The Great MBNA/Virgin Interest Rate Escalator Trick

[BeleagueredSinner]

Watching and subscribing here with interest.

 

My situation with MBNA is as per many. I have a circa. £11.5K balance, of which some £5K is a PPI plan. I am currently working through charges; be them late payment or over-limit charges, but I think these will add to some £2K.

 

I have S.A.R - (Subject Access Request)'d them, some months ago and they came back with a laughable application form. Which interestingly - back in 1999 - selected a clear NO for PPI as I was, and remain self-employed.

 

I wrote back to them and told them this wasn't a true agreement, and mainfestly an application form and telling them what else I needed. I am waiting to hear back from them now.

 

However, MBNA appear to be 'players', and they appear to use three weapons - at least with regards to my account. Firstly, the PPI joker, then systematically reducing the credit limit, whilist at the same time escalating the APR.

 

What I can see on my account is the credit limit being reduced; the PPI plan which I didn't want taking the account over the new credit limit, at which point and additional charge is levied for exceeding the account limit. Then what I can afford to pay doesn't scratch the surface, the account remains over it's new - even lower limit - and thus the the 'over-limit' charge is applied, plus an even greater PPI slice as this is a function of the balance.

 

It's a vicious circle which prevents people from getting out of debt. Clearly.

 

Their last (2nd stab) at satisfying my SAR still wasn't good enough; so I'm writing again to ask them to advise what APR and credit limit prevailed at any point in my account's life.

 

By getting them to provide the above, I hope to demonstrate clearly the trend above.

 

What's the thoughts of the clever fo9lk on here with regards to the above and proving the following??

 

Clause 19: Unfair relationships between creditors and debtors

46. Clause 19 inserts a new section 140A after section 140 of the 1974 Act. Section 140A(1) enables a court to make an order under the new section 140B, inserted into the 1974 Act by clause 20 (see below) if it finds that the relationship between the creditor and the debtor arising out of a credit agreement, or that agreement taken with any related agreement, is unfair to the debtor. A relationship may be unfair to the debtor because of one or more of the following:

 

• any of the terms of the agreement or the related agreement;
  

 

• the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
  

 

• any other thing done (or not done) by, or on behalf of, the creditor (whether occurring before or after the making of the agreement or any related agreement).
  

 

• 47. The court may take into account all matters it thinks relevant (including matters relevant to the debtor and to the creditor) in determining whether a relationship is unfair. This may include anything done or not done on behalf of or in relation to the creditor's associates or former associates (as defined by section 184 of the 1974 Act).
  

48. Section 140A does not apply to agreements that are exempt under section 16(6C) of the 1974 Act. Section 16(6C) exempts consumer credit agreements secured on land that are regulated by FSA under FSMA.

Clause 20: Powers of the court in relation to unfair relationships

 

• 49. Clause 20 inserts a new section 140B after the new section 140A (inserted into the 1974 Act by clause 19). Section 140B sets out the types of orders that a court may make in relation to any determination that a relationship between a creditor and a debtor is unfair.
  

I am thinking that a compound of the PPI plan, plus late payment fees and over-limit fees, plus the profiteering on APR must be worth over £10K of what I currently owe.

 

Given they've only got an application form to try and enforce their £1.5K balance; maybe they'll settle for a small sum.

 

However, I'm happy to go to court to prove some, or all of the above. Thoughts please

[tinkerbell20]

sounds a good angle to me

[phatram]

Could the outcome of the following case be of assistance to us?

BBC NEWS | Business | BAA sues Ryanair over unpaid fees

If Ryanair can win then should we be able to refuse to pay excessive fees etc?

[poppynurse]

Subscribing as MBNA have just ramped my interest to 34.9% and I have never missed a payment or been a day late on a £9k balance.

 

Could this be linked to the fact that my husband has reported MBNA (on his own card) to the FOS and has been waiting months to get things sorted - they have now suspended his account without telling him

[phatram]

As more and more of us are being ripped off by these scumbags, what are we going to do about it?

[poppynurse]

I've just sent a snotty letter - will post the response if and when it arrives!

