First Plus interest rates!

opinions4u

halifax71 wrote: »

To be honest you won't get any sensible replies onthis forum - far too many of the holier than thou crowd....

While your reply may throw a different light on the views expressed above, I do think you should look in the mirror before calling others "holier than thou".

Anyway, thank you for your concise response and good luck with the case.

Given that many lenders are charging 4.99% SVR for their standard first charge customers, many building societies more than this, much new lending on a product for first charges is well above too .... I think you're going to struggle to argue that a second charge company specialising in 125% ltv is acting outrageously when much of its book is effectively unsecured as a result of negative equity.

halifax71

Sorry if you felt offended but I have come across many posters who have treated secured loan customers with contempt. This was one of the reasons we took our discussions away from MSE.Back in the latter part of 2008 / early 2009 there were several discussions along these lines. Examples below

https://forums.moneysavingexpert.com/discussion/1270125

https://forums.moneysavingexpert.com/discussion/1810757

https://forums.moneysavingexpert.com/discussion/1325785

Thing is, now Firstplus have increased the variance to base rates they have to maintain that gap. That will mean if FHBR recovers to the rate it was when I took out the loan, i.e. 5% then I cold be looking at an APR of 18% as opposed to 8.4%.

Anyhow, as I said apologies, but my experience of this forum is that it is less than ideal where this issue is concerned.

cocker100

halifax71 wrote: »

To be honest you won't get any sensible replies onthis forum - far too many of the holier than thou crowd. There is a dedicated forum with over 1500 registered FirstPlus customers. Please see www.firstpluscomplaints.co.uk

We are tackling the Interest Rate issue as the the clause in question breaches the Unfair Terms in Consumer Contract Regulations. There are many complaints with the Financial Ombudsman but to be honest they are useless here as the Office of Fair Trading have responsibility for the UTCCR however they don't deal with individual complaints - they are however considering an "unofficial super complaint" submitted by our site members.

The facts are that since base rates began to fall Firstplus has made an additional £300m net income. Their business is borrowing money at one rate and selling at another. £200m of the above is evidenced in their accounts upto 31st Dec 09. The other £100m + wil be evidence in Dec this year. The simple fact is that they couldn't have made this £300m if base rates hadn't fallen.

This is a massive issue that will have a major impact on the banking industry once the regulators / courts get their act together. The people who say there is no case here are wrong. My case has been with the FOS & the OFT for 19 months now. This may end up in court but I really cannot see how this contract clause is fair and as such within regulatory guidance.

Some bedtime reading for those that want to know my issues. I have others regarding advertising, legal (estoppel), tracker precedent etc. Bit OTT if i post all.

UTCCR 1999

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% (9.0% 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.

The UTCCR state: -
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.

The UTCCR state: -
“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.”

As it stands I have no rights, I have to pay what Barclays FirstPlus say. If I don’t I default and lose my home. My obligations have changed dramatically and can potentially increase exponentially should Barclays FirstPlus continue to maximise their allowable return under Clause 7.

Under the UTCCR Unfair terms are not enforceable against the consumer. To quote again from the UTCCR, “The requirement of 'good' faith embodies a general 'principle of fair and open dealing'. It means that terms should be expressed fully, clearly and legibly and that terms that might disadvantage the consumer should be given appropriate prominence.”

My contention here is: -
· Where exactly have Barclays FirstPlus “expressed fully, clearly and legibly”?
· Where have they given prominence?

Returning to the UTTCR – It states, “However transparency is not enough on its own, as good faith relates to the substance of terms as well as the way they are expressed and used. It requires a supplier not to take advantage of consumers' weaker bargaining position, or lack of experience, in deciding what their rights and obligations shall be. Contracts should be drawn up in a way that respects consumers' legitimate interests. In assessing fairness, we take note of how a term could be used. A term is open to challenge if it is drafted so widely that it could cause consumer detriment."

It is my contention that Barclays FirstPlus have intentionally taken advantage of my “weakened bargaining position, and lack of experience”. This is a cleverly worded clause that I do not believe any customer could understand. I would even question whether legal representation would have helped.

