Untested Legal Arguement (Hardship & Credit Reference Agency files)

hicskis

The following text was originally posted by me and natweststaffmember has added his comments in red - i have answered his questions in blue.

Originally Posted by hicskis
OK - there are first two pieces of Law to consider:

Under section 159 (1) of the Consumer Credit Act 2006 (as amended) -

"A consumer given information under section 158 who considers that an entry in his file is incorrect, and that if it is not corrected he is likely to be prejudiced, may give notice to the agency requiring it either to remove the entry from the file or amend it."
If the bank have reported to a credit agency that a charge has been made and that the person is one month late in a payment how do they argue that an individual charge is wrong? Lenders don't report charges - they report late and missed payments. I have found often in life when the mistake is a minor one it is easy to just talk to the Lender explaining your or their mistake and getting the charge refunded with the credit file repaired. This is naturally easier when it is the Lender's mistake
1. The first step is to apply for the statutory report from the Credit Reference Agency's of Experian, Equifax, and Call Credit - these are the three major agencies in the UK. You can send a letter with a cheque for 2 pounds to them asking for your file. It may be possible to do this online for free as they often have a promotion running.
How does this apply to bank charges claims? I am trying to set the basis for an argument on Unfair lending.
2. Check these files against your actual borrowings. What you're looking for is lenders that have not declared your borrowings or have grossly misstated them. Better still just compare the three reports against each other - you'll have clear proof.
This seems to be maladministration of the account and not unfair bank charges. No this is Negligence in UK Law as you have a fundamental right to an accurate credit file.
The second piece of Law is Under the Data Protection Act (section 10)

(1) Subject to subsection (2) an individual is entitled at any time by notice in writing to a data controller to require the data controller at the end of such period as is reasonable in the circumstances to cease, or not to begin, processing, or processing for a specified purpose or in a specified manner, and personal data in respect of which he is the data subject, on the ground that, for specified reasons -

(a) the processing of those data or their processing for that purpose or in that manner is causing or is likely to cause substantial damage or substantial distress to him or to another, and

(b) that damage or distress would be unwarranted
But is the information factually correct? If it's not it's wrong.
3. Several points to be noted - the Lender is the Data Controller (not the Credit Reference Agency - you have an absolute right therefore under the Law to an accurate file with the Credit Reference Agency's - if it is not accurate you may be prejudiced. Therefore it is not up to you to add a Notice of Correction - it's up to the Lender to correct it at the source.
What has that to do with a bank charges reclaim? I am trying to set the basis for an argument on Unfair lending.
This is where i want to see a change in the Law which obliges Lenders to report a persons true borrowings, that after a year of this finance crisis they are NOT doing. The reason is that they PROFIT by lending to you.

4. Lenders have colluded by use of an agency called "The British Bankers Association" to create a set of rules called "The Banking Code" that stipulates how bank accounts, credit cards etc should be run. In that Code there is a paragraph that states that lenders "may - report information about your debts to third parties including Credit Reference Agency's)
The Banking Code ended at the end of October 2009 so any argument based on that is prior to the SC decision. My mistake - the Lending Code replaced the Banking Code in November 2009. The Lending Code as was its predeccsor is a voluntary arrangement the banks (and other lenders) have entered into to self-regulate their industry. THIS IS NOT LAW. The industry monitors this code to make sure that it is being applied in practice. As was the same with the Banking code. The Lendind Stardards Board now has that responsibility - i will note that the LSB is in fact The British Bankers Association (the banks) who were responsible for the implementation of the previous Banking Code.

The new revised Lending Code in fact is just a rehashed version of the former and contains pretty much all of the same features uncluding when a lender MAY or may not report your debts to the Credit Reference Agencies.

This means by agreement they do not have too. That is collusion and anti-competitive.
So we are going back to the current arguments already outlined by Martin 2 months ago. I'm sorry but i have not been folllowing that closly.
5: The next step therefore is to check the individual terms and conditions of each agreement you have. You will find this clause in the section entitled "Credit Reference Agency's - what we may do with your data."

