First plus ripoff

halifax71

It really does begger belief that some posters on her tarnish all debtors with the same brush. I am not trying to avoid paying this debt, I am after fairness in the application of the interest rate. It makes me wonder whether some on here post just to wind people up.

I along with most secured loan customers were sold a solution to financial mistakes that we made. I was in debt – wow shoot me. I have a secure job as does my wife. We have a combined income of circa £50k. I can afford the repayments but this disgrace of a company are in major financial trouble. The only way they can survive is by milking it’s existing customers.

When base rates recover over the next 2-3 years Barclays will have no option but to follow suit.

They have now stretched the Clause to its limit – for now. Well my interpretation of it anyhow. My logic does follow but BFP will not accept that methodology.

Once FHBR exceeds its rate of 12 month previous then they can double any variance. Unless this clause is deemed unfair Barclays will continue to ensure that their business is sustained (in existence) by pushing me nearer and nearer bankruptcy.

Can anyone of the “holier than thou” crowd explain a reduction in Barclays funding costs of 80% (based on FHBR of 5% in Jan 06 when I took my loan out and 1% now) and an increase in my repayment terms of 20% (8.4% in Jan 06 and 10% now)?

It is not acceptable to say that they need to recoup income from lost PPI sales etc – even though it is true. That is unfair and that is what the complaints to the regulators under the Unfair Terms in Consumer Contract Regulations are about.

At the risk of repeating myself I refer you to the OFT Guidance on Secured Lending. http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft1105.pdf

3.6 There should be transparency about the circumstances in which rates or charges may change, in particular where they may be varied at the discretion of the lender or by reference to some particular factor, for instance as a result of an increase in the lender's input costs. If rates are stated to be variable but do not vary in line with Bank of England base rate, this should be made clear, and if a particular rate is tracked, this rate should be stated.

4.4 If rates or charges are variable, this should be made clear. The potential implications of such variations should be explained, including the impact on the periodic instalments and / or the amount payable. Rates should only be increased on a loan to recover genuine increases in costs which have an effect on that loan and should not be misused, for example, to take advantage of a borrower's lack of ability to end the agreement. Clear explanations should be given to borrowers prior to rates or charges changing.

Please also refer to the UTCCR 1999 – how can anyone say they are not in breach?

UTCCR 12.2 Any purely discretionary right to set or vary a price after the consumer has become bound to pay is obviously objectionable. That applies particularly to terms allowing the supplier to charge a price on delivery of goods that is not what was quoted to the consumer when the order was placed. It also applies to rights to increase payments under continuing contracts where consumers are 'captive' – that is, they have no penalty-free right to cancel.


When a contract is made, obligations are accepted in return for benefits. If one party can unilaterally change agreed terms, to its advantage, the balance of the transaction is lost. So a term is likely to be unfair if it gives the supplier the right at its discretion to force the consumer to accept changes to the bargain. A right to change any term in the contract, or to vary its core terms – the price or description of the product – is particularly open to objection.
Fairness, and the law, require that consumers get what they agreed to buy. Goods, in particular, must be of the agreed description and purpose, not just of 'equivalent quality'. A right to raise prices at discretion, where consumers are locked into the contract, is also highly suspect.

At loan inception I agreed to a 8.4% APR (Variable) which at the time was 3.4% above FHBR. As it stands now I am paying 10% (9% above FHBR).

I have had explanation for variations ranging from base rate, house prices, equity, commercial judgement. This is clearly not true. I am in a situation now where my APR will never go below 9.2% but it can rise exponentially.

Where the supplier's freedom to vary is more restricted, there may be no unfairness. Terms which allow only technical product modifications of no significance to the consumer are usually acceptable. Even a right to make more substantial variations may be unobjectionable if the changes permitted are precisely specified, so consumers do effectively know what they are agreeing to. Alternatively, a variation clause that confers no real discretion, for instance, a right to raise prices in line with a published price index, may be fair. This applies particularly to terms in a range of specialised financial transactions terms allowing price variations due to fluctuations in an independent index, or published market rates, or currency values.

Clause 7 does not precisely specify the variations. I did not know I was agreeing to this process of varying the APR – who would, it’s so one sided? I would have no objections if my APR varied alongside an independent index, i.e. FHBR, this is what I thought I was agreeing to.

“A standard term is unfair if it creates a significant imbalance in the parties' rights and obligations under the contract, to the detriment of the consumer, contrary to the requirement of good faith.”

ILW

halifax71 wrote: »

It really does begger belief that some posters on her tarnish all debtors with the same brush. I am not trying to avoid paying this debt, I am after fairness in the application of the interest rate. It makes me wonder whether some on here post just to wind people up.

.”

