Santander are now refunding interest payments on Cahoot flexible loan's

tobyt_2

I too received a call with identical details from the FOS two days ago and was not exactly cheered by her revelations. However, on reading Farmer's adjudication I think that we have a solid point which we should all persue even if all others fail.

In the letters from Santander giving reasons for the rates hike, they admitted that one of their reasons for the increase was to maintain the loan's flexibility.

The adjudicator then went on to point out that Santander had no obligation to provide flexibility, (a claim never made by Santander, so in my view, a mistake by the adjudicator.)

Now, whether or not Santander had any obligation to provide flexibility, the fact is that they allowed for it's provision when they increased the interest rates and they have admitted so doing.

Having allowed for it's provision in the increased rates, they promptly withdrew the facility, so that we were paying for a service which Santander failed to provide.

I hope that whatever happens initially with our compplaints, we will all resolve to persue this matter until there is no avenue left open to us!

elgin_3

i too have heard from an adjudicator last week,who has asked me to email any more relevant information on my cahoot complaint that i might have.
as i have no paperwork [never received any] and no access anymore to on line account,i would be grateful for any tips ,comments to help my case [ the comments made by santander in my rejection letter back in march ie reasonable to raise rates,gave me notice,i could have taken out a different product etc]do make me concerned for outcome
some of us will win some lose for same complaint
hope FOS take a fair view
good luck to all

bankbasher2000

I too heard from the adjudicator, was trying to reach her on the phone but eventually ended up emailing her: You can figure out her questions from my answers .... This is my response,

1) Yes I did receive notification of rate increases, but only via messages posted to my online account, which offered no explanation as to why the rate was due to increase, just that it was going up .... I do not recall receiving any formal communication via telephone or post.

2) I do not recall receiving any form of communication notifying me that the flexible nature of the account had been stopped, and further borrowing against it had been withdrawn.

3) At no time was I offered an alternative option to take out a fixed or lower rate loan. I appreciate that there were other loans on the market at a lower rate, but due to the nature of the financial markets at the time, and that most lenders were highly reluctant to open a credit line to anyone, especially to consolidate debt, there was very little option other than to continue paying back the Cahoot loan.

May I also add that Santander claim that their rate hikes were in line with market conditions, however they appear to be disproportionate in comparison to their competitors - for example, at the time Abbey had a similar product and they raised their rates to 12% apr. I feel that Santander did not, and still do not have their customers interests at heart and raising the rates to virtually unsustainable levels where nearly 50% of the monthly repayment is interest, has simply served, and was always intended on being a revenue raising exercise aimed at those who are in a vunerable financial position.

Fingers crossed, but to be honest, I'm losing hope with this!

Denza

bankbasher2000 wrote: »

1) Yes I did receive notification of rate increases, but only via messages posted to my online account, which offered no explanation as to why the rate was due to increase, just that it was going up .... I do not recall receiving any formal communication via telephone or post.

2) I do not recall receiving any form of communication notifying me that the flexible nature of the account had been stopped, and further borrowing against it had been withdrawn.

3) At no time was I offered an alternative option to take out a fixed or lower rate loan. I appreciate that there were other loans on the market at a lower rate, but due to the nature of the financial markets at the time, and that most lenders were highly reluctant to open a credit line to anyone, especially to consolidate debt, there was very little option other than to continue paying back the Cahoot loan.

May I also add that Santander claim that their rate hikes were in line with market conditions, however they appear to be disproportionate in comparison to their competitors - for example, at the time Abbey had a similar product and they raised their rates to 12% apr. I feel that Santander did not, and still do not have their customers interests at heart and raising the rates to virtually unsustainable levels where nearly 50% of the monthly repayment is interest, has simply served, and was always intended on being a revenue raising exercise aimed at those who are in a vunerable financial position.

Fingers crossed, but to be honest, I'm losing hope with this!

Thanks for the update.

A concern at this time is that some of the FOS feedback represents a "did they or didn't they notify borrowers of XYZ" line of enquiry whereas I am quite sure that borrowers would agree the actual complaint lies firmly in the "should they have the right to exponentially increase APR under vague and unqualified T&Cs whilst at the same time withdrawing headline product features" or some such.

Here is my recollections of your three points:

1. Yes via online messages/email only. The Dec 2006 one stated "following a review of competitor rates and increases in the cost of lending" as qualification.

A note on both.

The cost of lending (LIBOR - fixed and unfixed) has evidently come down a great deal since. No APR adjustment.

Cahoot withdrew from the credit market (loans and credit cards) circa Oct 2006 so they had no "competitors" at that time. Not that there can be any sane interpretation of a "competition" between lenders, if there was then presumably it would be on who could attract the most customers as opposed to who could squeeze existing borrowers the most with unqualified APR increases.

Regardless of the nature of their competition their T&Cs do not clearly state that APR will rise in line with XY or Zs product APR and if it did then one can only presume the cartel would be officially recognised. Farmer's adjudicator has already stated that the T&Cs are open to misinterpretation on the "competative" clause and I very much agree. In which case I struggle to see it as a fair and just means to increase lender revenues.

2. I believe this was communicated again via online message/email. No revised T&Cs were (or have been) issued in full for the new unflexible loan. No APR adjustments were forthcoming in view of the withdrawal of almost all headline product features.

3. There was absolutely no offer of an alternate loan however there was an "advert" for an Abbey fixed rate on the Dec 2006 notifications. On application you would find that no facility existing to migrate your loan outside of the usual criteria for any other applicant. If, like me, you had a large flexible loan with Cahoot you would no doubt receive the same gracious rejection that I did.

