Rule of 78 query re First Plus

acapper

beachball wrote: »

Firstplus replied, dimissing my claim. I have now sent an LBA.

Hi, whats an LBA?

acapper

My solicitor has today written a letter to the totally unreasonable First Plus - It follows with personal details attached, I will keep the forum up to date with their response,

If anyone wishes to conjoin and take this dreadful organisation on get back to me

regards

ACapper

Date: 27 January 2010



FirstPlus Financial Group PLC

DX 136307 PENTWYN CARDIFF








Dear Sirs

FirstPlus Loan Agreement Number:
Our client:
Other party:

We are instructed by Mr in proposed Divorce and Ancillary Relief Proceedings.

While in the course of assessing the assets of the parties, our client brought to our attention your letter to him dated 07 January 2010 with its accompanying Settlement Quotation. We have also been handed a copy of your letter sent to both Mr and Mrs of 19 January 2010.

We note that your figures within the Settlement Quotation rely upon the “Rule of 78” method. You will be aware that although you say that this formula was devised by the Office of Fair Trading, they very much now frown upon this method of calculation being used. Indeed, many financial institutions (such as, for example, HFC Bank) have now ceased to use this calculation because it is acknowledged that it is no longer a fair method of calculating a rebate for an early settlement of a loan.

In the circumstances, we would ask you to confirm that as a reputable lender that you will, at least as from the 01 June 2010 when agreements not previously covered by the Consumer Credit (Early Settlement) Regulations 2004 are brought into line with these Regulations, agree to re-calculate a settlement employing a more reasonable method of calculation.

A settlement based upon a more modern actuarial basis will still enable you to receive a payment over and above the present capital settlement figure, but at the same time but which will also be fair to our client/your borrower.

We look forward to receiving confirmation that you are willing to do so. If you are not however prepared to agree, we would ask you to explain why, given the current financial climate and attitude towards this outdated and discredited method of calculation.


We await hearing from you.

Yours faithfully

marshallka

acapper wrote: »

My solicitor has today written a letter to the totally unreasonable First Plus - It follows with personal details attached, I will keep the forum up to date with their response,

If anyone wishes to conjoin and take this dreadful organisation on get back to me

regards

ACapper

Date: 27 January 2010



FirstPlus Financial Group PLC

DX 136307 PENTWYN CARDIFF








Dear Sirs

FirstPlus Loan Agreement Number:
Our client:
Other party:

We are instructed by Mr in proposed Divorce and Ancillary Relief Proceedings.

While in the course of assessing the assets of the parties, our client brought to our attention your letter to him dated 07 January 2010 with its accompanying Settlement Quotation. We have also been handed a copy of your letter sent to both Mr and Mrs of 19 January 2010.

We note that your figures within the Settlement Quotation rely upon the “Rule of 78” method. You will be aware that although you say that this formula was devised by the Office of Fair Trading, they very much now frown upon this method of calculation being used. Indeed, many financial institutions (such as, for example, HFC Bank) have now ceased to use this calculation because it is acknowledged that it is no longer a fair method of calculating a rebate for an early settlement of a loan.

In the circumstances, we would ask you to confirm that as a reputable lender that you will, at least as from the 01 June 2010 when agreements not previously covered by the Consumer Credit (Early Settlement) Regulations 2004 are brought into line with these Regulations, agree to re-calculate a settlement employing a more reasonable method of calculation.

A settlement based upon a more modern actuarial basis will still enable you to receive a payment over and above the present capital settlement figure, but at the same time but which will also be fair to our client/your borrower.

We look forward to receiving confirmation that you are willing to do so. If you are not however prepared to agree, we would ask you to explain why, given the current financial climate and attitude towards this outdated and discredited method of calculation.


We await hearing from you.

Yours faithfully

Hi, when did you take the loan out with FP and how much for? If the agreement was an unregulated agreement then they would be wrong in calculating the settlement using rule 78 but I am not sure whether its actually illegal as it was only the OFT that asked lenders to stop using it on unregulated agreements and it was in regards to non status lending. Use of it in unregulated loans though is liable to challenge under UTCCR.

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

Section 57

More information on rule 78 here.

However, changes to the Consumer Credit Act mean that, on Tuesday 31st May 2005, the Rule of 78 will be abolished on all new loans. Providers will now only be able to charge a maximum of two months' interest - as opposed to sums that have sometimes been much higher.
The reform will apply immediately for new borrowers. Existing ones who have loans for terms of 10 years or less, and want to settle early, will not benefit until 2007. Those with loans for longer than 10 years will not be covered until 2010

new_to_the_game

Hi Marshallka,
Now this sounds interesting, I might have to check on the section 57 of Rule 78, don't know if this may be what blemain use as the don't want me to calculate what I believe they still owe me from a redeemed loan a few years ago. interesting!
Regards
chopper

simmo66

may i suggest that you all register on the f.p.c. site fistpluscomplaints.co.uk you will get all the help that you will need about recliming p.p.i and also they are doing a super complaint about interest rates, they helped me get my p.p.i. payments refunded and my loan reset as if i did not take out the p.p.i. in the first place, which wiped off £11000 off of my loan and i got £2500 cash refund :Tso please check it out there are some great people on there :j