The UTCCR states,
"A term which merely says that variations will only be 'reasonable' or will only be made 'reasonably', is unlikely to be any fairer than one which contains no such qualification, unless there can be little doubt in a reasonable consumer's mind as to what sort of variation, broadly speaking, such wording allows, and in what circumstances. Where the criteria of reasonableness are vague, or clearly meant to include the best commercial interests of the business, there will be scope for the supplier to change the bargain unfairly to the detriment of consumers, simply on the basis that he needs to protect his profit margins."

This is the crux of the matter. The evidence of the accounts shows that the business would essentially now be insolvent without manipulating the interest rate clause “to sustain its business”. Its underlying costs have massively reduced and there is no argument possible that they can present to change what is clearly shown within their accounts.

UTCCR 10.3c - Such a term is more likely to be found fair if there is a duty on the supplier to give notice of any variation, and a right for the consumer to cancel before being affected by it, without penalty or otherwise being worse off for having entered the contract.

I am not free to exit my contract as there are early redemption fees. Also, the price of the product on offer now has increased – that isn’t my fault. I am therefore tied into my contract.


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.

Again, I am not free to exit my contract as there are early redemption fees. Also, the price of the product on offer now has increased – that isn’t my fault. I am therefore tied into my contract. See UTCCR 12.4 below.

UTCCR 12.4 “Any kind of variation clause may in principle be fair if consumers are free to escape its effects by ending the contract. To be genuinely free to cancel, they must not be left worse off for having entered the contract, whether by experiencing financial loss (for example, forfeiture of a prepayment) or serious inconvenience, or any other adverse consequences.

UTCCR 18.1.2 An explicit right to demand payment of unspecified amounts at the supplier's discretion – for example, by way of security deposit – is particularly open to challenge. But the same objections may apply if terms are merely unclear about what will be payable. Their purpose may not, in fact, be to allow the supplier to make unexpected or excessive demands for money, but the focus of the Regulations is on the effect that terms can have, not just on the intentions behind them.

My terms were clearly unclear – any reasonable adjudication will see that.

UTCCT 19.1 Regulation 7 states: (1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language. (2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail …

Transparency is also fundamental to fairness. Regulation 7 says that standard terms must use plain and intelligible language. Taking account of the Directive the Regulations implement, this needs to be seen as part of a wider requirement of putting the consumer into a position where he can make an informed choice. Thus even though a term would be clear to a lawyer, we will probably conclude that it has the
potential for unfairness if it is likely to be unintelligible to consumers and thereby cause detriment, or if it is misleading (in which case its use may also be actionable as an unfair commercial practice).

I believe that all of the above clearly prove that the Terms & Conditions of my loan are in clear breach of the UTCCR 1999. They are therefore unenforceable in there current form and require regulator intervention.


Code of Practice.

www.oft.gov.uk/shared_oft/business_leaflets/general/oft1105.pdf



The activities of First Plus contravene a number of the guidelines provided.

It is stated that the overriding principles of all businesses operating shall be the need for appropriate consumer protection and fair business practice. I have asked for transparency on how First Plus calculates and decides on movement in interest rates, when previously the links to base rates were clear and in more recent times, have been “changed”.

First Plus could not be any less transparent if they tried, simply trying to justify that their “commercial judgement” applies but will not disclose any further than that because of “commercial sensitivity”.

Fair and Clear contract terms are also required in plain and intelligible English. They simply state the term “variable” at point of sale and leave you to believe the “variable” they use is the one that applies in the mortgage sector. Failing to explain how they define variable means that they fail to comply to this point also.

It is stated that Advertising must be compliant and the attached literature may well tick the statutory boxes. However, the loan and business it advertises differs vastly from the loan in practice. The “low cost” solution, the “people not property” claim, the lack of explanation regarding working of interest rates in practice are 3 but areas where the advertising falls foul of my experience of the loan in practice.

For me, the misleading nature of the true reality of the costs of borrowing and the agenda of the lender over the term of the agreement need to be covered in far more detail than simply quoting the APR and “total amount payable” based on the day one repayment.

Section 3.6 states: -
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.

This is simply not explained at all by the lender. They clearly did link their loans to base rate in an increasing market but now they found troubled times coupled with a falling market, simply resorted to lists of “excuses” as to why they would not reduce rates – property values falling, competitor pricing etc.

Section 4.4 states: -
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.

