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

MGSteve

noh wrote: »

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"

Right, I have to admit, I wasn't aware of that wording - when were those guidelines issued? It just seems strange that the banks are now linking Credit Card interest rates to the BoE rate, which would only ever be because its low.

Its almost as if the banks agreed to abide by those guidelines because they planned to change to way they charged interest rates.

The card companies have said many times in the past that the lending rate has nothing to do with the Bank of England rate, now apparently it is. I can't believe its anything other than a cheap ploy to get away with increasing Interest rates and not giving consumers a way to reject the rises.

noh

The guidelines became effective January 2011 see section 76 of document below.

Further info can be found here:- http://www.bis.gov.uk/assets/biscore/corporate/docs/c/10-768-consumer-credit-card-consultation-response

This is the orginal government/industry consultation document setting out the agreed guidelines.

In particular see page 35 section 42

"These rights will apply to any interest rate increase which
is not directly linked to a change in an external reference rate such as the base
rate or the inter-banking lending rate (LIBOR)"

Just want to point out I am in no way associated with the finance industry apart from being an informed customer. I'm just able to use google effectively.

izools

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

So reject the change. You can reject the change from a Variable APR to Variable + Base Rate if you wish - as the linked article explains.

izools

MGSteve wrote: »

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.

Those debts wouldn't be there if you hadn't chosen to spend beyond your means in the first place.

It isn't luck, it's choice. Some people have chosen to live a lifestyle within their means, others have chosen otherwise.

People come on here all the time reeling stories about how it's not their fault ad infinitum and are later seen to be spending money on a car, or big flat, or expensive food, or nights out, that they could well do with out or cut down on to live within their means.

I chose to live outside my means for a few years and I paid the price for it, I got what I deserved, and I am under no false impressions as to the fact my prior credit problems stemmed only from my choices to live outside my means.

Realising that is the first step to solvency

InsideInsurance

MGSteve wrote: »

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.

But the whole point is that it isnt the card company increasing the rates but BoE base rate.

Right now with interest rates are so low it obviously isnt going to be great for you but go back to the beginning of the crunch when the base rate was slashed your interest rate goes down where as most of the banks held their rate.

Reesy1981

InsideInsurance wrote: »

But the whole point is that it isnt the card company increasing the rates but BoE base rate.

Right now with interest rates are so low it obviously isnt going to be great for you but go back to the beginning of the crunch when the base rate was slashed your interest rate goes down where as most of the banks held their rate.

Plus, i cant see the interest rates being raised in the near future. So why not try and overpay, reduce the debt owed so that when the BoE decide to raise the base rate, you will not feel it as much!

pqrdef

izools wrote: »

Those debts wouldn't be there if you hadn't chosen to spend beyond your means in the first place.

Oh my god. Spare us the sermon.

MGSteve

izools wrote: »

Those debts wouldn't be there if you hadn't chosen to spend beyond your means in the first place.

It isn't luck, it's choice. Some people have chosen to live a lifestyle within their means, others have chosen otherwise.

People come on here all the time reeling stories about how it's not their fault ad infinitum and are later seen to be spending money on a car, or big flat, or expensive food, or nights out, that they could well do with out or cut down on to live within their means.

I chose to live outside my means for a few years and I paid the price for it, I got what I deserved, and I am under no false impressions as to the fact my prior credit problems stemmed only from my choices to live outside my means.

Realising that is the first step to solvency

Oh believe me, I'm in no denial here. I know why I've got Credit Card Debts and it is down to being stupid in the first place, I know that.

Luck may not be so much involved, but my point was that the preacy 'I'm better than you' attitude of some on this forum could do with being lost. I'm sure some people do deserve the attitude, but speaking personally, I don't. I know I've got here through my own fault and I'm trying to fix it as best I can. The original post was about Lloyds changing the T&Cs to favour them rather than the consumer.

So, these came in force in Jan 2011 - well, that explains a lot. I doubt that interest rate provision was made with the intention that the banks could use it to side step the right to reject interest rate increases.

Its just yet another way for the Credit Card companies to screw customers as far as I'm concerned and god knows Lloyds has done it enough to me already.

As for rejecting the change - I'm trying to. Problem is its not a straight forward Interest rate change, its a change to their T&Cs that I'm trying to reject. I've managed to lodge a complaint with Lloyds and will report back when they get back to me - to be honest, I'd be amazed if they do what I want and leave me on the basic interest rate without the BoE element.

Plus, i cant see the interest rates being raised in the near future. So why not try and overpay, reduce the debt owed so that when the BoE decide to raise the base rate, you will not feel it as much!

That's not really the point. The rates WILL go up and if they decide to put them up by 5%, that's an instant 5% rise to everyone's card interest rate.

So the mortgage goes up, the Credit Card goes up all at the same time. Its going to hit a lot of people very hard when it does happen. Not that I'm saying it would go up by 5% in one go, but they quite easily next year could go up in steps.

Why some people can't see this as a cynical ploy by the banks I don't know - because that's all it is. There is no link between the lending rate and the BoE rate, so why are the banks now saying there is?

Reesy1981

Theyre not going to whack interest rates up to anywhere near 5%, and as i said, interest rates aint changing anytime soon, so just do yourself a favour, reduce your outstanding debts on credit card, so that when interest rates do eventually go up by 0.5 - 1%, you are not as exposed to it as you are now.

That is the best advice i believe i can give you.

izools

MGSteve wrote: »

Luck may not be so much involved, but my point was that the preacy 'I'm better than you' attitude of some on this forum could do with being lost.

I agree.

I was merely addressing your point in regards to "Luck" vs. "Choice".

Those that realise they have debt problems, and then have the "Lightbulb moment" that it actually was their fault, I have full sympathy towards.

Those that continue to believe that debts are caused by people being "down on their luck" or "having no other choice", I have little sympathy towards. It's a bad attitude that shouldn't be condoned and will only lead to further promblems. That isn't to say this is your attitude, it's just an observation

I wish you all the best of luck with LTSB and advise that you send them a formal written complaint quoting the article posted here and advising that if they don't freeze your rate as is in conjunction with closing your account to repayment only, you will refer the matter to the FOS.

Good luck!