Advice please…..�Responsible Lending V Irresponsible Borrowing�

[Penfold92]

Further to my first ever message in the “Welcome Forum” I have plucked up the courage to post my first thread. Embarrassing as my story is and maybe a lot of you out there will think “he brought it all on himself” there may just be a point in my situation that may help others in the future if not me…

Without going into too much detail my wife and I developed a huge amount of debt over the last 4 -5 years. At first due to the jobs we had this was not a problem, but then situations change and suddenly instead of dealing with a small amount of debt we decided to “borrow from Paul to pay John”. Basically out debt snowballed and because we were such good payers (never missed any minimum payments) we were accepted wherever we applied. I must point out at this stage that I developed a gambling addiction that helped increase the debts dramatically. I must also clarify that these were not cash withdrawals to go down the “bookies”, but online transactions via Ladbrokes and William Hill and so showed up on credit cards statements.

It all came to a head last year when my wife found out the extent of our debt and threaten to leave with our two young sons! So I got help and kicked the habit, unfortunately there was no way to pay the debts off. I searched for a solution not wanting to run from my responsibilities to my creditors finding that my only option was an IVA. We managed to get a proposal accepted and this went on for a year. In that time you are all aware of the interest rate rises and the impending one to come and so our carefully though out budget was not working and the IVA repayments were going to go up at the end of this year. We decided to contact the creditors again, via the IP, and they agreed to allow us to sell our house and release all funds as full and final settlement.

So problem solved and just restart again from scratch, right? Well actually no, we have defaults from all creditors, an IVA showing on our credit file and so we are still looking at a while before we can save enough money to buy again and even if we do we will be crucified by the mortgage company because of our history.

Ok so my reason for writing this in the first place now….I feel that the credit card companies breached the “Responsible lending” clauses of the banking code. They saw a regular payer and completely ignored where the money was going. Also they did not look at the credit files to see that there was a huge amount of debt and it was getting bigger each month.

Here are the points I would like to discuss now you have some background on me and my situation:

1) As a desperate measure towards the end I applied for more and more credit cards to transfer balances and try to buy time. One example of what I am talking about above is MINT. They offered me….are you ready for this?.....£19,2000 as a starting credit limit! This is to a man with around £80K worth of debt at this point. That is without any employment/ income checks. How is that “Responsible Lending”

2) Most of the credit card company’s slapped defaults on our credit file as soon as they heard we were doing an IVA. Most without even a payment being missed. Is that normal or fair?

3) Older cards of ours kept increasing the limits at regular intervals, again never checking income, never asking any questions about the regular withdrawals to gambling sites, what they did do is charge for cash withdrawals even though these were online transactions!

4) When we submitted the IVA for approval did noone at these big banks look at the feasibility of interest rate rises etc and that we may be just delaying bankruptcy? I believe they just wanted to get whatever they could out of us, because they knew they had done wrong in giving us money so easily!

5) HSBC did a lovely thing….When we organised the IVA we had to open a new account where we did not have any debt. So we opened an Abbey account and cancelled all DD’s and SO’s from our HSBC account so no more transaction could go through. HSBC still put 2 card payments for their card after this and then slapped a default on us for that account being overdrawn and including the IVA!

6) My argument now is that we were definitely not lent money “Responsively” and so we were driven into an IVA which has ended up costing us our home.

So is this “Responsible Lending” or “Irresponsible Borrowing”? Lots of you will say I bought this on my family as addicted/ stupid or naive person, BUT I argue that the greedy banks “love” people like me and take advantage of us every single day! If any of you looked at the statements of any of the credit cards in question you could see a mile off there were serious problems coming, instead of helping/ controlling the situation they just lent more and more money.

Your thoughts good or bad will be truly appreciated. If any of you feel I have a case how should I go about claiming and what would I be able to claim for?

Thanks and sorry for such a long post,

Penfold

[Guest NATTIE]

Many people have addictive personalities be it gambling or nicoteine addiction or even alcoholism. I hope that you are looking at the charges side of things to claim back. The Mint Credit card does sound outrageous, what income were you on at that time(ball park figure obviously). There was a time a good few years ago when i felt as a member of staff of a bank that the credit card side of things were irresponsible. Changes have occurred recently which i will post in due course in the way lenders share information to stop the kinds of thing that has happened to you. I admire your courage to post on here and am pleased that at least you have kicked the habit although i am sure it is an addiction you will have to fight for the rest of your life(addiction is like that, i am afraid).