Firstplus' underlying costs have decreased massively in the last 2 years. Since loan inception they have reduced by 80% (5% to 1%) based on FHBR (First Plus borrow at less than that but FHBR is the measure used in the T&C's so is used here.) My rate has increased by 20% (8.4% to 10%)

The business is clearly acting in breach of these guidelines and needs action as alluded to in your section covering Regulatory Compliance and Enforcement.

Many thanks for this excellent post and information!!!:beer:

Cocker:)

halifax71

Bit more info. The clause in question reads: -

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.”

This basically means they can double any FHBR increase and not pass on decreases. Use of the term to date on my loan is as follows:

1. Jannuary 2006 – loan inception. APR 8.4%.

2. January 2007 – Increase of 0.5% to 8.9%. Explanation given “The BoE has raised interest rates twice in recent months – once in August by 0.25% and once in November by 0.25%”.

3. March 2007 – Increase of 0.3% to 9.2%. Explanation given “The BoE raised interest rates twice in 2006 – once in August by 0.25% and once in November by 0.25%. This resulted in FHBR rate rising by 0.5%. The additional BoE rate increase in January 2007 has resulted in us having to pass on further costs to customers by raising the variable interest rate on your loan.”

4. April 2007 – Increase of 0.5% to 9.7%. Explanation given “Any changes to the BoE interest rate or FHBR could affect the rate we charge to our customers. The latest change was the Finance House Base Rate increase in March 2007”.

5. July 2007 – Increase of 0.3% to 10%. Explanation given “The way in which our rates are calculated is based on the Finance House Base Rate (FHBR). However, any changes to the Bank of England interest rate or Finance House Base Rate could affect the rate we charge our customers. Both the bank of England interest rates and the Finance House Base Rate have increased in the last 12 months. The Bank of England raised interest rates twice in 2006, once in August by 0.25% and once in November by 0.25%. This resulted in FHBR rising by 0.5%. This was followed by a further Bank of England rate increase in January 2007 which led to an increase of 0.5% in FHBR in March 2007. The latest increase by the Bank of England in July 2007 was 0.25%. We are therefore raising the interest rate on your loan.”

6. January 2008 – Increase of 0.3% to 10.3%. Explanation given “Any change to the Bank of England interest rates or Finance House Base Rate (FHBR) could affect the rate we charge our customers. Since our last interest rate increase in July 2007 there have been further changes to the Finance House Base Rate. We will now be changing your rate.”

Notice a trend with the above? J

7. March 2008 – Decrease of 1.1% to 9.2%. Explanation given “We regularly review our existing customer rates in line with market conditions. As a result of the latest review I am pleased to inform you that the interest rate on your loan will decrease.” I would have preferred tham to be honest and confirm that it was a contractual obligation by reverting me back to my rate of 12 months previous.

8. May 2008 – Increase of 0.5% to 9.7%. Explanation given “We have recently reviewed this rate and will be increasing it to reflect the increased underlying costs associated with borrowing and prevailing market conditions.” However I would have preferred them to be honest and confirm that they were simply maximising their allowable return by reverting me back to my rate of 12 months previous.

9. August 2008 – Increase of 0.3% to 10%. Explanation given “Our product, like a mortgage, is a variable rate product; therefore rates can fluctuate up and down. We ensure that rate changes are fair and manageable; therefore your interest rate is no higher than it was 12 months ago and our product is still one of the most competitive on the market.” However I would have preferred them to be honest and confirm that they were simply maximising their allowable return by reverting me back to my rate of 12 months previous.

10. February 2009 – Decrease of 0.8% to 9.2%. Explanation given “We have reviewed the interest rate on your account in line with our contractual obligations to you.” I like the honesty in this one.

11. September 2009 – Increase by 0.8% to 10%. Explanation given “We have recently reviewed our rates and as a business have made a decision to increase interest rates to ensure that our business is sustainably and prudently managed”. Again I would have preferred them to be honest and confirm that they were simply maximising their allowable return by reverting me back to my rate of 12 months previous.

12. March 2010 – Decrease by 0.8% to 9.2%. "In line with your terms and conditions the interest rate charge on your loan is variable subject to a cap by reference to the Finance House Base Rate. We have reviewed your account and we are reducing the rate of interest charge to at least match the rate you were charged in March 2009". In other words it was a forced reduction, exactly matching their behaviour over the life of the loan thereby maximising their allowable return.