I along with many others have some savings. The rates have fallen to virtually nothing over the last couple of years. At the moment there are some better rates available of around 4%. The banks need savers money at the moment so need to charge borrowers to get it. As usual some you win, some you lose.

halifax71

ILW wrote: »

I along with many others have some savings. The rates have fallen to virtually nothing over the last couple of years. At the moment there are some better rates available of around 4%. The banks need savers money at the moment so need to charge borrowers to get it. As usual some you win, some you lose.

I’m struggling with your “I’m alright jack” concept. The 2 issues are not intrinsically linked. The loan was sold with a misleading link to FHBR that is now being manipulated to ensure the sustainability of a failing business. At the end of the day, as you’ll see from my summary, what they are doing is unfair, as per the regulations. We just need the OFT to actually pass judgement.

The balance between banks income and expense is a balancing act – I agree. But surely even you can’t support this action.

ILW

halifax71 wrote: »

I’m struggling with your “I’m alright jack” concept. The 2 issues are not intrinsically linked. The loan was sold with a misleading link to FHBR that is now being manipulated to ensure the sustainability of a failing business. At the end of the day, as you’ll see from my summary, what they are doing is unfair, as per the regulations. We just need the OFT to actually pass judgement.

The balance between banks income and expense is a balancing act – I agree. But surely even you can’t support this action.

It was not an "Im alright Jack" comment, just stating a fact of life. I fail to see what the misleading link to FHBR is. Did your agreement actually state any direct link? If it did you have a perfect right to compensation.
If not then I cannot see what grounds you have.

halifax71

You need to read the other threads on this matter
http://forums.moneysavingexpert.com/showthread.html?t=1924209

"We may from time to time vary our interest rate. We may increase or decrease our interest rate to reflect a change which has occurred, or which we reasonably expect to occur in interest rates generally, or to ensure that our business is carried on prudently, efficiently and competitively. The interest on your account will not in any twelve month period, vary by more than twice the variation in the Finance House Base Rate published by the Finance and Leasing Association during the same period. If for any reason, the Financing and Leasing Association ceases to publish the Finance House Base Rate we may refer the variation in our interest rates to any other Base Rate which in our reasonable opinion best matches that rate.”

ILW

halifax71 wrote: »

You need to read the other threads on this matter
http://forums.moneysavingexpert.com/showthread.html?t=1924209

"We may from time to time vary our interest rate. We may increase or decrease our interest rate to reflect a change which has occurred, or which we reasonably expect to occur in interest rates generally, or to ensure that our business is carried on prudently, efficiently and competitively. The interest on your account will not in any twelve month period, vary by more than twice the variation in the Finance House Base Rate published by the Finance and Leasing Association during the same period. If for any reason, the Financing and Leasing Association ceases to publish the Finance House Base Rate we may refer the variation in our interest rates to any other Base Rate which in our reasonable opinion best matches that rate.”

If this is lifted from the agreement you signed and they have breached it, why are you messing about with the ombudsman, just get a solicitor.

halifax71

They haven’t breached it – My argument is the “fairness” of the clause as per the UTCCR / OFT guidance on transparency.

FHBR was 6% in Sept 08 and is 1% now – Variance = 5%. My APR was 10% in Sept 08 and was 9.2% yesterday but now upped to 10%. Variance = 0%.

0% is not more than twice the 5% FHBR variation. See the post above at 7:33pm yesterday

However, and this is the problem – see case 3. As we are at the bottom of the base rate cycle and not reaped any benefit from it then APR’s will increase exponentially when base rate (and more importantly FHBR) increases.

ILW

Maybe I am not getting your point, but if you believe the terms of the agreement to be so unfair, why did you agree to them in the first place?

halifax71

Because i thought there was a link to FHBR.

BIG MISTAKE.

But i'm clearly not alone in making that mistake. To any reasonable person the above clause would be interpreted as there being a direct link to the FHBR. The more financially astute would have realised that the FHBR was not the only driver but would still have expected FHBR to be followed to some degree.

I bet if we polled a representative sample that the majority would agree.

We'll see if my argument holds up when the ombudsman and the OFT rule shortly. If it doesn't i do fear for the future.

edwards97

halifax71 wrote: »

Because i thought there was a link to FHBR.

BIG MISTAKE.

But i'm clearly not alone in making that mistake. To any reasonable person the above clause would be interpreted as there being a direct link to the FHBR. The more financially astute would have realised that the FHBR was not the only driver but would still have expected FHBR to be followed to some degree.

I bet if we polled a representative sample that the majority would agree.

We'll see if my argument holds up when the ombudsman and the OFT rule shortly. If it doesn't i do fear for the future.

Glad im not the only that does not understand confusing T&C. I thought it would be linked to some kind of base rate when I took the loan. All the advertising and not getting advice from someone that has a knowledge of jargon fooled me in to trusting what I was being sold, as you say......BIG MISTAKE! I feel like I have been tricked into taking out an unfair loan!