states 9.5% but I make it 9.8% (?)

 

2. discrepancy of 0.1% should in our view be disregarded on the basis of the de minimis principle. Does this make the CCA unenforceable? 

 

3. If it does, can I use 127(3) to argue its irredeemably unenforceable?  However, the only prescribed term is the total amount of credit not interest, so I don’t think 127(3) is relevant here. 

 

4. Am I better off taking a dispute to the FCA instead? 

 

[Peterbard]

I cannot see any dispute to take.

 

As I said APR is not a prescribed term, although important. If you mentioned it as part of action it would render the agreement unenforceable under section 65, which means that the court has to issue an enforcement order under section 127, but such an order would not be prohibited by section 123(7).

 

The court would examine the amount of harm done to the debtor by the error, the sanction imposed would reflect this, from experience, there would be no sanction and no benefit to you.

 

You could do a little fishing and ask the OC to explain the discrepancy, never know may turn something useful up.

 

At the risk of being hated even more. I also wrote a piece about APR in 2009, it may be useful if you want to understand the inns and outs, this was also copied by various posters onto many forums.

 

 

[HSBCandMe]

Ok thanks. Not looking too good then? 

 

But, do you think they preloaded the interest up front?  I cannot see how this agreement differs so very much from the masterloan one?  Or am I missing something obvious? 

 

 

 

Thats very helpful, thank you. Well written and clear. 

[Peterbard]

The problem earlier was in the restructure for the second loan, with the method they used and information they had. it would have been impossible to create an accurate copy.

For instance, they matched the APR with the old one. This is not possible using only the details they had available.

You can calculate the interest, but the APR contains all other costs of credit, fees. insurance etc. there is no way they can know what was in the missing agreement.

[HSBCandMe]

Thanks, as always. Useful clarification ref masterloan. 

 

I am hoping I can still do something on the HBOS matter, though, as it seems to me I shouldn’t have been paying out on a loan that included 5 years of interest when I defaulted, just perhaps the capital from then on (as they froze interest on It when it went to collections ).  Let us see what they say...

[HSBCandMe]

Cabot wrote today, saying Wescot have handed collections back to Cabot.  Is this a sign of things hotting up? 

 

They also made an offer of settling for 42% of outstanding debt.  

 

Any views on this and whether, in light of the above comments on the CCA, I should accept? 

[dx100uk]

typically a discount means there are problems wit the debt

be that paperwork

or the balance

penalty fees , PPI anything like that in it?
 

[HSBCandMe]

No ppi. There was the £50 penalty fee and £50 courier fee (attachments, above). Balance, I have argued above, includes preloaded interest (surely?).  

 

In your experience, what should my next steps be? Should I fold, make a counter offer or continue dispute?  In light of the CCA being (prima facie) enforceable? 

Edited April 18, 2019 by HSBCandMe

[dx100uk]

well £50+int doesnt = 42%

and 42% is a weird figure to offer a discount on.

 

somethings up IMHO.

 

wait and see what they send next

don't forget they've got to send a PAP letter before they try and litigate.

do we know if things like the DN exist?

has HSBC gotten an sar sent yet

[HSBCandMe]

The claim is for £7K odd.

The settlement offer is for approx. £3K. 

 

'I THINK' the £4K discount is suspiciously like the amount of interest HBOS preloaded to the credit and (and I never got a rebate). Earlier posts refer. 

Anyway, it looks suspiciously like.

 

Their stoopid £50 charges are just powder added to my ammo, the real issue is the interest. 

 

Also, the APR is way out (above the de minimis).

However, it is not I gather a prescribed term, but does call into question the amount owed under an otherwise valid CCA. 

 

 

[Peterbard]

In your defence you could say:

The APR calculated to 99% rather than that indicated in your reconstruction. I remind you that the FCA defines an acceptable margin of error as .1% below the actual value or 1% above, this represents a breach of section 65-127(1) CCA1974.

 

The increased APR also leads me to believe there was another item in the charge for credit, That or the repayment details were incorrect, which would render the agreement unredeemable, not having the original it is impossible to ascertain what was on it..

 

AS well as the other factors I submit that it would be extremely unlikely, and certainly beyond the realms of the evidential test for you to be able to reconstruct a Section 77 compliant copy

 

feel free to alter/ammend substitute/ correct spellimg etc/.

 

It may be as said that one or some of those charges were within the TCC, this would account for the error.

[HSBCandMe]

I posted up the photocopy of the signed CCA earlier. This is not a recon. You took the view, I think, it was enforceable.

[Peterbard]

Yes and I think I pointed out that the enforceability of the CCA is dependant on more than the document you posted.

On its own, the agreement sites all the correct terms and is compliant with section 77.

 

However, it also has to comply with the agreement(copy) you signed, how can anyone who as not seen that document say one way or the other.

 

I went on to explain how it would be impossible to calculate the terms on the second agreement from the first as the first did not exist.

 

I seem to be constantly repeating myself, and I do not see you doing anything to move this case forward. 

[HSBCandMe]

But you can see it’s the one I signed - it’s a photocopy if it. 

 

Are you confusing this thread with my masterloan thread? 

 

On 18/04/2019 at 19:20, Dodgeball said:

However, it also has to comply with the agreement(copy) you signed, how can anyone who as not seen that document say one way or the other.

 

Post #7. 

[HSBCandMe]

Hi guys. 

 

Cabot wrote today (they usually do for a Friday delivery) and said as follows: 

 

“dear... 

 

“you were provided with:

 

”credit agreement 

“T&cs

”statement of account 

 

“your reference to ss.61 and 127(3) of the CCA is not relevant under a.77. 

 

“We are not the original creditor and are unable to assist with matters relating to pre-purchase conduct. 

 

“As this dispute is in regard to whether the debt is unenforceable, you cannot refer it to the financial ombudsman service. They cannot adjudicate on this determination l, as only the court can. 

 

“In light of the above it is clear we have complied with ss77-79 CCA and you need to contact us to discuss your repayment options on.... etc” 

 

 

 

Edited May 3, 2019 by HSBCandMe

[HSBCandMe]

Hi. I have an on-going complaint with Cabot about a rebate of pre-loaded interest on a pre-2004 loan I took out with the AA.

After years of paying minimal payments to Cabot, the AA finally assigned it to them last year. 

 

I CCA'd them and on the back of it disputed a £50 courier fee, a £50 collections charge and about £3K of pre-loaded interest that was not off-set against the loan when it went to collections in 2006.  Current debt about £7K.

 

During the course of my dispute, Cabot wrote me in May making a settlement offer of about 43% of the outstanding debt, of approx. £2,300 or thereabouts.

 

I made a counter offer in May to pay the £2,300 over 60 months and after that debt to be written off, and that this would NOT affect my on-going dispute with them about charges and rebated interest.

 

Cabot wrote back to me agreeing to that proposal.

I replied by recorded post saying fine, and that I would make my first payment to them under the new arrangement in June. 

They were duly paid the agreed amonts in June and July.

 

However, I have just received a letter (mid-July) from Cabot (a different author to the guy who accepted the offer), saying that they cannot accept an arrangement with me during a dispute.

 

My argument is that they made an offer, I accepted it, I added some conditions, did not receive a response, made my first payment to them under it and that they should now be stuck with it. 

 

Any views?