AMILLIONDOLLARS

Reading all this, I am so grateful they turned me down, many moons ago!!

Good luck with your case, I very much hope that you win in the end.

AMD

cocker100

halifax71 wrote: »

Bit more info. The clause in question reads: -

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.”

This basically means they can double any FHBR increase and not pass on decreases. Use of the term to date on my loan is as follows:

1.Jannuary 2006 – loan inception. APR 8.4%.

2.January 2007 – Increase of 0.5% to 8.9%. Explanation given “The BoE has raised interest rates twice in recent months – once in August by 0.25% and once in November by 0.25%”.

3.March 2007 – Increase of 0.3% to 9.2%. Explanation given “The BoE raised interest rates twice in 2006 – once in August by 0.25% and once in November by 0.25%. This resulted in FHBR rate rising by 0.5%. The additional BoE rate increase in January 2007 has resulted in us having to pass on further costs to customers by raising the variable interest rate on your loan.”

4.April 2007 – Increase of 0.5% to 9.7%. Explanation given “Any changes to the BoE interest rate or FHBR could affect the rate we charge to our customers. The latest change was the Finance House Base Rate increase in March 2007”.

5.July 2007 – Increase of 0.3% to 10%. Explanation given “The way in which our rates are calculated is based on the Finance House Base Rate (FHBR). However, any changes to the Bank of England interest rate or Finance House Base Rate could affect the rate we charge our customers. Both the bank of England interest rates and the Finance House Base Rate have increased in the last 12 months. The Bank of England raised interest rates twice in 2006, once in August by 0.25% and once in November by 0.25%. This resulted in FHBR rising by 0.5%. This was followed by a further Bank of England rate increase in January 2007 which led to an increase of 0.5% in FHBR in March 2007. The latest increase by the Bank of England in July 2007 was 0.25%. We are therefore raising the interest rate on your loan.”

6.January 2008 – Increase of 0.3% to 10.3%. Explanation given “Any change to the Bank of England interest rates or Finance House Base Rate (FHBR) could affect the rate we charge our customers. Since our last interest rate increase in July 2007 there have been further changes to the Finance House Base Rate. We will now be changing your rate.”

Notice a trend with the above? J

7. March 2008 – Decrease of 1.1% to 9.2%. Explanation given “We regularly review our existing customer rates in line with market conditions. As a result of the latest review I am pleased to inform you that the interest rate on your loan will decrease.” I would have preferred tham to be honest and confirm that it was a contractual obligation by reverting me back to my rate of 12 months previous.

8.May 2008 – Increase of 0.5% to 9.7%. Explanation given “We have recently reviewed this rate and will be increasing it to reflect the increased underlying costs associated with borrowing and prevailing market conditions.” However I would have preferred them to be honest and confirm that they were simply maximising their allowable return by reverting me back to my rate of 12 months previous.

9.August 2008 – Increase of 0.3% to 10%. Explanation given “Our product, like a mortgage, is a variable rate product; therefore rates can fluctuate up and down. We ensure that rate changes are fair and manageable; therefore your interest rate is no higher than it was 12 months ago and our product is still one of the most competitive on the market.” However I would have preferred them to be honest and confirm that they were simply maximising their allowable return by reverting me back to my rate of 12 months previous.

10.February 2009 – Decrease of 0.8% to 9.2%. Explanation given “We have reviewed the interest rate on your account in line with our contractual obligations to you.” I like the honesty in this one.

11.September 2009 – Increase by 0.8% to 10%. Explanation given “We have recently reviewed our rates and as a business have made a decision to increase interest rates to ensure that our business is sustainably and prudently managed”. Again I would have preferred them to be honest and confirm that they were simply maximising their allowable return by reverting me back to my rate of 12 months previous.

12.March 2010 – Decrease by 0.8% to 9.2%. "In line with your terms and conditions the interest rate charge on your loan is variable subject to a cap by reference to the Finance House Base Rate. We have reviewed your account and we are reducing the rate of interest charge to at least match the rate you were charged in March 2009". In other words it was a forced reduction, exactly matching their behaviour over the life of the loan thereby maximising their allowable return.

Again, many thanks!!!