[Spartan117]

Hello!

 

My first post here and its a thank you. Received the letter from Virgin which was amounting, essentially, to a whopping 100% increase in my rates!!!!

 

Phoned them up following the guide, and it panned out perfectly. The first person I spoke to seemed to pause for about 2 mins every time after I spoke (no doubt flipping through his book of pre-written lines to see how he could get rid of me) and passed me on to his colleague very quickly, also kind of giving the game away, stating that "maybe they could reduce the rates for you, or something" .

 

Spoke to his colleague who basically repeated simmilar lines, once I stated the FOS, S.A.R - (Subject Access Request) and data protection act a brief silence was triggered, and I was put on hold for about 5 mins while he spoke to his manager. Once he came back, immediately they were backing down and I got my rates decreased back to their original :D.

 

Just a note, each of them managed to fit the word "business decision" into their schtick about every other word, so don't let that put you off, stick to your guns!

 

Edit - Just to make clear, by 100% increase I mean effectively doubling my previous rate of interest .

 

Thanks again so much!

Edited August 18, 2008 by Spartan117

[phatram]

As more and more of us are being ripped off by these scumbags, what are we going to do about it?

 

 

bump

[poppynurse]

I got a reply! Yep they have cut...not the interest rate but the credit limit - down to my balance With absolutely no comment on the points I raised in my letter, the barstewards. Time for war me thinks, CCA request on it's way.

[Marj]

Hi, I got 'the letter' second time around now when got back from hols (1st one in February when they proposed rate 29.9%) and this time around APR was to go up from 15.9% to 29.9% again.

 

Just phoned them and although didn't manage to keep APR at 15.9%, at least it only went up to 18.9%. I had kept the details of last time so that was able to tell the date and names of the people who I spoke to and what was then agreed, including calling back if this happened again. After a 10 min wait to speak to someone they first proposed 23.9%. However, I expressed not being happy with that so the lady on the phone went to speak to a manager and they proposed 18.9% which I agreed to.

 

I probably should have been more insistent but I have just recently got a new job that pays more and I just want to pay the card off and never to have anything to do with this company again.

 

Phatram, well done

Edited September 21, 2008 by Marj
Inaccurate info (Feb interest rate) corrected

[Adfax]

I have received the increase letter for my MBNA / A and L card - increasing my rate from 15.9 to 29.9%.

 

Having spent a sleepless weekend worrying about this I called them this morning only to get the official line of 'this is a business decission' and 'your card is a variable rate' and, ultimately, to be told they couldn't do anything about it.

 

BUT I then spent a morning Googling and found this forum, and I called them back and told them that I now knew that these rate rises could be reversed. I explained I had been a customer for years and always paid on time by direct debit, and after a brief wait whilst the young lady spoke to a manager, my rate was returned to 15.9%.

 

To be fair to the person I spoke to she couldn't have been more helpful and understanding ...

 

I would suggest that anyone in this position should call them - and if they say no the first time try again. They log that fact that you have called previously and they seemed more obliging the second time.

 

Good luck.

[belovedm8]

My MBNA card has gone from 18.9% to 34.9% in the last year!!

 

I have asked them to explain why and they have trotted out the usual excuses saying they can periodically review my account etc etc.

 

Vitally they have admitted in the letter they have 'increased the APR as a result of late payments and over limit fees over a period of time'. This is an admission that the increase in APR is a penalty. In addition, they also charge £25 each and every time the late payments/over limit occurs. Talk about a cheek!! Talk about greed!! How can this possibly be fair, reasonable and ethical? You dont need to be Einstein to work out I was struggling to pay the original payments!!

 

I have now asked them to provide evidence that they have assessed my ability to pay the increased payments. Failure of the creditor to do this is assessable as an unfair business practice and actionable under Part 8 of the Enterprise Act 2002.

 

I have also requested they clarify where in the terms and conditions it states they will increase the APR as a result of continual late payments and going over the credit limit. They are required to provide a statement within the agreement indicating the circumstances in which any variation of the APR may occur (para 19 Schedule 1 of the Consumer Credit (Agreement) Regulations 1983).

