Fos ruled in eggs favour over charges help grealty appreciated on what to do next

janey17

Good Morning Everyone

After being successful with Lloyds TSB and Capital one on their charges ranging from £12 to £20 I complained to Egg on behalf of my husbands card.

The charges total just £1000 which is the balance outstanding. This all started in 2005 when my husband missed a payment and they placed two charges on the account which took the balance over the limit. This has led to accumulating effect as despite paying monthly a over limit charge has constantly been applied. We took this to the FOS in February after Egg would not budge on their £16 charges and did not expect to gain a decision so soon.

Received a letter yesterday from FOS quoting the OFT report in April 2006 who did not take any action against Egg. Egg have told the Fos that it costs a little more than £16, on average , to deal with each instance of a non payment or a customer exceeding a credit limit. The FOS go on to say that Egg produced:

correspondence between their solictors and the OFT from 2005 to 06
A report on default charges prepared by their accountants in Oct 05 and
a review of their default charges dated Sept 08

Fos state that the charges broadly reflect the cost to Egg of dealing with a default. Egg does not accept that a customer who exceeds a credit limit is in breach of contract and there is , therefore no requirement that its default charge should reflect its costs in such a case. Fos is satisfied that the default charges do reflect the costs to Egg.

The Fos goes on to quote dates from 1999, 2002 and 2004 about calculations from accountants and solictors. They stipulate that the law does not require a precise calculation in this sort of situation. they are not unfair or disproportionate and he can see no basis on which I can properly uphold your clients complaint.

The charges are from 2005 to 2010. I would be very grateful for any advice or suggestions on what to do next.

Many thanks in advance

Janey

Premier_2

Yes, Egg are one of the companies that have proved to the satisfaction of the OFT that £16 is not an unfair charge for them to be making. (Generally the FOS say anything in excess of £12 they will automatically consider to be unfair) Consequently the FOS are not forcing Egg to refund charges that are not in excess of the higher level.

If you want to challenge that, you'll need to do so yourself in court ... but it won't be easy if the OFT have already been satisified that £16 is a fair charge for Egg to make in such circumstances.

dunstonh

I would be very grateful for any advice or suggestions on what to do next.

The FOS are unlikely to overrule that decision as it is consistent with their current stance. So, your free options are basically over now. If you want to take it further then you are looking at legal action. Although that may well see you incur costs and would be unlikely to succeed if the charges are considered fair.

davidgmmafan

But other cards capitulate even though thier charges are twelve pounds...

The OFT said, I thought, that twelve pounds was the threshold at which THEY would take legal action, but Egg got some kind of exemption and thier charges were sixteen. This does not mean that that amount of twelve pounds is fair, or that sixteen is fair, just that that's the cut off at which the OFT would take action.

As for

'Egg have told the Fos that it costs a little more than £16, on average , to deal with each instance of a non payment or a customer exceeding a credit limit'

Sounds likes cross subsidy there, if they are talking averages then they're probably including the people who simply don't pay the debt ever...

I'd keep going on this, hopefully someone more experienced in these matters will be along soon. If one person misses one payment what action does Egg take??? They send the statement they would usually send with the charge on. Yep loads of work involved there.

dunstonh

I'd keep going on this

Where and how would you keep going? The FOS is over now as they have rejected the complaint. So, its court action as the next course of action but that comes with risks of costs.

Alpine_Star

janey17 wrote: »

Good Morning Everyone

After being successful with Lloyds TSB and Capital one on their charges ranging from £12 to £20 I complained to Egg on behalf of my husbands card.

The charges total just £1000 which is the balance outstanding. This all started in 2005 when my husband missed a payment and they placed two charges on the account which took the balance over the limit. This has led to accumulating effect as despite paying monthly a over limit charge has constantly been applied. We took this to the FOS in February after Egg would not budge on their £16 charges and did not expect to gain a decision so soon.

Received a letter yesterday from FOS quoting the OFT report in April 2006 who did not take any action against Egg. Egg have told the Fos that it costs a little more than £16, on average , to deal with each instance of a non payment or a customer exceeding a credit limit. The FOS go on to say that Egg produced:

correspondence between their solictors and the OFT from 2005 to 06
A report on default charges prepared by their accountants in Oct 05 and
a review of their default charges dated Sept 08

Fos state that the charges broadly reflect the cost to Egg of dealing with a default. Egg does not accept that a customer who exceeds a credit limit is in breach of contract and there is , therefore no requirement that its default charge should reflect its costs in such a case. Fos is satisfied that the default charges do reflect the costs to Egg.

