HBOS change terms and conditions

Luminol

Has anyone else received a letter from HBOS with changes to their terms and conditions to indicate that the new standard annual rate will now be based upon a "personal rate" + the Bank of England base rate?

I was wondering if anyone knew if any promo rates on the accounts would remain the same or would be promo rate + base rate? It doesn't seem very clear on the letter.

If I cancel my account will all my rates remain the same (without the inclusion of the Base rate)?

YorkshireBoy

This article, in conjunction with the letter, should answer most of your questions.

Luminol

Appreciate the help

Luminol

Read the article and linked posts and still unclear. Guess I'll call them.

luvsnail

YorkshireBoy wrote: »

This article, in conjunction with the letter, should answer most of your questions.

There appears to be a very serious problem here. The MSE article linked above says that the normal rights for rejecting rate hikes still applies. However, the letter from Halifax specifically states that your right to reject applies only to what they're calling the "personal rate". IF your rate goes up as a result of a base rate increase (which seems inevitable) then you have no right to reject.

Here is the relevant excerpt from the small print (I can scan this later today if anyone wants to see it):

From your next statement date after 26th November 2011 your right to reject any interest rate changes, and information about your options, will apply only to your personal rate. Any changes made to the Base Rate will be automatically applied to your account from the date of your next statement.

In effect, they can and will jack your interest rates, they don't have to give you the usual 60 days' notice and you have no right to reject the increase. Obviously this is only if the base rate increases, but it's hardly going to stay at 0.5% forever.

Is there a Money Saving Expert who can take a look at this? It seems like all HBOS is doing with these changes is finding new ways to undermine the rights of consumers.

chattychappy

The Lending Code allows them to do this: see para 144. http://www.lendingstandardsboard.org.uk/docs/lendingcode.pdf. See also http://www.theukcardsassociation.org.uk/best_practices/-/page/1240/

The Lending Code is effectively "soft law", it could be challenged via the FOS, but it does represent a view as to best practice in terms of compliance with hard law/regulation.

I expect interest rate rises will be 0.25% or 0.5% at a time. If you're on, say, 20% APR, a rise to 20.25% is not really significant. About £1 a month on a debt of £5000.

DebtMagnet

You are quite right chattychappy, a 0.25% rise would not be the end of the world for people.

My problems with this new tactic is that while they are 'allowed' to do it, it really is designed to trap people in to a situation where the rate could just keep rising and there is nothing they can do about it.

I had been awaiting my own letter and now it has arrived I feel even stronger that they are deliberately trying to trick people in to accepting this new set-up based on a lack of an understanding of the 'bigger picture'.

The letter is very well laid out in the way it shows your current rates compared to your new future rate. It lists the rates for cash withdrawals and cheques before the standard purchase rate, and as the cash and cheque rates are higher, at first glance it may look to someone like the new rate is actually better for them as it is less than their current rate.

They then show you in big bold numbers how much interest you pay now per £1k, and how much it will be at the new rate......and lucky me, its going to cost me exactly the same as now.....so no worries there then!!

As I said I have been waiting for this after reading the article on MSE and I will of course be rejecting it, but I do object to the clear positive slant they have put on it when in reality, there is only one way the BOE base rate is going and as such, only one way your APR is going.

And as for their claim that they want to make interest rates fairer and more transparent, well nice of them to do it while the base rate is at the lowest possible point and their income can only increase or at worst, stay the same. Shame they didn't seem to want to start being 'fairer' 4 years ago when the rate started dropping!!!!

t4mof

I'm on a 0% deal with a Halifax credit card at the moment and thankfully it will be paid off by the beginning of July. I was going to cancel the card anyway but this has made up my mind.

Feels very underhand to me and it would make me think twice about going with them again. Hope other providers don't follow suit.

DebtMagnet

My fear is that they will be the first and that others will follow.

They are smarting from the fact they have been forced to give people the chance to reject their excessive rate increases and so they are trying a new angle. If they get a decent success rate then why would the other card providers not do the same?

I mean on top of any BOE linked rises they make it clear that your 'personal rate' can also go up, and even though you will be able to reject that increase under the normal rules and close the account, you will then be already tied in to the BOE linked element which will remain changeable even though your account is effectively closed.

So its a case of rejecting now, or accepting that you will always have your rate linked tol the BOE base rate no matter what you do about the 'personal rate'

reiver1

I personally am LIVID about HBOS's conduct in my accounts over the past 6 months. They played a very large part in the freezing of the credit markets, took taxpayers (my) money and now are putting all the risk of interest rate hikes onto their customers. If anything this reduction of risk should have resulted in a reduction in your personal rate as HBOS now have zero exposure.

In addition to this Halifax and Intelligent finance have slashed my two credit card limits by 15k, almost 50% of the limit held. Their excuse was that they had reviewed my credit file, (no credit search footprints though so I don't really believe this) and have determined that in my best interests (Ha, I can decide what my best interests are) my credit limit needed adjusting. The only change in my credit rating/ credit report is that we moved home about 6 months ago. I am now earning more than ever and all the companies I run are now more profitable than ever.

So all the headroom on these accounts has been wiped out, and what is more galling is, there is nothing I can do about it. When I queried the reduction HBOS very kindly offered to review their decision on the accounts and all you get is a slap in the face by way of a credit search as if you had made a new application and been turned down and a NO. (which BTW they don't ask you if they can do)

Now I realise Credit is not a right and that you need to be creditworthy, however I have taken great pains to be savvy with my money and to build my credit over time starting from low limits 15 years ago and gradually build up, I have never had a missed or even had a late payment. I have kept my end of the bargain!

Now I feel that credit worthiness means nothing and that the banks do not take their customer in to account in their decisions at all. HBOS is expecting issues with credit cards as inflation starts to bite and the real situation on the ground starts to catch up with people as it has in the US. HBOS are just shedding risk where ever they can they don't care about the customer or what damage it may do to people all they care about is their bonus. Their recent letter is proof of this.

I for one have had enough, we should have let them fail it would have hurt us like ripping off a plaster, but now they are free to continue to hurt us and have a government issued licence to do so.

YorkshireBoy

reiver1 wrote: »

Their excuse was that they had reviewed my credit file, (no credit search footprints though so I don't really believe this)

Believe it! They take a monthly feed from the CRAs and have access to CII (customer indebtedness index) data...both of which leave no search footprint on your file.

The only change in my credit rating/ credit report is that we moved home about 6 months ago

Any increased mortgage commitment would have been fed through to them on the aforementioned monthly feed/CII.

I am now earning more than ever

Are these increased earnings paid into a HBoS current account? If not, they had no way of knowing this when making their decision.

So all the headroom on these accounts has been wiped out

If you weren't using the available credit, they may feel they can lend more profitably elsewhere. New 'coverage' rules mean they have to limit their exposure.

a credit search as if you had made a new application and been turned down and a NO. (which BTW they don't ask you if they can do)

They don't need to ask. You gave them blanket permission to search your credit file, both initially and on an ongoing basis, when you signed the credit agreement. Take a look at your T&Cs.