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    • Hello,

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      OT APPROVED, 365MC637, FAROOQ, EVRi, 12.07.23 (BRENT) - J v4.pdf
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Rule 78 unfair? could we claim on this alone?


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I challenged the Rule of 78 with Firstplus when the Charged me £760 + in early Settlement Interst Charge.

 

They did not like that..lol I had Issued summons and was due in Court on 5/2/07 - But guess What they Crapped it on Friday and settled in full on the condition I dismissed the case through Dundee Sheriff Court. I Got the cheque this morning which Included Interest and Court Fees.

 

So simply the answer to your Question...YES you can challenge the rule of 78 and if you want to see the legal arguements etc I used let me know.

Though Firstplus said that their Legal Eagles did not agree with my legal Arguements and that they were Flawed (xxxxxxx..lol). they paid up as a gesture of goodwill of course.

 

Ian

 

Reidnet,

 

please could you send me the legal arguments you used?:-)

 

 

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  • 3 months later...

The rule of 78 has been ruled unfair by the appeal court. This means anyone who has been shafted by it will be able to make a claim going back 6 years.

 

PW

An appeaser is one who feeds a crocodile, hoping it will eat him last. <br />

Winston Churchill

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The rule of 78 has been ruled unfair by the appeal court. This means anyone who has been shafted by it will be able to make a claim going back 6 years.

 

PW

 

 

Hi PW,

Do you have any further details on the case relating to this, any links would be good and could prove very useful for something I am working on..

 

I am still working away along with a press agent to highlight all the nasties of PPI, I have some good info relating to Firstplus and the way they run their PPI, this has been greatly helped with information from an ex senior member of staff within Firstplus.

 

Info relating to this will also be getting passed onto the FSA to look into..

 

Though Im not online as much these days (In the process of moving house etc etc) I am still working on PPI. 8-)

 

Ian

Lloyds TSB -PPI - Full refund . 05/09/06 :D:p (As Seen on TV) :p

Halifax settled in Full.. :D 22/09/06

TSB First Claim SETTLED IN FULL 19/10/06 :D

Second Claim to Lloyds TSB - Settled in Full

Firstplus - early settlement interest charges - Challenged the use of the rule of 78 - SETTLED IN FULL 12/1/07

PPI - GE Money / Purpleloans / Firstplus - Now Settled after 1 year long hard fight.

 

 

 

If my post has helped you, please click the scales! :grin:

 

Anything said is my opinion and how I understand the law, always consult professional legal advice before taking something to court.

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Hi PW,

Do you have any further details on the case relating to this, any links would be good and could prove very useful for something I am working on..

 

I am still working away along with a press agent to highlight all the nasties of PPI, I have some good info relating to Firstplus and the way they run their PPI, this has been greatly helped with information from an ex senior member of staff within Firstplus.

 

Info relating to this will also be getting passed onto the FSA to look into..

 

Though Im not online as much these days (In the process of moving house etc etc) I am still working on PPI. 8-)

 

Ian

 

Hi Ian

 

More info in the link below.

 

Legal Update

An appeaser is one who feeds a crocodile, hoping it will eat him last. <br />

Winston Churchill

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The rule of 78 was a rule set out in Regulations issued under Consumer Credit Act 1974. There is therefore no way a court can find them unlawful.

 

Also the similar Early Redemption Charges on mortgages have proved problematic:

 

http://www.consumeractiongroup.co.uk/forum/mortgage-companies/62003-important-mortgage-claimants-please.html

 

I would think very carefully before issuing a claim.

 

What if the loan i not regulated by CCA 1974?

 

Hi Ian

 

More info in the link below.

 

Legal Update

 

Or i this the answer taken from Pauls link: 'The Rule of 78 can still be used until 31st May 2010 to calculate settlement figures for regulated loans repayable over more than 10 years' Or does this statement refer again to loan 'regulated' by CCA 1974?

 

Cheers

 

PS whilst I am posting on this issue does anyone have info on how one calculates what one claims back. IE how does one calculate what the true figure should be?

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  • 2 weeks later...
The rule of 78 was a rule set out in Regulations issued under Consumer Credit Act 1974. There is therefore no way a court can find them unlawful.

 

Also the similar Early Redemption Charges on mortgages have proved problematic:

 

http://www.consumeractiongroup.co.uk/forum/mortgage-companies/62003-important-mortgage-claimants-please.html

 

I would think very carefully before issuing a claim.

 

 

Ok going by this argument how about loans not covered by the CCA 1974? It was designed for loans up to a certain limit so if used for loans outwith the scope of the CCA 1974 ie loans above £25 000. Thus it could be argued that it is an unfair condition on a loan - and not just after the decision to remove its use as the lender could not claim it used due to an act parliament saying it should use it. I hope this is not just confusing the argument!

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Subscribing.

BANK CHARGES

Nat West Bus Acct £1750 reclaim - WON

 

LTSB Bus Acct £1650 charges w/o against o/s balance - WON

 

Halifax Pers Acct £1650 charges taken from benefits - WON

 

Others

 

GE Money sec loan - £1900 in charges - settlement agreed

GE Money sec loan - ERC of £2.5K valid for 15 years - on standby

FirstPlus - missold PPI of £20K for friends - WON

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  • 3 weeks later...