[tiglet]

Wel Penfold, that was quite frank. Ok, here's a couple of points:

 

1. Have you sent off your SAR's to try to reclaim any charges? You may be able to get some defaults removed, e.g. HSBC, if you can show the default was due to the charges.

 

2. irresponsible lending - well, in theory, I would agree with you. however, I think you may just have to accept that the court's view would be that you are an adult in sound mind and so it was your responsibility to ensure this did not happen.

 

You could ask to have notes added onto your credit file explaining this, but IMO, at this stage, it probably wouldn't make you look like a good credit risk.

 

Hope that gave some hope and wasn't too judgemental - well done for kicking the habit and just think, in a few years those defaults you can't get removed and the IVA will be gone and really can start afresh.

 

But do send off those SAR's to see what you can do and if there is any money you can claw back.

[tiglet]

typing pretty much the same thing at the same time Nattie!

[Guest NATTIE]

copycat:p

[Penfold92]

Thanks guys for such quick responses.

 

I was on around £40,000, but my point is if they looked at the credit files they would see "bad risk" written all over it even if no adverse there...

 

As for a Judges opinion, I thought they needed to judge on law not morality (read it somewhere) and so surely an addiction means you are not nessesarily in sound state. Not trying to make excuses, but would like them to go to court to argue their point of giving that amount and they are not alone...had £4000 starting credit limits and at the end practically all cards were at least £10k apart from MINT being double from the start.

 

As for SAR's what are they and will they not effect the agreed settlement if I ask right now? We are in process of selling not done yet although all creditors have agreed and we have letter from IP to confirm this.

 

Penfold

PS On a side note also kicked smoking on 12th September! over 20 a day!

[Guest NATTIE]

They wouldn;t see it i am afraid, because you were making payments on time, and so credit file would have said at that time that you were ok, and no adverse data. My knowledge of IVA's is not good enough to advise on the SAR's, so sorry on that bit. And Congratulations on kicking the nicoteine habit.

[Penfold92]

While waiting for other responses, I had an after thought, is it worth me checking that all the creditors that have the right and legal Consumer Credit Agreements for the debts? If they don't then surely all of this is irrelevant anyway and the debt is illegal? Again I read this somewhere on the site.

 

Maybe I am jumping way before I can crawl on this...

 

Penfold

[Penfold92]

They wouldn;t see it i am afraid, because you were making payments on time, and so credit file would have said at that time that you were ok, and no adverse data.

 

Yes but the rest of the file would say the outstanding debt and therefore the risk based on income?

 

Or do they not want to know that info?

 

Thanks,

 

Penfold

[gemspan]

Hi Penfold

 

I think you're very brave to post your circumstances and to admit to your addiction.

 

In a way you and the banks etc., are both to blame; you for applying and the banks for giving!!!! However, I know that when things are hard financially you do desperate things (I have been there!!!!) and it really should be up to the banks to look more closely at the circumstances. Howver, I think that they are only interested in seeing that things are paid on time. If that is the case then they will lend. Awful, but that seems to be the way.

 

I am currently in the process of trying to sort myself out financially after an illness that affected my business and consequently finished it!!!! I now have a new full-time job which I am enjoying and, for the first time in almost 2 years I feel as if there is light at the end of the tunnel.

 

I dont know how things would stand regarding sending a CCA letter to your creditors now that you have entered into an IVA. It would need somebody with more experience to answer that, but it certainly wont stop you claiming charges back as these are rightfully yours.

 

I do hope that things turn around for you. Its awful that you are having to sell your home to pay off the debts. Is this the only way forward?

 

Kind regards

Annie

[Penfold92]

I dont know how things would stand regarding sending a CCA letter to your creditors now that you have entered into an IVA. It would need somebody with more experience to answer that, but it certainly wont stop you claiming charges back as these are rightfully yours.

 

 

Hi Annie,

 

Thanks for the reply. With regards the above, can I claim charges back if I am not fully paying them back in the first place? Now I think of it I am not so sure. I still would love someone to let me know the stance with regards the "Responsible Lending" which is no all paperwork these banks send out.