You will find it in every agreement as your contract will comply with the Banking Code.
Not from November 2009 since the Banking Code no longer applies. Now the Lending Code but in spirit the same with just a new name.
Martin Lewis has summarized in his latest email on Bank Charges (see 03 February 2010) that consumers might be able to try their luck under:

Regulation 5 of the Unfair Terms in Consumer Contracts Regulations (UTCCR)

Unfair Terms In Consumer Contracts Regulations 1999

5. – (1) A contractual term which has not been individually negotiated shall be regarded as 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.
But you have to name the term and why at that point in time that it caused an imbalance in the whole contract based on the bank charges incurred. I have - it's the generic term (means found in all contracts as it's in the Lending Code) - which states when a lender MAY or may not give information about your debts to the Credit Reference Agency's.
And under Section 140a of the Consumer Credit Act (CCA) which says:

“The court may make an order … in connection with a credit agreement if it determines that the relationship between the creditor and the debtor … is unfair to the debtor... “


I believe such a clause that permits a lender to not report a person's true borrowings to be grossly unfair - why?


Lenders check your credit files when making lending decisions to you - if lenders cannot see the true extent of your borrowings then they continue to lend to you.


If you keep to the terms of your agreements then you are good risk. If you only make minimum repayments then you are good business.



It's only when you are maxed out to the hilt and are struggling to repay (hardship) that they coin it in.
That is utter nonsense, what about when you have a temporary shortfall that is then corrected. I don't see this argument at all. What that you are good risk or good business? As already explained a temporary shortfall can be explained away to the bank - ie one must learn to manage ones affairs and not go overdrawn in the first place.

An honest mistake is a human trait.

Regular abuse is something else.

Do not forget that most credit cards start out at say 14% and probably hit near 100% by the time you wack on all the fees and charges.


It's what i said - it's all about profit.


Good Luck

This next paragraph was an addition by natweststaffmember (by the way if you no longer work for them have you thought about adding an (ex) in front of your username?

Credit card fees are reclaimable. Please can you tell me how this argument applies to bank charges. Lending. To help you, I have one simple argument: I transfer money to an account late and incur one charge for my car insurance(I then pay it when they represent their request to pay)/ This was the second time I was charged so no Gesture of goodwill for me. Maybe you can clarify - why were you charged the second time - surely if you by then had enough money in your account you were not in a position to be charged the second time?
Now, explain how I argue my case with the example above. The argument basics should be the same all round

I would quite simply have phoned the bank as soon as i knew that i had busted my overdraft limit and was charged and explained to them that i had made an honest mistake - a human trait, and ask as a geasture of good will and customer satisfaction that they reimburse the charge and repair any damage to my credit file.

If the bank then charged me a second time even though i had transferred enough funds into my account to cover the original repayment then i would phone the bank and explain that they had made a mistake. I would point out that they were Negligent in Law - DEMAND my money back, with compounded interest set at Base Rate, plus costs, plus damages.

The Financial Ombudsman Service (F0S) have a fact sheet that explains what you can reasonably expect to receive. You can charge physical costs such as a telephone call, a stamp, electricity - just like a business would - in fact i have often charged 10 pounds for an hour of my time (the FOS says you can), and 12 pounds for a standard letter - as that is what the credit card companies have admitted is a reasonable cost.

For example sake - say the bank makes a minor mistake and refuses to rectify it - phone them - the longer you're on the better - say it takes an hour = 10 pounds + the cost of the call.

Follow that up immediately with a letter = a further12 pounds.

Demand your original money back, plus costs, plus damages, plus compounded interest. Get yourself in a postioin that they owe you alot more than what they originally took - works wonders when forcing a settlement later.

noh

But you have to name the term and why at that point in time that it caused an imbalance in the whole contract based on the bank charges incurred. I have - it's the generic term (means found in all contracts as it's in the Lending Code) - which states when a lender MAY or may not give information about your debts to the Credit Reference Agency's.
And under Section 140a of the Consumer Credit Act (CCA) which says:

“The court may make an order … in connection with a credit agreement if it determines that the relationship between the creditor and the debtor … is unfair to the debtor... “


I believe such a clause that permits a lender to not report a person's true borrowings to be grossly unfair - why?


Lenders check your credit files when making lending decisions to you - if lenders cannot see the true extent of your borrowings then they continue to lend to you.

You believe not reporting to the CRAs makes the contract unfair.
I just can't see that it is unfair.

What about the credit accounts that are not reported to the CRAs because they were taken out before a certain date (1999 I think) because the T+Cs before that time did not allow data to be passed to third parties?.

There is a requirement that the data recorded is accurate but there is no requirement that all data be recorded.