Your story seems to mirror mine with regards to the increases/decreases!

They choose to minipulate that clause to maximise their profits and nobody can seem to do anything about it. With so many complaints against them, surely it is obvious that the loan agreements are completely one sided and unfair.

Cocker:)

amersall

halifax71 wrote: »

To be honest you won't get any sensible replies onthis forum - far too many of the holier than thou crowd. There is a dedicated forum with over 1500 registered FirstPlus customers. Please see www.firstpluscomplaints.co.uk

We are tackling the Interest Rate issue as the the clause in question breaches the Unfair Terms in Consumer Contract Regulations. There are many complaints with the Financial Ombudsman but to be honest they are useless here as the Office of Fair Trading have responsibility for the UTCCR however they don't deal with individual complaints - they are however considering an "unofficial super complaint" submitted by our site members.

The facts are that since base rates began to fall Firstplus has made an additional £300m net income. Their business is borrowing money at one rate and selling at another. £200m of the above is evidenced in their accounts upto 31st Dec 09. The other £100m + wil be evidence in Dec this year. The simple fact is that they couldn't have made this £300m if base rates hadn't fallen.

This is a massive issue that will have a major impact on the banking industry once the regulators / courts get their act together. The people who say there is no case here are wrong. My case has been with the FOS & the OFT for 19 months now. This may end up in court but I really cannot see how this contract clause is fair and as such within regulatory guidance.

Some bedtime reading for those that want to know my issues. I have others regarding advertising, legal (estoppel), tracker precedent etc. Bit OTT if i post all.

UTCCR 1999

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% (9.0% 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.

The UTCCR state: -
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.

The UTCCR state: -
“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.”

As it stands I have no rights, I have to pay what Barclays FirstPlus say. If I don’t I default and lose my home. My obligations have changed dramatically and can potentially increase exponentially should Barclays FirstPlus continue to maximise their allowable return under Clause 7.

Under the UTCCR Unfair terms are not enforceable against the consumer. To quote again from the UTCCR, “The requirement of 'good' faith embodies a general 'principle of fair and open dealing'. It means that terms should be expressed fully, clearly and legibly and that terms that might disadvantage the consumer should be given appropriate prominence.”

My contention here is: -
· Where exactly have Barclays FirstPlus “expressed fully, clearly and legibly”?
· Where have they given prominence?

Returning to the UTTCR – It states, “However transparency is not enough on its own, as good faith relates to the substance of terms as well as the way they are expressed and used. It requires a supplier not to take advantage of consumers' weaker bargaining position, or lack of experience, in deciding what their rights and obligations shall be. Contracts should be drawn up in a way that respects consumers' legitimate interests. In assessing fairness, we take note of how a term could be used. A term is open to challenge if it is drafted so widely that it could cause consumer detriment."

It is my contention that Barclays FirstPlus have intentionally taken advantage of my “weakened bargaining position, and lack of experience”. This is a cleverly worded clause that I do not believe any customer could understand. I would even question whether legal representation would have helped.

The UTCCR states,
"A term which merely says that variations will only be 'reasonable' or will only be made 'reasonably', is unlikely to be any fairer than one which contains no such qualification, unless there can be little doubt in a reasonable consumer's mind as to what sort of variation, broadly speaking, such wording allows, and in what circumstances. Where the criteria of reasonableness are vague, or clearly meant to include the best commercial interests of the business, there will be scope for the supplier to change the bargain unfairly to the detriment of consumers, simply on the basis that he needs to protect his profit margins."

This is the crux of the matter. The evidence of the accounts shows that the business would essentially now be insolvent without manipulating the interest rate clause “to sustain its business”. Its underlying costs have massively reduced and there is no argument possible that they can present to change what is clearly shown within their accounts.

UTCCR 10.3c - Such a term is more likely to be found fair if there is a duty on the supplier to give notice of any variation, and a right for the consumer to cancel before being affected by it, without penalty or otherwise being worse off for having entered the contract.

I am not free to exit my contract as there are early redemption fees. Also, the price of the product on offer now has increased – that isn’t my fault. I am therefore tied into my contract.


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.

Again, I am not free to exit my contract as there are early redemption fees. Also, the price of the product on offer now has increased – that isn’t my fault. I am therefore tied into my contract. See UTCCR 12.4 below.