 

Unfortunately bankruptcy is not an option because of the job I do. So yes full and final settlement is the best I can hope for and start again. I can try after the settlement to get rid of the defaults based on ending of the contracts as is discussed elsewhere on the site, but I am now thinking that is it, unless one of the legal guys can give me any other angles...

 

Thanks,

 

Penfold

[gemspan]

Hi Penfold

 

I would definitely send a CCA letter off to your lenders. You have nothing to lose. In fact you may have a lot to gain!!!!!

 

If any of them cant produce the proper documentation it might give you some leverage to get things sorted in your favour. How it works with an IVA I dont know as Ive said above but I do think that somebody will be able to help.

 

Lookingforinfo is normally great on things like this and I'm sure he will be along today at some point to give you some great advice.

 

Keep your chin up!!!

 

Kind regards

Annie

[Stornoway]

Co-op increased my wife's credit card limit to £9k over three years (starting from £2k) when she earned only £4k in a part time job. No checks on other debts or salary were completed. This is completely irresponsible - it would be easy for the banks to check her debt position as all the information is already reported monthly with Credit Reference Agencies.

[Rhia]

Penfold. I would be inclined to send a Subject Access Request under the Data Protection Act to the original lenders as this way you could ask for all the statements, copies of the original executed agreements and also make sure you ask for all written material, notes letters, etc AND electronic (i.e. emails) and audio data. If you get all of this OK (and they are playing dirty tricks at the moment supplying this info) but you will be able to see the entire picture, any penalties and also to track where they added interest or bumped up the credit limit.

You have done a brave thing to admit to your habit and if yyou keep strong you can sort it out. As a previous poster has said though do you really have to sell your home? Have you tried talking to Citizien's Advice as they often have barristers and lawyers who can help.

Best of luck and keep posting as we are all here to help.

[tiglet]

I would certainly question the defaults if you had not defaulted. The CCA will show you whether this was part of their terms and conditions.

[Penfold92]

Thanks Annie and the rest of you for the support. If we do not continue to maintain the IVA payments then the IP will have no choice, but to go to bankruptcy. This is not an option due to my job (and I would lose it if I go the B route!) so as we had a decent enough amount of equity in the property that would equate to 1/2 the payments over the 5 years we felt they would accept and the creditors did. As I said before they know they have messed up and are trying to get what they can and nothing more. The more I think about it the more I feel someone has to take this to court if no-one has already. Banks cannot give moeny out without proper checks and control. Are newsagents allowed to sell alcohol to people if they just say they are 18? If in doubt ask for ID. Surely the same shoudl apply to credit, just because I have 10 cards/ loans and all are paid ontime it does not mean I am ok, also what about income to debt ratios etc? Surely the banks know that lots of people take new cards out to transfer balances around. Wrong as it is combined with the problem I had was just snowballing into a nightmare.

I have to say the IVA arrangement and now the settlement is fair and I will be paying about £0.10 in the £1, which is practically unheard of these days. So should I shut up and accept I got a good deal or should I go for jugular and risk nothing as the judgement has already been passed last year so the creditors cannot change their minds, the new settlement offer was accepted by all and again I have written proof so I have nothing to lose by trying to get them to admit fault and compensate me.

I hope someone can give me some angles to explore as I do feel quite strongly about all this now. A few other points regarding MINT and others that just give large limits out:

1) Is their ¼ page reference to the CCA 1974 posted with the card legal? I thought there had to be my signature as well as theirs etc? It was online applied, but surely no legislation has come in since 1974 with regards the CCA and prior to 2003-4 when most of my cards were taken out?

2) Am I dreaming or is there some kind of law/ code with regards responsible lending? Say Banking Code or FSA directive?

3) I have decided I will go after MINT on the basis of the way they just accepted my application and gave me that huge limit straight away without any heightened checks. Obviously apart form righting the debt off I want to go after them for compensation for the impact theirs (as well as other lenders) flippant actions have cost me dear! Is there any kind of compensation guide or am I supposed to just work figures out for myself?

4) I know many of you reading this will say I spent the money, BUT they lent it. Therefore morally I guess we are both at fault, but is this about morals OR about the law of the country and if they ignored their responsibilities in order to make money?

