BBC take on Barclays FirstPlus

halifax71

See link- or if that gets deleted go onto the BBC MoneyBox website

http://news.bbc.co.uk/1/hi/programmes/moneybox/8146083.stm

jonesMUFCforever

Your point is??

Barclays must be quaking in their boots.

halifax71

You really are a troll. You obviously post in an effort to wind people up. I've had the pleasure of your comments before and they were as pointless as ever.

Do you not realise that people have debts- that's why we post. It must be great to be you, everything must be so rosy. Well wake up man, we ain't all perfect.

I've told you before that all i want to do is repay my loan at the agreed rate not at the inflated rate as dictated by the bank. I think that's reasonable and it now transpires that others think the same. All i and others need is the OFT / FOS to take action.

At loan inception First Plus were expected to make a 68% profit on my loan repayments, using FHBR as the Baseline. They are now making over 500% profit. That is why it's unfair under the UTCCR.

Please don't reply to any more of my posts.

Sol00

jonesMUFCforever wrote: »

Your point is??

Barclays must be quaking in their boots.

What a waste of space you are

Reddh_Legend

Thankfully we now possess more relevant information regarding our situation. I was invited on to the BBC Moneybox programme to raise the issue and their compliance expert has been looking at the FP ts and cs re interest rates. The conclusion is that the nature of the bargain is so one sided in terms of FP and they have proven it by their actions, that in fact the term should be deemed unfair under UCCT regs. As it stands the term could deem the loan unenforceable. These are the words of legal experts not me.

Do we have the evidence..of course, just look at their accounts. Historically they have maintained a £40 - £50m difference between their interest income ( that they get from us) and interest expense ( that they pay to Barclays on their own loan which is linked to bank of england base). Their funding costs have dipped but they have decided not to pass these reductions on which means that to Dec 08 ( and remember rates did not dip to 0.5% until Feb so the gap now is even larger) they had increased this gap to some £94m. THIS IS THE REASON WE HAVE HAD NO DECREASES NOT THE EXCUSES THEY PUT OUT RE HOUSE PRICES ETC.

They are no longer in receipt of huge commission incomes from the sale of PPI products (this dropped from £94m in 2007 to some £20m in 2008) and clearly they have tried to recoup these costs from somewhere. As may be pointed out their terms are not illegal but Unfair Contract Clauses are about fairness and not legality.

To quote from my dialogue with the FSA

With regards to the Unfair Contract Terms guidance you pointed me
to, the first point that jumps out, underlines all of the above completely,

"A standard term is unfair 'if, contrary to the requirement of good faith,
it causes a significant imbalance in the parties' rights and obligations
arising under the contract, to the detriment of the consumer'- Regulation
5(1). Unfair terms are not enforceable against the consumer. The requirement
of 'good' faith embodies a general 'principle of fair and open dealing'.1 It
means that terms should be expressed fully, clearly and legibly and that
terms that might disadvantage the consumer should be given appropriate
prominence - see below. However transparency is not enough on its own, as
good faith relates to the substance of terms as well as the way they are
expressed and used. It requires a supplier not to take advantage of
consumers' weaker bargaining position, or lack of experience, in deciding
what their rights and obligations shall be. Contracts should be drawn up in
a way that respects consumers' legitimate interests. In assessing fairness,
we take note of how a term could be used. A term is open to challenge if it
is drafted so widely that it could cause consumer detriment."

It also states,

"10.4 A term which merely says that variations will only be 'reasonable' or
will only be made 'reasonably', is unlikely to be any fairer than one which
contains no such qualification, unless there can be little doubt in a
reasonable consumer's mind as to what sort of variation, broadly speaking,
such wording allows, and in what circumstances. Where the criteria of
reasonableness are vague, or clearly meant to include the best commercial
interests of the business, there will be scope for the supplier to change
the bargain unfairly to the detriment of consumers, simply on the basis that
he needs to protect his profit margins."



The latter point is one that FP can now no longer refute. Their lack of desire to debate this on air speaks volumes.

The FSA are now passing my case to the OFT where I am lead to believe I am not alone in complaining about this interest rate term (which seems strangely similar across the secured loan arena).

The firstpluscomplaints website is growing in numbers, we are pressing regulators, we are pressing FP and with the media interest in our cause growing, feel as though we can now start to apply serious pressure to the lender in question.

