Firstplus Secured Loans

keefy66

Hi

A few years ago I needed to borrow money following a messy divorce to enable me to clear some outstanding debts and keep my home, resulting in me taking out a loan with Firstplus. The rate is a variable rate but started at 9.4%. Since the financial 'crash' the rate has actually gone up to above 11%, until recently when it dis drop to 10.7%. I have seen the threads relating to interest rate hikes regarding credit cards and wondered if this was any way similar to secured loans.

Any advice would be appreciated

Regards

Keefy66

halifax71

First of all - complain to Barclays FirstPlus

www.firstplus.co.uk/contactus/Pages/contact-us.aspx

Keep it simple:
State the facts at loan inception, i.e. APR, Variance to FHBR (for those with the FHBR Clause), Variance to Bank of England rate for those without,

State the Variance now.
Historic FHBR here - www.fla.org.uk/filegrab/1FHBRhistory.xls?ref=51
Historic Base Rates here - moneyworld.com/bank-base-rates.htm

E.g. Jan 06 FHBR 5% APR 8.4%. April 10 - FHBR 1% APR 9.2%. 80% reduction in the lenders costs coupled with an increase to your APR.

State that you were led to believe your loan would vary in line with interest rates, e.g. if you have the FHBR clause, the contract term infers it; their advertising literature infers it; the historical use whilst FHBR was increasing provided further evidence of this state of affairs.

State that it did when rates were increasing and that every explanation given by them whilst rates were increasing referred to increasing rates as the reason for increasing your APR. (See my post from another thread (last one on page)which summerises the explanations i've received so far. www.firstpluscomplaints.co.uk/forum/18-t...imit=10&start=40)

Now rates have decreased the link to base rates has disappeared.

State "This cannot be fair".

State that you have real concerns for the future as actions to date could see your APR reach 20% should base rates recover to their 5 year average.

State that you want your APR realigned with the variance to Base rate (or FHBR if you have that clause) as at loan inception.

State that you want the terms of the loan amending to reflect the link to base rates.

That should do, most important is you put it in your own words.

Secondly - when BFP send their rejection (must be final response), complain to the Financial Ombudsman Service and the Office of Fair Trading.

Financial Ombudsman - www.financial-ombudsman.org.uk/consumer/complaints.htm

Office of Fair Trading - www.oft.gov.uk/contactus
Ignore the fact that they say they don't give individual advice.

Simple summary

- quote / map the APR variance history since loan inception.

- quote a few extracts from the UTCCR & relate to your experience

- say "this cannot be fair"

- say "you are not free to exit - early redemption, price of product now increased, you're captive

- say to the OFT only "the OFT have responsibility as the FOS won't consider the fairness of a term just whether the term is being complied with"

---

More in depth

Make it as long or short as you want. Things to include: -

1.Your loan details at loan inception. Amount, APR, Term, FHBR Clause if relevant to you. FHBR/Base Rate variance.

2.How it was sold – “like a mortgage”, inferred link to interest rates, “one low monthly payment”

3.Current details, APR, FHBR/Base Rate variance.

4.Say to the OFT that the FOS will only consider if BFP are complying with the terms, not whether those terms are unfair.

5.Outline what could happen based on historical use of the terms & conditions, i.e. if FHBR recovers to its 5 year average of 5% then an additional 8% can be added to your APR.

6.Refer them to the Unfair Terms in Consumer Contract Regulations 1999. See 10.4 & 12.2
www.oft.gov.uk/shared_oft/reports/unfair...act_terms/oft311.pdf

7.Refer them to the Consumer Protection from Unfair Trading Regulations 2008.
www.oft.gov.uk/shared_oft/business_leaflets/cpregs/oft1008.pdf

8.Refer them to the Unfair Relationship Test under the Consumer Credit Act.
www.oft.gov.uk/advice_and_resources/reso...A2006/unfair/#named2

9. Refer them to the OFT Guide to Secured Lending. Have a look at 3.6 & 4.4.
www.oft.gov.uk/shared_oft/business_leaflets/general/oft1105.pdf


As a minimum, include 1-5. Ask them to advise you if there are any laws, regulation or codes of practice that prevents them from adding all Base rate / FHBR increases to your loan APR but treating Base Rate / FHBR decreases as a bonus.

Tell them you would have never bought the product if it had been explained that the price could double, simply because the bank needs more profit.

If you’re feeling brave quote some extracts from points 6-9.

[Deleted User]

it is a variable rate loan,and the rates have varied,i honestly dont see what you can expect to do?
if you are in a position to then i would suggest you borrow elsewhere at a fixed rate to pay this off.

Apples2

halifax71 wrote: »

State that you want the terms of the loan amending to reflect the link to base rates.

Isn''t that a bit of a tall order?

A bit like saying, "I'm not happy with my 26.9% apr agreement and want it to be 3.2%".

Good post though and probably worth a shot (long as it is).

halifax71

I suppose ultimately it depends whether you deem it acceptable for a bank to increase it's income at the expense of its customers.

If base rates has remained at 5% then my APR would be same as it is now, it couldn't increase. Now base rates have hit rock bottom they have the right to double any future increase.

In the last 5 years they have tracked all base rate / FHBR increase and ignored all decreases. Now that is allowable within the terms under the auspices of prudence and efficiency, but the question here is whether it is "fair" when you judge it against regulatory guidance which I have highlighted above.

