How to prove a bank gave a loan irresponsibly

moneywisemummy

Hello,

I am looking for advice for one of our clients that I do voluntary work with. I have tried to get as much info as possible and I hope this forum can help us as volunteers to assist her.

She was approached by Barclays Bank in 2002 (was already their customer) and by Household Bank (Beneficial Finance) in 2004 with loan offers. At that time she was at university, with a tuition scholarship and on a temporary student visa (valid till 2005), which meant that she worked part time to cover living expenses. She made this known to both lenders at the time of application and took in her passport but they still gave her the loans (high interest, with ppi).

She made all agreed monthly payments till 2006 when her permission to work was withdrawn by the UK border agency (basically, her uni offered her a PHD research position. She sent her passport to renew her visa and the UKBA acknowledged receipt of her docs but did not respond further. When she enquired, they did not have her documents and declared her an illegal immigrant (not allowed to work or claim benefits, has been living with friends while waiting for the situation to be resolved).

She has just received admission of this fault from the UKBA and is now sorting out her visa, but in the 5 years they have not allowed her to work, her lenders have demanded payment and denied irresponsible lending.

Citizens Advice Bureau managed to negotiate frozen interest and £1/month payment but have spent enough allocated hours on the case, so its left to a bunch of us volunteers to help (help!). Last month she was offered a ppi refund by HFC but they want to offset this against her loan (can they do that?). Were these loans legal anyway? How can she get banks to admit it? What can we do to help?
Thank you for your advice.:)

jonesMUFCforever

Why would any bank admit lending irresponsible?

She seemed to be a clever enough person to do a university course so why could she just have said no to the loans?

I think you are on a loser here - responsibility jointly with the borrower and bank.
The best she can do is reclaim the PPI - morally I don't see why the refund cannot be offset against the debt - legally I am not sure.

Has she raised a formal complaint? You can then take it to the ombudsman if you disagree with the final outcome by the lenders. He then can make a ruling on the PPI refund.

erdd2

jonesMUFCforever wrote: »

She seemed to be a clever enough person to do a university course so why could she just have said no to the loans?

I think you are on a loser here

Sorry to say it OP, but I am in agreement that this will be the stance the bank and FSA take

chalkie99

Sorry, but the way I read this.......

She was approached by Barclays Bank in 2002 (was already their customer) and by Household Bank (Beneficial Finance) in 2004 with loan offers.

Just about everyone was approached with loan offers during the so-called "boom years". You could not pick up a newspaper or switch on the television without being bombarded with advertisements for them, offer letters cascaded through the letterbox each morning.

We all had the opportunity to decide whether it was a good idea to take them.

at the time of application

So, she chose to apply.

and took in her passport but they still gave her the loans

You make it sound as though she was protesting at being made to take the money.

Sorry, she took this money voluntarily knowing she would have to pay it back and knowing she was on a temporary visa. It is irresponsible borrowing, not lending.

opinions4u

She had a job when she borrowed the money, so I don't see why the lending is irresponsible.

Even if it was, that doesn't get the debt written off, as the borrower is an adult with respobsibilities too.

Pursue the ppi claims, allow this to reduce the debt, keep the interest frozen and take it from there.

Emmzi

You would generally need to prove mental incapacity to an extent that it would have been clear to the bank that there was mental incapacity.

Otherwise it is irresponsible borrowing, not lending.

The loans were legal.

Yes, they can offest the PPI, the money is owed, why wouldn't they?

paddyrg

Ifit hadn't been for a bit of confusion here, and your client had her PhD, would we be in the same position? The banks are not responsible for her immigration status, and some may say were generous to lend her money without a permenant residency status in the first place.

27col

I was approached by many lenders offering me loans. Funnily enough, as I did not need a loan at the time, I did not agree to having one. Amazingly enough I also managed to avoid the strong arm tactics of the banks trying to force me to take a loan. Just because someone offers you something, does not mean you have to take it.
Nobody gives you a loan, you have to agree that you want to accept an offer of a loan. Which does not constitute miss-selling as I understand it.

opinions4u

I also managed to avoid the strong arm tactics of the banks trying to force me to take a loan

A bit of junk mail? A cashier on £12k asking if you wanted to talking to a loan adviser?

Credit may have been too easily available, but "strong arm" tactics? Really?

Apples2

I'm beginning to see a pattern emerging in the replies....

moneywisemummy wrote: »

. Were these loans legal anyway? How can she get banks to admit it?

What do you think should happen about all the money she took and spent??


This thread is not working out how you were hoping is it??

antrobus

moneywisemummy wrote: »

Last month she was offered a ppi refund by HFC but they want to offset this against her loan (can they do that?).

Yes, I believe they can. But why would that be a problem?

moneywisemummy wrote: »

Were these loans legal anyway?

Yes. Or at least there is nothing in the facts set out that indicates otherwise.

Banks are known to approach people with offers of loans. They're banks, they make money by selling people loans. Tesco makes money by selling people food and they're allowed to approach people and offer to do so as well. I can't quite see how someone's immigration status comes into it.

It seems that your client's problems with repaying the loans arise from her inability to find paid work due to an error by the UKBA. But I don't quite see how any bank could have either (a) anticipated the problem or (b) be responsible for it.

moneywisemummy wrote: »

What can we do to help?

Don't know. What is you client doing now and what are their plans? Do they intend remaining in the UK?