The Fos goes on to quote dates from 1999, 2002 and 2004 about calculations from accountants and solictors. They stipulate that the law does not require a precise calculation in this sort of situation. they are not unfair or disproportionate and he can see no basis on which I can properly uphold your clients complaint.

The charges are from 2005 to 2010. I would be very grateful for any advice or suggestions on what to do next.

Many thanks in advance

Janey

The OFT have said of credit card default charges that ''Our basic position is that the charges must be cost reflective''. They are also on record as saying that ''only a court can decide if the charges are unfair''.

On Egg's £16 charge in particular this is their position as given in response to a Freedom of Information request in Aug 2007:


1 We have not given Egg an indication that a default charge of £16 is fair. We do however accept, as previously explained, that, where a business operates exceptional factors, the presumption that a charge above £12 is unfair may not apply and that a business may be able to justify as fair a charge in excess of £12.


2 We have never stated that £12 is a fair charge. £12 is a threshold for OFT intervention. However, as I indicate above, and as you are aware, we have made clear that where a business operates exceptional factors the presumption that a charge above £12 is unfair may not apply and a higher charge may be fair. Further to this, in light of commercial information supplied to us by Egg, and as a matter of administrative priority, we took no further action against Egg. In view of on going work in the bank charges area, this position has not changed.


3 The OFT would consider a requirement (as opposed to an option) to pay credit card bills by periodic direct debit to be an exceptional business factor in some circumstances.

The example of an exceptional factor the OFT uses in its April 2006 statement is that of a bank that (1) offers credit cards only to customers who satisfy a relatively high credit scoring requirement; and (2) has a policy of requiring those customers to pay minimum monthly repayments by direct debits. In ‘Calculating fair default charges in credit card contracts,’ published in April 2006, we provide information on exceptional factors and explain that as a result of these an issuer may find it has fewer incidents of default over which to spread recovery of its fixed costs. The denominator (the number of defaulting consumers) it uses to calculate default charges may therefore be lower. It would, however, still be necessary, in assessing the level of a fair charge, to review whether only recoverable costs were being taken into account in the numerator (the total amount of costs sought to be recovered in default charges).

Fedupwithegg

Have just had exactly the same letter myself.

Was wondering if egg had supplied a genuine signed copy of the original credit agreement?
Also eggs own terms and conditions state

7. CHARGES
7.1 If you break the terms of this Agreement we may
charge you the following, where relevant, to cover the
additional cost caused to us:
£16 each month you go over the Credit Limit,
even if we authorised the Transaction which
resulted in you exceeding the Credit Limit;

Hope this helps and would welcome any advice myself.

Cheers, will be back online late evening

Premier_2

Fedupwithegg wrote: »

...Was wondering if egg had supplied a genuine signed copy of the original credit agreement?
...

Why? They don't need to.

http://www.moneysavingexpert.com/news/loans/2009/12/high-court-ends-debt-avoidance-loophole

leclerc

Premier wrote: »

Why? They don't need to.

http://www.moneysavingexpert.com/news/loans/2009/12/high-court-ends-debt-avoidance-loophole

The point the quoted posted used is irrelevant and dependent on the case the above link is irrelevant. I can ask someone a bit more qualified on unenforceable agreements to post if you want to go down that route.

dunstonh

Premier wrote: »

Why? They don't need to.

http://www.moneysavingexpert.com/news/loans/2009/12/high-court-ends-debt-avoidance-loophole

It was that which has killed off many of the claims companies, including Cartel, who were banking on the court ruling being different.

This is why you dont see as many claims companies trying to get people to sign up for unenforceable credit claims. Only the dodgy ones are still doing it.

never-in-doubt

dunstonh wrote: »

It was that which has killed off many of the claims companies, including Cartel, who were banking on the court ruling being different.

This is why you dont see as many claims companies trying to get people to sign up for unenforceable credit claims. Only the dodgy ones are still doing it.

Ok, the "loophole" that you mention HAS NOT BEEN CLOSED - It cannot be closed, because it is not a bloody loophole in the first place! You're taking somthing that a MSE reporter quoted as saying, as being gospel... No offence to MSE Guy but I told him at the time and repeat it now, that article is misleading and incorrect!

A lender MUST send a true copy of the CCA encompassing the prescribed terms, signed by both with the debtors full address before they can take any formal (court) action.

Without this, the "loophole" is as wide open like a black hole!