How does lender B seeing a credit report that does not state your debt to lender A make your contract with lender A unfair?
Even if you could prove that it did it would just be that clause that would be unfair it would have no bearing on the charges made for services.

natweststaffmember

The charges are for consideration of whether to pay or not so I'm sorry I do not buy your argument. Your title is "Untested Legal argument(Hardship and Credit Reference agencies)"

If someone is in financial hardship they do not have a court case.

Ok, let's kinda get to the nitty gritty, if I accept your argument, give me some wording of the letter you would send to the bank?
Furthermore, have you got an example of a Particulars of Claim if you were taking a case based on the above to court?


My example should have been more clear, the first charge occurred 2 years previously so this one is a new one. How do I argue that case?

The £12 charge with regards to credit card charges point you have made is utter nonsense. You can charge reasonable costs to send a letter to a bank but you cannot charge them the same as they have charged you since the contract with the provider does not allow that. "reasonable cost" could be LIP rate plus postage.

hicskis

Reply To: natweststaffmember -

The charges are for consideration of whether to pay or not if you've got the money to pay what are they considering? If you don't then you get a charge when they pay on your behalf or refuse the payment so I'm sorry I do not buy your argument. Your title is "Untested Legal argument(Hardship and Credit Reference agencies)" i know it's about whether you should have been lent to in the first instance

If someone is in financial hardship they do not have a court case. why?

Ok, let's kinda get to the nitty gritty, if I accept your argument, give me some wording of the letter you would send to the bank?
Furthermore, have you got an example of a Particulars of Claim if you were taking a case based on the above to court? in due course


My example should have been more clear, the first charge occurred 2 years previously so this one is a new one. How do I argue that case? i would need to have more particulars - but to me it's a new charge so therefore a new case

The £12 charge with regards to credit card charges point you have made is utter nonsense. i know but it works wonders - take this one step further - to court - if you are standing there asking for 12 pounds a letter the banks will have to prove that a letter does not cost 12 pounds. The onus is on you to prove that it did cost 12 pounds - the banks say it does - what more proof do you need.You can charge reasonable costs to send a letter to a bank but you cannot charge them the same as they have charged you since the contract with the provider does not allow that. "reasonable cost" could be LIP rate plus postage.

hicskis

Alpine Star - The OFT though they had a clear legal basis when they took the banks to court with what was probably a clear legal argument. They lost - i suppose they weren't too clever either.

hicskis

noh has made an intelligent observation:


"How does lender B seeing a credit report that does not state your debt to lender A make your contract with lender A unfair?"

If you owe money (charges and interset) to Lender B you might well not have to pay if you can prove that Lender A had not reported your true borrowing to the CRA's.

Quite simply you may have borrowed more than you can afford. When lender A failed to report those borrowings they created an unfair relationship. The Lending Code says that they must.

Your claim is against Lender A. You will still have to repay what you borrowed.

Lenders have had over 10 years to change your terms with contracts from pre 1999. the banking code and lending cdse says that they must. They can so why didn't they. Data passed to the CRA's must be accurate and relevant for the purpose - not every snippet will be passed on - just the basics - whom have you borowed from, when, how much, are you paying on time, did you default because you couldn't get your house in order......

natweststaffmember

hicskis wrote: »

Reply To: natweststaffmember -

The charges are for consideration of whether to pay or not if you've got the money to pay what are they considering? If you don't then you get a charge when they pay on your behalf or refuse the payment so I'm sorry I do not buy your argument. Your title is "Untested Legal argument(Hardship and Credit Reference agencies)" i know it's about whether you should have been lent to in the first instance
But they also charge for paying the item ie referral fees. There is case law to state that a request either formally or informally is indeed a request by you the customer for the overdraft or extended borrowing.

If someone is in financial hardship they do not have a court case. why?
Financial hardship can be claimed without the need for county court action, further, the only issue for someone in financial hardship is whether they will get fee remission for applying to the courts to sue their bank.
Ok, let's kinda get to the nitty gritty, if I accept your argument, give me some wording of the letter you would send to the bank?
Furthermore, have you got an example of a Particulars of Claim if you were taking a case based on the above to court? in due course
Case law then? If you want to do this in due course then until you do, you are not making too much sense except for default removal and not bank charges reclaiming.