 

It will be interesting to see what they come up with!!

 

Any advice is gratefully received!

 

PS I have asked that they refund the difference between the present and original APR's.

[phatram]

My MBNA card has gone from 18.9% to 34.9% in the last year!!

 

I have asked them to explain why and they have trotted out the usual excuses saying they can periodically review my account etc etc.

 

Vitally they have admitted in the letter they have 'increased the APR as a result of late payments and over limit fees over a period of time'. This is an admission that the increase in APR is a penalty. In addition, they also charge £25 each and every time the late payments/over limit occurs. Talk about a cheek!! Talk about greed!! How can this possibly be fair, reasonable and ethical? You dont need to be Einstein to work out I was struggling to pay the original payments!!

 

I have now asked them to provide evidence that they have assessed my ability to pay the increased payments. Failure of the creditor to do this is assessable as an unfair business practice and actionable under Part 8 of the Enterprise Act 2002.

 

I have also requested they clarify where in the terms and conditions it states they will increase the APR as a result of continual late payments and going over the credit limit. They are required to provide a statement within the agreement indicating the circumstances in which any variation of the APR may occur (para 19 Schedule 1 of the Consumer Credit (Agreement) Regulations 1983).

 

It will be interesting to see what they come up with!!

 

Any advice is gratefully received!

 

PS I have asked that they refund the difference between the present and original APR's.

 

Would you please post a copy of the letter?

Don't forget to remove all personal details tho.

[BeleagueredSinner]

This is what I got from them:

 

'Section 11a of our terms and conditions states, 'we may decide to change any of the terms of this agreement, including interest rates, fees and charges, or introduce new terms. If the change benefits you, we will do this immediately and tell you about it within 30 days. Otherwise, we will tell you at least 14 days before any increase in interest rates and at least 30 days before any other change'.

 

Details of our cost structure are confidential to our business and we do not disclose them. We do, however, make it clear in our agreements what our policies are concerning making changes to the agreement; you have agreed to these terms when opening the account.

 

I confirm we sent a letter to you in ###### to inform you that with effect from ###### we would be revising your standard rate to 29.9% APR (variable). A further letter was sent in ###### to inform you that with effect from ###### we would be revising your standard interest rate to 34.9% APR (variable). I have enclosed copies of these letters for your information. I regret I am unable to reduce the interest rate, as this is currently the most competitive rate that we are able to apply to your account.'

 

Any ideas where I can go? I've already got them on the agreement itself, which is manifestly an application form, and the terms and conditions, which are, of course, unconnected in any way with the application. Any angles on the APR thing? The more of a pain in the #### the better!!

[phatram]

"Vitally they have admitted in the letter they have 'increased the APR as a result of late payments and over limit fees over a period of time'. This is an admission that the increase in APR is a penalty".

 

Where is the above bit in the letter?

[BeleagueredSinner]

That statement was a quote from belovedm8's letter, not mine. I wish I'd been sent something so daft in print!

[phatram]

That statement was a quote from belovedm8's letter, not mine. I wish I'd been sent something so daft in print!

 

 

So it is,:?

[belovedm8]

sorry folks, just looked at thread....and will post letter here forthwith.

[belovedm8]

sorry, my secretary isn't in yet and i am no techno whizz. I will post letter later today however the quote from MBNA verbatum:

 

We regularly review interest rates and, as a result of the reviews, adjust the rates on certain accounts. The factors we consider in this review include the way in which an account has been managed over a period of time. i.e. the number of late payments and over limit fees on an account. We also consider information provided by external credit bureaux.

 

All we are asking that this type of statement should be contained in the terms and conditions. But wait a minute....they cant do that because they already have a term in there which states they will charge you £25 EVERY TIME YOU ARE LATE AND £25 EVERY TIME YOU EXCEED THE CREDIT LIMIT. In accountancy this is known as 'double dunting.'