Thing is we're talking big money here. Firstplus (owned by Barclays) have increased their net income by over £300m in 2 1/2 years since base rates fell. Without rates falling they couldn't have made that £300m. They have made this money out of their existing customers who are captive due to early redemption penalties and the price of new loans increasing. I'm paying £2000 a year more than I think I should be. Extrapolating that across the 50,000 customers and you see where the £100m+ extra a year is derived. This is evidenced in their accounts.

No one in their right mind would have believed it was possible for Firsplus to double the APR on the loan without a corresponding increase in base rates. We all know what variable means - well we thought we did.

To use simply prudence and efficiency as the reason fails, in my opinion, to satisfy regulatory guidance - examples below. This is a complicated area which the FOS and OFT have been pondering over for 2 years now. The problem is if there was a ruling in our favour it would be bigger than the PPI scandal and probably break the bank unless Barclays come to the rescue.


UTCCR 10.4

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.

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.

OFT Second Charge Guidance 3.6 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.

OFT Second Charge guidance 4.4 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.

halifax71

Just been reading Martins blog - very interesting.

http://blog.moneysavingexpert.com/2010/11/15/a-charge-for-going-to-the-ombudsman-p-off/

He finally seems to be coming round to the issues of treating customers fairly and the whole issue of transparency. To quote: -

Michael Fallon: How can we use regulation to reduce costs more generally for consumers, not just the clever ones who use your website?

Mr Lewis: I think you regulate so that products are fairer. It goes back to what I said in the first place: many of the costs dont come in the headline prices; they come in the ancillary costs that are never broken out and that arent looked at, where theres no competition. Theyre only put in the small print, and people dont understand. If we go back to my great problem with "treating customers fairly" regulation-this does answer your question-Ive always had a problem with treating customers fairly, in that I can set up the most abysmally over-expensive product with stealth charges and, as long as I tell you about it, even if you dont understand it, and I get you to sign on the line, and I follow the procedures, I am treating you fairly, according to the rules. For me, regulation needs to look at the real impact of the product, and product rate, and product charges, not just the procedure of product. So if you want to regulate to bring down costs, I would get regulation to work in a way that looks at what the product actually does, rather than whether the product is procedurally correct. Does that answer your question?

I appreciate that i sound like a broken record but I make no apologies for that. I am one of thousands who have been duped by Firstplus and I would guess that Firstplus are not the only company behaving in such a manner.

To put it simply they expected to make circa £1700 a year out of me. This being the 3.4% gap between their funding costs (based on FHBR) and my APR. They are currently making £4,100 a year.

Why should they be allowed to double their profit?

Many customers do not realise that the current gap between base / FHBR, now 8.2% against FHBR in my case, will be maintained going forward.

Every future increase will be passed onto APR's.

Now the major problem, is if FHBR recovers to its 5 year average of 5%, then as a minimum customers can expect a 4% rise in APRs.
This would add about £3.27 per month per £1,000 owed. Based on £50,000 that would be an extra £163.70 a month.

Now in my case I borrowed at 8.4% when FHBR was 5%, Repayment was £375p/m. Using the above my APR would be 14%. FHBR would still be 5% but my repayment would be £550p/m.

Anyone who feels that the bank is treating the customer fairly here clearly has another agenda.

The OFT are expected to rule on this in the near future and in my opinion the FOS are stalling on making decisions based on the regulators investigation. As a minimum it will be interesting to hear the outcome as the evidence is irrefutable, in my opinion of course.

geoffky

halifax well done for helping people who some on here think should not be helped...i tip my hat,,

amersall

geoffky wrote: »

halifax well done for helping people who some on here think should not be helped...i tip my hat,,

Ditto, ditto, ditto:T

amersall

keefy66 wrote: »

Hi

A few years ago I needed to borrow money following a messy divorce to enable me to clear some outstanding debts and keep my home, resulting in me taking out a loan with Firstplus. The rate is a variable rate but started at 9.4%. Since the financial 'crash' the rate has actually gone up to above 11%, until recently when it dis drop to 10.7%. I have seen the threads relating to interest rate hikes regarding credit cards and wondered if this was any way similar to secured loans.

Any advice would be appreciated

Regards

Keefy66

Hope you come back on and read this. Have you claimed mis sell with these? as along with the interest rate (as halifax so expertly put it)
You will most certainly have been mis sold this ppi with the loan. If you did not take ppi then more power to you.

[Deleted User]

Lets be realistic here,the banks have been/are in a mess,their first port of call was always going to be existing customers,the moral of the tale is that variable rates are sometimes to be avoided because they always go up and rarely(with the exceptions of most mortgages)come down.

halifax71

woodbine wrote: »

Lets be realistic here,the banks have been/are in a mess,their first port of call was always going to be existing customers,the moral of the tale is that variable rates are sometimes to be avoided because they always go up and rarely(with the exceptions of most mortgages)come down.

Appreciate the point, but I seem to recall the same being said about PPI, i.e. you signed / agreed.

UTCCR 10.4

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.

OFT Second Charge guidance 4.4 Rates should only be increased on a loan to recover genuine increases in costs which have an effect on that loan......

It will be for the regulator to decide what genuine cost increases there have been on my loan to warrant Barclays Firstplus increasing their Gross Profit on my loan by 140%.