My example should have been more clear, the first charge occurred 2 years previously so this one is a new one. How do I argue that case? i would need to have more particulars - but to me it's a new charge so therefore a new case
If you don't have an argument to say without the most simplest of examples, ie I have one item returned 2 years ago and they refund as a GOGW and then I make a mistake and they charge me again so no GOGW as one already had been made.
The £12 charge with regards to credit card charges point you have made is utter nonsense. i know but it works wonders - take this one step further - to court - if you are standing there asking for 12 pounds a letter the banks will have to prove that a letter does not cost 12 pounds.
You don't get the basics do you? The £12 is nothing to do with whether you get a letter or don't get a letter. It is for not paying the bill at the due date or exceeding the limit on the credit card account.

The onus is on you to prove that it did cost 12 pounds - the banks say it does - what more proof do you need.
I'm sorry but that is rubbish with regards to that point.
You can charge reasonable costs to send a letter to a bank but you cannot charge them the same as they have charged you since the contract with the provider does not allow that. "reasonable cost" could be LIP rate plus postage.

I need to see a letter to the bank as to what you propose claimants send. I do not believe that it is an argument that you can argue and so I would suggest that you get charged more than once and test the theory rather than imply to others that they should try something which is not entirely clear to argue.

noh

Quite simply you may have borrowed more than you can afford. When lender A failed to report those borrowings they created an unfair relationship. The Lending Code says that they must.

As far as I can see the lending code says they "may" not that they must.
Section 3 here http://www.lendingstandardsboard.org.uk/docs/lendingcode.pdf

There is no compulsion for lenders to report to the CRAs as you have pointed out before.
If they do report they have a duty to ensure that the data is accurate.

It's also worth noting that the Lending Code and CCA do not cover loans secured on property ie mortgages.
What would the arguement be if your mortgage was not reported but the particular account that the charges related to was?

My mortgage and main current account are not reported to the CRAs.
I consider this gives me an advantage not the other way round.

hicskis

What i would like to see is a change in the Law. I believe it is grossly unfair that lenders have the choice of whether they report a person's borrowings to the Credit Reference Agencies or not, when by the same token (The Lending Code) lenders are supposed to be checking those very same reports to see whether a person is good credit (risk). There is a contradiction here.

I believe i have a right to an accurate credit file that i can build on in my life be it for loans, overdrafts, credit cards, or mortgages. I should be able to build a solid history that allows lenders to see that i can manage my affairs, and am therefore a good risk.

That in itself should allow me to acquire more competitive rates over people with poor credit - an advantage.

However what i see - and i have the credit files in front of me - is a complete and utter abuse of the system by lenders.

They report some accounts, not others - they report only to one agency and not all three, and in some cases when i have apllied for credit they have carrried out their search of one agency, and then reported the account with another.

This is appalling abuse. Why? As i've said it's all about profit. They want you to miss payments so they can charge you. That's good business.

I have had first hand experience of claiming back charges - and won with profit - but it's been a hard slog - on one occasion I won but with a cost - that i had a default registered against me for 6-years.

The art is understanding the Law and being able to construct and argue a point of Law. I am not a lawyer nor do i have that kind of resource at my disposal.

Unfortunately some times as the OFT has found out it can be very difficult. We all know that these charges are Unfair, that we have no choice when we sign up for a product - but we still get our selves into a mess and end up owing the banks money.

I live in Germany - if i go beyond my overdraft limit i get charged a couple of basis points over the base rate in interest - no one is subsidising my account.

It is Unfair and that's why i've been trying to get a change in the Law where lenders must be made to report person's true borrowings and be more careful when carrying out due diligence.

It is unfortunate in the UK that the structure punishes those most at risk ie those in hardship, be it for loss of job, illness, lack of knowledge or education, or just too deep in debt.

Unfortunately the lenders exploit this. They check your credit files to see not if you repay in full every month but whether you make the minimum repayment or not. If you pay in full - your bad business.

If you pay the minimum or worse miss payments - you are good for profit - charges and interest.

That's not right and it's not fair and must stop.

That's why i'm suggesting a claim on the basis of Credit Reference Files and Hardship, because i believe the clause as found in the Lending Code that says a bank may pass on details of your borrowings, that is found in every Consumer credit Agreement, banking account loan and overdraft contract - is an Unfair term.

I am hoping, ever so slightly, that peolpe with better legal expertise and resources see something in my ideas, in whole or in part, and can put them to more constructive use.

That is why i am going to end this thread.

natweststaffmember

Just because one term is unfair does not necessarily invalidate the contract as a whole. The bank charges debates are about charges specifically and the terms that allow for them. I cannot see any point in discussing the matter further on this thread since there is no case law provided for a success on this and I would not want to advise someone based on a reason that at best is a statement rather than anything else.