 

Pparagraph 10 of Schedule 1 of the Consumer Credit (Agreement) Regulations 19 provides inter alia:

‘ where more than one rate applies, all the rates in all cases quoted on a per annum basis with details of when each rate applies’

I should have been provided with a statement within the terms of the agreement indicating the circumstances in which the APR would increase. i.e. if I go over the credit limit or my payments are late then I could expect the APR would increase to X%. This term should have been presented at the time the document referred to in section 61 (1) of the Consumer Credit Act 1974 was sent to me for signing.

The consumer credit act 2006 introduced the assessment of unfair conditions and/or business practices to determine if an unfair relationship exists between creditor and debtor. Part 8 of the Enterprise Act 2002 can then be enforced if an unfair relationship exists.

Some examples of improper business practices are:

using false or misleading statements in order to induce consumers to enter into a contract

• hiding important details about credit deals in the small print

• requiring consumers to sign credit agreements that are not easily legible and are difficult to understand

• failing to comply with the requirements of the Act or the regulations on advertising and agreements

• failing to perform contractual obligations to consumers, or to give any or adequate redress when in breach of duty to consumers

• marketing or targeting loans explicitly at consumers in debt

• using unacceptably high-pressure selling techniques or engaging in other aggressive commercial practices

• misrepresenting the form, nature, purpose or long-term implications of loan agreements.

Let me know what you think.

[belovedm8]

is the failure to disclose these penalties not fraud? See Fraud Act 2006!!

[BeleagueredSinner]

I think we need comment and wisdom from 'the clever ones' on this one! Certainly a number of potentially interesting angles

[Marlowe52]

Hi BelovedM8

 

You were kind enough to reply to my post on another thread - for which many thanks! I have taken your reading advice and that led me here to this thread.... which I have also been reading with interest. I had no idea the problem was so widespread...

 

It really is a bit of a scandal!!

 

Has anybody suggested approaching the OFT to take action? (I haven't been through the whole thread yet - so forgive me if this is old ground)

 

I know the OFT don't deal with individual cases but it might be possible to persuade the OFT to act under under Part 8 of the Enterprise Act 2002 which is there to deal with "infringements which harm the collective interests of consumers"

I also know the OFT guidelines on the application of Part 8 and Unfair Conditions point out that they don't normally consider clauses relating to rates under unfair conditions ... unless, that is, the rates might be considered to "in the particular circumstances, be oppressive or exploitive of the individual borrower"

Their guidelines add.... "even if they are in line with rates prevailing at the time in the particular sector". I don't think rates of around 30% APR would even need to call on this latter point!

 

Of course a lot of customers would need to band together to raise a collective complaint to the OFT for any chance of action - and that would be unlikely to happen.... Unless, of course, they were members of some kind of action forum or group....

[belovedm8]

hi marlowe 52.

 

APR's are normally core terms and not accessable under UTCCR's 1999. Term for variations in the APR is not a core term and to which OFT 786a paragraph 4.18 refers. So this could look into the matter with respect to UTCCR's!!

[Marlowe52]

Exactly, that was my understanding as well...

 

I don't know where to go from here - but it's certainly given me a lot to work on with regard to a number of cards I have...

 

Thanks again....

[belovedm8]

I have also been in touch with the FOS and I have explained the particulars of the case. They seem to think there is a legitimate arguement. After all section 19 of the Consumer Credit (Agreement) regs 1983 says they must state the circumstances and time which any variation occurs in the original agreement.

 

Obviously it does not state we will increase the APR to 34.9% from 18.9% if you have several late payments/over credit limit. They do state

 

We may decide to change any of the terms of this agreement, including rates, fees and charges or introduce new terms. If the change benefits you we will contact you within 14 days blah blah blah.

 

Does it state the circumstances? Does it state when? Does it state how much? Its pretty open ended and open to exploitation.

 

OFT have also stated if the APR is to change following a certain event, then if the creditor does not know the rate or the rate cannot be ascertained then they should use estimated information based on reasonable assumptions.

 

Put OFT 786a into google. It is an eexcellent document which was drafted as an idiots guide for creditors follow the consumer credit act 2006. Give it a read it is very good!!