I have sent a letter to firstplus about a loan we took out with them in Jan 2000 and am trying to reclaim the ppi back. I have also used the rule of 78 as we settled 3 years later and got stung by these charges. I think we repaid them about £22k on our original £17k loan. Does anyone think we stand a chance of getting anything back for the ppi and rule of 78 that was used to calculate the settlement charge. I think its just over 5 years ago that we settled. I wrote to Firstplus for a copy of the agreement and they have sent one so they must still have the records but it was over 5 years ago that we settled.

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  • 1 month later...
I have sent a letter to firstplus about a loan we took out with them in Jan 2000 and am trying to reclaim the ppi back. I have also used the rule of 78 as we settled 3 years later and got stung by these charges. I think we repaid them about £22k on our original £17k loan. Does anyone think we stand a chance of getting anything back for the ppi and rule of 78 that was used to calculate the settlement charge. I think its just over 5 years ago that we settled. I wrote to Firstplus for a copy of the agreement and they have sent one so they must still have the records but it was over 5 years ago that we settled.

 

Any update on how you got on with your letter?

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Any update on how you got on with your letter?

Yes, there has been lots of letters and a final response of "no". I have sent in a complaint to the FOS for unfair rebate but will have to wait on that one and don't hold out much hope. I have just been digging the dirt on this company and found lots out. I really think they rip people off. I have had my SAR from them and there are phone calls recorded of me bck in 2003 saying i had no paperwork as to how this rule of 78 worked or the ppi rebate thing. All i can do now is hope for the best.I have used the UTCCR.

 

If you are interested in Firstplus then read this i found out today

 

Barclay's acquired First Plus as part of its £5.4bn takeover of Woolwich, the former building society turned bank, in August 2000. Woolwich had itself bought First Plus in 1998.

Edited by marshallka
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  • 3 weeks later...

Hi there,

 

I have a loan with Welcome finance which I would like to pay early. I was told they calculate the settlement balance based on rule 78. what means do i have to contest this higher charges?

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Hi there,

 

I have a loan with Welcome finance which I would like to pay early. I was told they calculate the settlement balance based on rule 78. what means do i have to contest this higher charges?

I would. How much was the loan for???

 

If it was under £25K then they ARE allowed to use it if the agreement was pre 2005. If it was over £25K then they should not.

http://www.oft.gov.uk/shared_oft/reports/consumer_credit/oft192v2.pdf

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I took a loan from Welcome finance for 3.5k 2 years ago. I now want to settle and they are going to apply rule 78 to get a settlement figure. I think it is unfair. Will making a complaint help?

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Hello SPECIAL

 

I am pleased to let you know that the Financial Ombudsman has ruled in my favour; FirstPlus should not have used the Rule of 78 to calculate my early redemption figure on a loan for 50K. I am waiting for the response from FirstPlus on this decision.

 

I would have to do some quick research to find out whether it was legal to use the Rule of 78 on your 3.5K loan in 2006. Over what period were you signed up to pay the loan off?

 

Be clear that the Rule of 78 has been abolished for all new loans since the ruling to abolish it so it depends on when you took the loan out as to whether Welcome Finance can still employ it. I'll get back with my opinion shortly.

 

Best of luck

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Hi there,

 

thanks for your response. The repayment period was 5 years. I am hoping to repay it back withinm 2. Should I make a claim for this, what is the procedure for claiming?

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Hello again

 

If you have read this link:

Punishment eases for early payers of debt - Loans & Credit, Money - The Independent

 

you will see that as the loan was taken out after May 2005 then the Rule of 78 cannot be used.

 

It seems that you haven't paid the early redemption amount back yet so you don't actually have a claim as yet. Are you in the process of requesting a settlement figure? I would get the settlement figure first. If it is higher than the original loan, they have probably used the rule of 78. In any case check your loan paperwork and see whether they say they will use the Rule of 78 for early settlement (it is usually in small print on the back).

 

If it is apparent from the early redemption figure that they have provided that the Rule of 78 has been used then first write to the company and complain telling them that this method has been outlawed and that you would like a recalculation of the redemption figure based on a fairer method. You should give the company at least 4 weeks to try and sort things out for you. Give them an estimate of how much you think you should be paying back i.e full loan amount less repayments to date and plus any administration charge that they levy on early redemption.

 

If the company cannot resolve things after several weeks then write to the Financial Ombudsman complaining that the use of the archaic Rule of 78 has been outlawed (May 2005) and that the figure should be calculated using more fairer methods. Do not work to Welcome's timetable; they will try to say that they need more time to sort things out but make sure you stick to your guns if you feel that they are just trying to string things along.

 

The FO will talk to the company on your behalf and make a decision based on the information you have provided and what the FO can collect from Welcome.

 

Go online and file your complaint to the FO, print it out and send copies of correspondence etc as I have advised above.

 

Good luck!

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