Compensation resulting from bank increasing credit limit without permission?

izools

It's quite simple, really.

The credit agreement for your credit card advised that the credit limit is variable. The card holder signed this agreement, either in writing, verbally, or electronically.

Ergo, no one has had their limit altered without consent as the consent was provided at time of taking out the card.

Case closed.

I had a call yesterday from one of these firms saying "I'm entitled to a refund to any credit taken out prior to mid-2007".

Ha. I was on the phone for quite some time explaining to him the case precident between RBS and blokey a couple of years ago, and why their operation actually stands to cause more damage than harm. I don't think they'll call me again

chexum

gvlewis wrote: »

My interest was that, although I have heard about banks having to pay out for mis-selling loan insurance, I hadn't heard any reports of compensation being awarded as a result of unwanted increases in credit card limits. I presumed that such compensation was paid as a result of people running up high levels of debt on their cards (which, is was why it wouldn't affect me) but was curious to know more mainly because I would have an answer I could give the claim firm next time they phoned up and hassled me.

Most of the forum members have seen a bunch of... well intentioned people try to talk their way out of debt the easy way, hence the trigger happy nature of most responses.

The gist is indeed - the call is a scam, of the "advance fee fraud" type.

The background is that some time ago, it was considered that purely increasing the credit limit is a breach of contract which would void it all, which is clearly nonsense. If I lent you £10k and then offered £1k more, you wouldn't try to accept and then sue me that I caused hardship as you can no longer afford to pay all that back?

You could argue that increasing for the sake of increasing is bound to hit a limit where the borrower will have problems paying it off - and it seems the risk analysis is improving at the banks, and also new regulations are now in place to reject the credit limit increases easier, but we are all assumed to be responsible adults.

There's another side of it, in some cases increasing the limit was predictably wrong - it made repayment with the new borrowing impossible, and made the borrowers incur charges, then default. Some of those charges can be unfair, but this should rule out anyone not having serious issues with the repayment.

It could also be argued that even defaulting is not bad then - it takes the borrower off the credit market (or at least makes it very difficult to borrow more), and with the debt in the hands of DCAs it may be possible to reach a lower settlement. I'm sure anyone with the experience will not have such a fond memories of the process though

Do you think a cold caller company is prepared to put all their legal brainpower, for a small fee, to find loopholes in your (or for that matter, any) specific case?

gvlewis

bengal-stripe wrote: »

Over the years I have received numerous phone calls and correspondence, telling me I had won prizes,
holidays or the Spanish lottery.

Would I waste my energy to find out? I have learned: "There’s no such thing as a free lunch."

Yes, I have had a few of those as well but this was a little different.

The phone calls I received were from a claims company who first started banging on about whether I had taken out any loans and that I may be entitled to compensation etc etc... - but that line failed. It was then that they moved on to credit card limits.

On the basis that they can probably get compensation for people who were mis-sold loan insurance, I think it is fairly reasonable for me to think that perhaps there was some way in which claims companies can get compensation for people who had had their credit limits increased without the borrowers permission. However as I said in my original posting I haven't heard of such a scheme before which is why I asked the question to more experienced and knowledgeable members of this forum. From the replies I have received, for which I am grateful for, it would appear that compensation is not available.

Thank you.

danothy

gvlewis wrote: »

Well if that is an attempt at sarcasm, you should remember that it is the lowest form of wit.

The person who first said it was the lowest form of wit was actually being sarcastic though ...

Basically this type of claim call is tapping into peoples greed (something we all suffer from in varying degrees) by suggesting to them that someone owes them compensation for doing them wrong when objectively the change was technical rather than detrimental (i.e. it never cost you anything to have the limit raised).

The suggestion that an increased credit limit is detrimental because it induces debt is (in my opinion) an absurd one in all but the most limited cases, and those who voice it often appear to me to be either trying to avoid the personal responsibility for running up a debt (remember folks, you don't have to spend up to the limit) or profit from the concept speculatively by claiming/charging a fee to claim on someone's behalf. Generally, the most detrimental a credit limit increase could be would be if it prevented other lines of credit being issued due to too much credit already being available, but proving loss from that is a long shot methinks.

As has been said, these types of operations are often scams who will charge a fee and run, or at best pay a lip service to making the claim which is likely doomed to fail. They hook people in though by tempting them easy money and/or an emotional reinforcement that the running up of a debt wasn't their fault.

Contrast this with PPI claims, and you see that those who took out PPI paid money out for it, often took it due to false advice and in a lot of cases paid interest on the insurance as it was added to the loan - A very material loss in a lot of cases.

As was said above regarding the free lunch, rule of thumb is that if you haven't lost out then there's no compensation to be had.

CLAPTON

gvlewis wrote: »

Well if that is an attempt at sarcasm, you should remember that it is the lowest form of wit.

Personally, I take an interest in what is going on around me and if someone keeps phoning me up and telling me about some scheme where compensation is paid to those who have had their credit card limits increased, I like to know what they are going on about whether or not it may be of benefit to me.

Sadly, there are many people who see life in purely selfish terms. However they should not assume that other people think the same way as there are plenty who don't.

You could have chosen to make your highly principled stance quite clear; I suggested suitable wording in my non sarcastic post above.

Equally you could have reflected on your post after the event and realised that your intention was unclear and not jumped down peoples throats.

But you didn't and haven't.

jonesMUFCforever

Basically they will ask for a fee - so they win even if they do nothing - they then can turn round and say sorry we were wrong in your case - case shut.
Say £200 multiplied by even 1000 people = £200K!

I'll come back to on this one I'm going down to the ministry of justice to register my own firm pays much better than where I am now (sic)!