UTCCR 12.4 “Any kind of variation clause may in principle be fair if consumers are free to escape its effects by ending the contract. To be genuinely free to cancel, they must not be left worse off for having entered the contract, whether by experiencing financial loss (for example, forfeiture of a prepayment) or serious inconvenience, or any other adverse consequences.

UTCCR 18.1.2 An explicit right to demand payment of unspecified amounts at the supplier's discretion – for example, by way of security deposit – is particularly open to challenge. But the same objections may apply if terms are merely unclear about what will be payable. Their purpose may not, in fact, be to allow the supplier to make unexpected or excessive demands for money, but the focus of the Regulations is on the effect that terms can have, not just on the intentions behind them.

My terms were clearly unclear – any reasonable adjudication will see that.

UTCCT 19.1 Regulation 7 states: (1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language. (2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail …

Transparency is also fundamental to fairness. Regulation 7 says that standard terms must use plain and intelligible language. Taking account of the Directive the Regulations implement, this needs to be seen as part of a wider requirement of putting the consumer into a position where he can make an informed choice. Thus even though a term would be clear to a lawyer, we will probably conclude that it has the
potential for unfairness if it is likely to be unintelligible to consumers and thereby cause detriment, or if it is misleading (in which case its use may also be actionable as an unfair commercial practice).

I believe that all of the above clearly prove that the Terms & Conditions of my loan are in clear breach of the UTCCR 1999. They are therefore unenforceable in there current form and require regulator intervention.


Code of Practice.

www.oft.gov.uk/shared_oft/business_leaflets/general/oft1105.pdf



The activities of First Plus contravene a number of the guidelines provided.

It is stated that the overriding principles of all businesses operating shall be the need for appropriate consumer protection and fair business practice. I have asked for transparency on how First Plus calculates and decides on movement in interest rates, when previously the links to base rates were clear and in more recent times, have been “changed”.

First Plus could not be any less transparent if they tried, simply trying to justify that their “commercial judgement” applies but will not disclose any further than that because of “commercial sensitivity”.

Fair and Clear contract terms are also required in plain and intelligible English. They simply state the term “variable” at point of sale and leave you to believe the “variable” they use is the one that applies in the mortgage sector. Failing to explain how they define variable means that they fail to comply to this point also.

It is stated that Advertising must be compliant and the attached literature may well tick the statutory boxes. However, the loan and business it advertises differs vastly from the loan in practice. The “low cost” solution, the “people not property” claim, the lack of explanation regarding working of interest rates in practice are 3 but areas where the advertising falls foul of my experience of the loan in practice.

For me, the misleading nature of the true reality of the costs of borrowing and the agenda of the lender over the term of the agreement need to be covered in far more detail than simply quoting the APR and “total amount payable” based on the day one repayment.

Section 3.6 states: -
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.

This is simply not explained at all by the lender. They clearly did link their loans to base rate in an increasing market but now they found troubled times coupled with a falling market, simply resorted to lists of “excuses” as to why they would not reduce rates – property values falling, competitor pricing etc.

Section 4.4 states: -
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.

Firstplus' underlying costs have decreased massively in the last 2 years. Since loan inception they have reduced by 80% (5% to 1%) based on FHBR (First Plus borrow at less than that but FHBR is the measure used in the T&C's so is used here.) My rate has increased by 20% (8.4% to 10%)

The business is clearly acting in breach of these guidelines and needs action as alluded to in your section covering Regulatory Compliance and Enforcement.

Thanks for this, i was going to reply to this thread. Have only just come across it. Someone with common sense at last you took the words right out of my mouth :cool:

cocker100

amersall wrote: »

Thanks for this, i was going to reply to this thread. Have only just come across it. Someone with common sense at last you took the words right out of my mouth :cool:

Lets just hope that all these complaints against FP are properly investigated. Surely its plain to see that what they are doing is unfair! We cant all be wrong!!!

Cocker:)

cocker100

I'm going to keep this thread up to date with any developments regarding my complaint with the FOS.

Anyone else with similar stories please feel free to post.

Cocker:)

cocker100

Right then, a little later than planned due to trouble locating various required documents.

Complaint finally sent off to the FOS today.

I await their response...................................


Cocker:)