My belief is that Cahoot applied these increases for the following reasons from 2006 onwards:

1. To move borrowers off their books as they withdrew from the credit market
2. To increase and fix product revenues (from those that could not move off their books) thereby offsetting bad debt*

* bad debt from their own risk management failures, i.e. a failure to lend responsibly.

Apologies for the lengthy post! Good luck to all.

bankbasher2000

Denza, thanks for that, you put it far more sucinctly than I can!!

So ... this is the response from the Adjudicator

"I have included the information in your file and will be in touch in due course. As you may be aware, the Ombudsman Service is currently considering our approach to the Santander Cahoot cases, and until this has been confirmed I am unable to progress your case at this point."

As soon as I hear anything back, I'll let you know.

kenny_straw

Another thing that struck me as being strange.... - I only started getting statements after I complained in Jan. On every statement the interest rate is listed as 0.000% - I have called Santander numerous times and they have confirmed my APR is 17.8% or thereabouts, no one can explain why the statements say 0%.
I raised this in my original complaint and the FOS complaint but it hasn't been mentioned. Has this happened to anyone else?

gibbskr

Hi All,
Today I have recieved a letter from FOS saying they have requested the relevent infomation from Santander about my Cahoot loan and that they will contact me within 12 weeks.

Like many of you I'm not holding up much hope on this body coming to the right conclusion as they always seem to fall in favour of the banks.

These crooks they seem still intent in ripping off the public by using jargon that nobody understands.

My complaint raised a simple issue according to the banks code of contact that all contacts should be easy to understand, still is clearly not the case with the cahoot account contract.

trsisko

The banking Code exists to Favor Banks, no power to implement anything and the Ombudsman is practically useless, I sent off a complaint in April and it's now approaching November with no consequence to Santander!

MHO_2

I've just had the adjustor's call this afternoon, no news, just that i had one!

VanGoghsEarhere

Hi folks,
I have eventually been appointed an adjudicator. They've contacted me asking for additional information. I've added a few extra points to my original complaint (thanks Denza) but felt obliged to re-iterate some of my issues. Content below. Hope it helps some of you. Will update you all when I hear something of significance.
I understand you are complaining because the interest rate on your Cahoot Flexiloan increased significantly, during 2006 and 2007. You are also unhappy because you are no longer able to draw down money or view the account online.

The rates increased substantially from an initial rate of 8% to a present rate of 21.9% (as per Santander Customer Service, March 2010), a rise of more than 250%. However, my monthly statements cite that my APR is 20%. Surely this is misleading in itself and Santander are obliged to advise customers of the APR that they are being charged. Santander stated to me in a letter dated 16th April 2012 that:

“The Cahoot loan you chose was a flexi-loan. It had a variable rate of interest. It offered you the flexibility to draw down more funds without the need for a further credit search. It also gave you the opportunity to repay the full balance at any time, without penalty."

I also had online access to the product and could view the balance.

"We carry out regular reviews of all our products to ensure that the interest rates charged on our products are appropriate. This is important to ensure we run our business prudently. Regrettably, at the time we felt it necessary to increase the interest rates on the Cahoot flexi-loan to ensure the product, with the flexibility it offered to customers, could continue to be offered."

It seems to me that I am still paying interest rates based on the benefits of a flexible loan. Since January/February 2010 only one feature still remains of the flexible loan 'benefits', that is, to pay the balance in full without penalty. So the product is essentially a fixed loan. I was never asked to sign a credit agreement for what is basically a different product, nor informed in advance of what the APR would be for this product. Furthermore, the base rate in 2006-07 was 5% and since March 2009 it has been 0.5%. Santander were quite happy to raise my APR when the base rate was high but reluctant to lower it to mirror the change in base rate. Also the cost of lending (LIBOR - fixed and unfixed) has evidently come down a great deal since. Again no APR adjustment.

"I am satisfied that these interest rate rises were made in accordance with the Clause 13 of the terms and conditions of your agreement with Cahoot, a copy of which is included.”

Clause 13 is vague mumbo jumbo which does not explicitly explain the reasons for the interest rate rises particularly section 13.3 "for any other reason which is valid". Where is the transparency there? It is my opinion that Cahoot applied these increases a) to move borrowers off their books as they withdrew from the credit market, and b) to increase and fix product revenues (from those that they could not move off their books) thereby offsetting bad debt (due to their own risk management failures). I would also like to point out that I have never defaulted on any payment of the loan which makes the excessive interest rate rises all the more galling.


To resolve the complaint, you would like Santander to re-imburse the excessive interest rate, and apply an acceptable APR until the account is repaid.

In July 2010 I was extremely worried about my financial situation as I was struggling to make ends meet. So I contacted Santander and explained my situation to the customer representative in the hope that they would be sympathetic and that I would be able to negotiate a decrease in my APR (as per section 14.2 of the Banking Code "If you find yourself in financial difficulties, you should let us know as soon as possible. We will do all we can to help you to overcome your difficulties. With your cooperation, we will develop a plan with you for dealing with your financial difficulties and we will tell you in writing what we have agreed"). The representative emphatically stated that there could be no alteration of my APR but that I could apply for a new loan which 'might' have a lower APR. Feeling that I had no option I was passed through to the personal loans representative. They insisted that any new loan would have to be for my outstanding balance on my present loan + £1,000. This is not what I wanted but felt obliged to proceed. Needless to say, the application was declined. I would suggest that this behaviour is at odds with the spirit of the Banking Code.
I appreciate that each case has to be judged on its own merit, however, I am aware that several Cahoot flexi-loan customers received reimbursements of interest payments or 'goodwill gestures' from Santander late 2011 / early 2012. I would contend that a precedent has been set.

If you require any further information please do not hesitate to contact me.