5) Does anyone know what type of timescales I need to give with regards going straight to court re the compensation claim? Or should I go for viod credit agreement etc first?

6) You may be interested in a report written by the National Consumer Council made at the British Bankers Association Conference 2004. See http://www.ncc.org.uk/pressinfo/BBA_Deirdre.pdf

I do not know their powers or much about them, but it clearly talks about my situation…

It talks about the “overindebted”, “Evidence of irresponsible lending” both pre and post contractual and what the NCC wants to be done. Does anyone know anymore about this or how I can find out if anything was done? I know there was a white paper in 2006 for the CCA but that would be after my applications and so would not apply in my case.

There is also another interesting articles from the DTI: http://www.dti.gov.uk/files/file23663.pdf which talks about possible changes. This was done in 2004, but does anyone know if it was implemented and what Act or Law or amendment it was?

Thanks,

Penfold

[Penfold92]

Hi all,

 

From what I can see searching around section 13.1 of the Banking Code:

"Before we lend you any money or increase your overdraft, or other borrowing, we will assess whether we feel you will be able to repay it."

 

Would help me, snag is it looks like it is upto the banks and no other rules are set out about it. What Joke, if your ID is ok they can lend you money no rules...surely this cannot be right???

 

Penfold

[tiglet]

Why don't you try giving the Financial Ombudsman a call and see what they have to say about it? They may be able to explain the criteria in more detail and give you a potential basis for complaint, or, conversely, convince you it's not worth pursuing.

[Penfold92]

Hi Tiglet,

 

I thought they were only for FSA case and CCA does not come under the FSA?

 

Thanks,

 

Penfold

[Penfold92]

No you are right Tiglet and they will deal with the complaint. The lady I spoke to said they are getting more and more irresponsible lending complaints each month and some are being upheld.

 

I must complain to the lender first. I will work on a letter and post for opions in due course.

 

Thanks,

 

Penfold

[tiglet]

Oh, and feel free to tip my scales if you're feeling generous (don't know what it does, but it sounds fun!).

[gizmo111]

I would certainly question the defaults if you had not defaulted. The CCA will show you whether this was part of their terms and conditions.

 

Removing the defaults wil lgain no benefits as the IVA will be showing and wil lremain for 6 years, regardless of any defaults pre dating the IVA.

 

If any of the defaults are after the IVA then that is a different matter, nd probably worth pursuing.

[Penfold92]

Removing the defaults wil lgain no benefits as the IVA will be showing and wil lremain for 6 years, regardless of any defaults pre dating the IVA.

 

If any of the defaults are after the IVA then that is a different matter, nd probably worth pursuing.

 

I agree with you, but is it worth pursuing to find if the debts are legal in the first place? By the way last time I checked my credit file on the Court Info it showed:

 

Date: 27/07/2005

Case Number: nothing

Court Name: Luton

Judgement: £0

Name: mine

DOB: nothing

Satisfied: Nothing

 

If this is how the IVA shows then there is nothing on my file anyway. Or does it merely mean any new creditors will not seeit or will they search in a different place?

 

Thanks,

 

Penfold

[gizmo111]

I agree with you, but is it worth pursuing to find if the debts are legal in the first place?

 

When you say legal do you mean the irresponsible lending aspect or enforceable via the CCA request route?

 

I would suspect that if you mean the CCA route then the fact that these debts have been included in an IVA, you have admittted them and therfore a type of legal action has occurred that a CCA would not now render them unenforceable.

[Penfold92]

I would suspect that if you mean the CCA route then the fact that these debts have been included in an IVA, you have admittted them and therfore a type of legal action has occurred that a CCA would not now render them unenforceable.

 

Are you basically saying that all debts included on the IVA (which of course would have been all debts) are now non contestable under the CCA route?

 

I spoke to the Financial Ombuds and they said I could go to them after the IVA was settled on the irresponsible lending side, but I have 3 old debts that were included in the IVA that were with DCA that I am trying the CCA route with. Am I wasting my time then? I was told by the IP to put into the IVA ALL debts and so if I find out later that the debts were not contractual because of the CCA route (for example) there is nothing I can do?

 

Please advise as I now feel a lot worse...Is there not a chance that the DCA's and even the Banks will not cross reference or even realise that?

 

Thanks,

 

Penfold