No matter what anyone's opinion is on loan be they secured or unsecured, it does not fundamentally matter. This clause allows a one sided bargain and has been evidenced in formal actions which has lead to the position we now find ourselves in. I have looked for evidence to support the stance of FP and take a balanced view but their accounts show they are now classified as a GOING CONCERN by the auditors, Barclays have had to give written confirmation of support for another 12 months. Barclays have put £9m in to keep liquidity levels solvent and the accounts for the first time make reference to the commissions it has received formally as a business, commissions regarded as "secret" and litigation is under way. This is a business in trouble whose only recourse to additional income is through those customers tied into them by contract and thus teh breach of UCCT regs is clear and will be proven.

halifax71

I think we need to spread this wider in that it certainly won't be just Barclays that are doing this to their Secured Loan book.

I've no idea how this is going to progress as in effect the OFT could bankrupt First Plus if it deems all of it's loan book unenforceable. Appreciate that this is very unlikely to happen but there must be some redress. I for one am paying £170 p/m more than i believe i should be (based on loan inception APR / FHBR).

An estimated 50,000 Barclays First Plus customers all paying an additional £2,000 a year would make Barclays an astronomical £100,000,000 a year.

MS_Dolphin

halifax71 wrote: »

I think we need to spread this wider in that it certainly won't be just Barclays that are doing this to their Secured Loan book.

I've no idea how this is going to progress as in effect the OFT could bankrupt First Plus if it deems all of it's loan book unenforceable. Appreciate that this is very unlikely to happen but there must be some redress. I for one am paying £170 p/m more than i believe i should be (based on loan inception APR / FHBR).

An estimated 50,000 Barclays First Plus customers all paying an additional £2,000 a year would make Barclays an astronomical £100,000,000 a year.

I have a secured loan with Firstplus and have long thought that the terms were unfair. Given that they've always put the repayment rates up with movements of the base rates I'd hoped it would return with the falls of recent times. I guess this is the crux of your complaint.

How did you come up with the figure of £170 p.m?
Is there anything I can do to at least complain and help to make the voice louder?

Also, is there somewhere I can get more information on this case? I feel like I've stumbled across something that has been going on a while and I'd like to get some more information.

Many thanks,

petermb_2

Lawyers are looking at the issue to see if this can be added in to the standard claim procedure. I know that FP have come under the spotlight because they have failed to reduce their interest rate but their contract terms are very much a standard across the Second charge mortgage market place. This could run and run.

MS_Dolphin

Thanks Peter, I guess the answer is already in your reply, but as this is a secured loan, its not covered by the CC Act, but other than being unethical, where exactly is there cause for legal challenge?

Thanks,

halifax71

MS_Dolphin wrote: »

I have a secured loan with Firstplus and have long thought that the terms were unfair. Given that they've always put the repayment rates up with movements of the base rates I'd hoped it would return with the falls of recent times. I guess this is the crux of your complaint.

How did you come up with the figure of £170 p.m?
Is there anything I can do to at least complain and help to make the voice louder?

Also, is there somewhere I can get more information on this case? I feel like I've stumbled across something that has been going on a while and I'd like to get some more information.

Many thanks,

You could start by joining us at http://www.firstpluscomplaints.co.uk/. Sign up to the forum and there's loads of info on PPI, Commissions & Interest Rates.

The £170 p/m is derived from the fact that for every £1000 i owe they were expecting to make 3.4% profit, or £34 per £1000. This was the difference between my APR of 8.4% and the Finance House Base Rate of 5%. This is their preferred measure as quoted in their Terms. In actuality they borrow from the Barclays parent company at less then 1.5% (more likely BoE rate, i.e. 0.5%.

Anyhow the "gap" is now 7.7% based on my 9.2% APR and 1.5% FHBR. This gives them £77 profit per annum on every £1000 i borrowed.

This is in effect is giving them an extra £43 (£77 - £34) profit per £1000. I owe £46k so that's an extra £1,978 per annum or £165 per month.

Edit - the legal angle isn't an issue it's the fairness under the Unfair Terms in Consumer Contract Regulations that is the issue. When the Bankof England raise rates in the future, your APR will have to rise. If we do nothing expect a 5% increase in your APR within 3 years.

Hope that helps.

ceebeeby

FP did reduce our payments by 0.5% about 3 months ago?? Been customers for circa 3 years - a hellish 5 left to go!