Lloyds & sidestepping consumer law with 'personal' interest rates?

MGSteve

I received a letter a few weeks ago and I've searched to see if its been discussed and I can't find any mention, so I thought I'd ask.

It appears Lloyds are trying to sidestep the right we have to reject interest rate rises by sidestepping the law.

The interest rate I'm going to be charged is made up of a personal rate of say, 24% and the Bank of England rate, which is 0.5%, so the total interest rate would be 24.5%.

Looking through the T&Cs, I cannot reject a rise to the bank of England rate, only the personal rate.

So, once the BoE rates start to rise, so will my card rate and there's nothing I can do about it.

Surely this is side stepping the consumer law that says I can reject interest rate hikes, albeit with the condition of cancelling the card - fine with me.

But how does Lloyds think it can get away with this, which to me at least, is a blatant attempt to sidestep the consumer protection law.

noh

But how does Lloyds think it can get away with this

Because it is not unlawful?

I believe Halifax Credit cards (also part of LBG) were the first to do this. The subject has been discussed in relation to them.

http://www.moneysavingexpert.com/news/cards/2011/04/halifax-revamps-credit-card-interest-which-could-lead-to-large-hikes

https://forums.moneysavingexpert.com/discussion/comment/42784868#Comment_42784868

opinions4u

No, it is using the regulations / directives / laws that currently exist to price in a way that allows them to track the base rate without giving you the right to opt out.

Clear, legal, fair and above board.

izools

Bottom line, you are aware before taking out the account.

Don't like it? Don't open the account. Simple

You can't sign an agreement and then come back complaining the terms aren't to your liking. That's not what your signiature says!

MGSteve

izools wrote: »

Bottom line, you are aware before taking out the account.

Don't like it? Don't open the account. Simple

You can't sign an agreement and then come back complaining the terms aren't to your liking. That's not what your signiature says!

Actually, I didn't - I've had the card since around 2002 and they only wrote to me informing me of the change a few weeks ago.

'opinions4u' - 'fair'?
Really? the law was put there to protect consumers from credit card companies from putting up the interest rates and allowing consumers to opt out, at the risk of cancelling the card.

This action by Lloyds does sidestep that provision.

MGSteve

noh wrote: »

Because it is not unlawful?

I believe Halifax Credit cards (also part of LBG) were the first to do this. The subject has been discussed in relation to them.

http://www.moneysavingexpert.com/news/cards/2011/04/halifax-revamps-credit-card-interest-which-could-lead-to-large-hikes

https://forums.moneysavingexpert.com/discussion/comment/42784868#Comment_42784868

It nearly is the same as what the Halifax are doing - I'll have to let my wife know, she's with Halifax.

However, with Lloyds if you agree to this, you're waiving your ability to reject rate rises when the BoE rate goes up. Lloyds T&Cs specifically say you can't reject them.

The irony is of course, whenever I've complained about the rate on the card and the low BoE rate, they've always said the two aren't related..!

Now they are and its only to screw you for more money.

chattychappy

MGSteve wrote: »

'opinions4u' - 'fair'?
Really? the law was put there to protect consumers from credit card companies from putting up the interest rates and allowing consumers to opt out, at the risk of cancelling the card.

The law is intended to achieve balance between the interests of consumers and those of credit cards.

Why should you be able to have the power to hold a CC to the same rate, month after month against a background of rising base rates?

Whilst a CC cannot force you to repay on demand, you are always free to pay a CC balance on demand.

On interest rates, I think if anything things are tipped in favour of consumers.

opinions4u

MGSteve wrote: »

'opinions4u' - 'fair'?
Really? the law was put there to protect consumers from credit card companies from putting up the interest rates and allowing consumers to opt out, at the risk of cancelling the card.

This action by Lloyds does sidestep that provision.

How can they be sidestepping something in the rules if those rules explicitly allow them to do this?

If the rules define what's fair, then what they are doing is fair.

noh

MGSteve wrote: »

It nearly is the same as what the Halifax are doing - I'll have to let my wife know, she's with Halifax.

However, with Lloyds if you agree to this, you're waiving your ability to reject rate rises when the BoE rate goes up. Lloyds T&Cs specifically say you can't reject them.

The irony is of course, whenever I've complained about the rate on the card and the low BoE rate, they've always said the two aren't related..!

Now they are and its only to screw you for more money.

It's the same as Halifax Credit cards. Same conditions. You are unable reject a rate rise due to an increase in base rate.

MGSteve

opinions4u wrote: »

How can they be sidestepping something in the rules if those rules explicitly allow them to do this?

If the rules define what's fair, then what they are doing is fair.

Because they frankly are bending the rules.

chattychappy wrote: »

The law is intended to achieve balance between the interests of consumers and those of credit cards.

Why should you be able to have the power to hold a CC to the same rate, month after month against a background of rising base rates?

Whilst a CC cannot force you to repay on demand, you are always free to pay a CC balance on demand.

On interest rates, I think if anything things are tipped in favour of consumers.

Eh? How can it be tipped in favour of consumers when prior to this change, I could reject any increases and keep the rate the same but after the change, I can only reject 'personal rate' increases, not increases that they link to the BoE rate, which we all know has absolutely nothing to do with the credit lending rates.

The reason they have done this is plain and simple. The BoE rate is at an all time low and not going to go any lower, its only going to go up.

Whilst a CC cannot force you to repay on demand, you are always free to pay a CC balance on demand.

Ok, do you think anyone would seriously leave a balance on a card if they could pay it off? You gotta love the condescending attitude of those on this forum, such as those who boast about their 78K worth of credit worthiness and the fact they've made £4K out of cashback.

The fact is not everyone is as lucky as you, there are a lot of us with outstanding debts on cards and are having to pay them off as best we can. Ever thought who actually pays for your cashback? Yes, we do.

What Lloyds are doing is bypassing the regulation that is in place, its not fair and its bloody obvious to anyone who is on the receiving end.

Yes, we should be able to hold lenders to interest rates, otherwise they would be free to screw us completely by increasing the rate say from 18% to 30% and we'd be powerless to stop them.

That's what the spirit of the consumer protection is and that's what Lloyds are bypassing.

noh

MGSteve wrote: »

Actually, I didn't - I've had the card since around 2002 and they only wrote to me informing me of the change a few weeks ago.

'opinions4u' - 'fair'?
Really? the law was put there to protect consumers from credit card companies from putting up the interest rates and allowing consumers to opt out, at the risk of cancelling the card.

This action by Lloyds does sidestep that provision.

Just to clarify things.
As far as I am aware there is no such law.
What exists is a set of guidelines, produced in consultation with government, that the card industry has agreed to abide by.
If they do not stick to these guidelines then in any dispute the FOS will side with the consumer.

These guidelines specifically allow the card issuer to increase interest rates in line with a defined index without giving the right to opt out.
Therefore Lloyds and Halifax, far from sidestepping the guidelines are acting strictly in accordance with them.

Here is a link to said guidelines:-

http://www.theukcardsassociation.org.uk/best_practices/-/page/1240/


Note the words

"These principles do NOT apply where:

• The credit card’s interest rate has been set to directly track a movement to an external index (such as base rate) and this has been clearly stated in the product’s terms and conditions"