secured loans - penalty charges

dgraham

I have a secured loan of 7500 regulated under CCA 1974. To cut a long story short I was seriously ill, preventing me from working then and now and lost my job within weeks of each other. I found out then that the protection cover did not include Critical Illness and so effectively after 1 year would be responsible for resuming full payments. Obviously living on benefits there were often period when I was in arrears. I have now found out that the company (CENTRAL TRUST) have been dumping a total of around 2k in penalty payments, suposedly under the admin charge umbrella. I find this is unreasonable especially when you consider that these extra charges are over 20% of the original loan. Can anyone tell me whether I can argue the case per the bank charges scenario, i.e. that they are only able to add reasonable admin charges and not apply interest penalties which allow them to profit? Also they also applied a 500 penalty for appointing a solicitor despite the fact that I had already written to them about making reduced payments. On complaining the company say that their limited records show that they only did so because I did not pay within a couple of weeks. They did not advise me that they would take action if they did not receive reduced payment before a certain date and seem to be unsure about what they actually told the solicitor. In fact they did not advise the solicitor of my circumstances and seem to have only appointed her verbally and there appears to be no written correspondence either to the solicitor or from the solicitor despite suggesting that they did so for good reasons. Any advise would be gratefully appreciated.

DEG

homer_j_3

In my personal opinion, I think you could argue the bank charges argument. Cotract law does not just limit itself to bank contracts on current accounts.

If you want to view their limited records and letters sent, ask for a data subject access. This will get you copies of all the information that they hold about you. You will then be able to see what letters have been sent etc. .

lynzpower

Yes you can and there have been people on the bank action group discussing this.

I am very interested in this issue and will give you any help that I can. Im NOT an expert in bank charges, but hell Im feeling pretty litagous at the moment, and am poring the law quite a lot

I know that penalties for wending mortgages early have started to be refunded. these secured loan charges are phenomennal ( and always seem to hit those least able to pay) and are the least "fair " out of the lot.

Feel free to PM me about this, ore find us over at https://www.consumeractiongroup.com/forum

dgraham

Have I got my understanding right? The company is allowed to charge a reasonable admin charges, but they are not permitted to make interest penalties where they are perceived to make a profit. The charge imposed must reflect the work done and not just a way of making extra pounds ?

dgraham

In respect of the charges they imposed for appointing a solicitor can you offer any advice on how I retrieve this. Their arguments seem very misguided. I wrote and asked to make revised payments which I understood were acceptable. From memory there was no warning from them that if they did not receive this, say within 14 days proceedures would continue. They seem to have little information relating to this point. I believe the verbal instruction cannot be verified and feel it very suspicious that there appears to have been no written letter confirming these instructions and whilst I will check this and also ask whether the solicitor confirmed the instructions I would be really grateful for your help. Surely a firm regulated by the FSA must keep adequate records, including notes of telephone conversation and any particular events that occur on the account?

Many thanks

homer_j_3

The argument is all to do with punitive charging. Under contract law in the uk, it is seen as lawful to claim liquidated damages for breach of contract. Liquidated damages are seen by a court of law as being a true and accurate reflection on the losses incurred due to the breach of contract.

If these charges can be proved to be more than the actual or true costs of losses incurred then these will be defined as punitive and therefore unlawful in a court of law.

Where mortgages are concerned and having worked for a few different lenders and financial institutions in my 10 years of financial services, I know that it does not cost 15-40 to return a direct debit or inform you that a payment has been missed.

When you talk about legal costs being added, you are being charged these as a true cost to the legal work carried out and therefore I think it would be difficult to claim these back, however, depending on the situation, you may be able to argue that these should never have been charged.

You may be able to do this by stating that the punitive charges incurred were a primary factor in the snowball effect of the arrears balance increase and that if the lender had been acting lawfuly, you would not be in the situation that you are.

However, I am positive that the lenders will not roll over easily and you may have to push to the extent of court action. If this action is for more than 5k then you could expose yourself the the legal costs of the lenders should they defend and win. I guess it is something you need to consider fully and see whether the action will achieve what you want.