Bad Loan Advise from LloydsTSB

taylor_s

Hi,

I have been looking into my mothers finances recently and have discovered some shocking information from her regarding a lone she took out in September '09.

After her and my father broke up she had a tough time adjusting and coping and ran up some debt in the form of overdraft but mostly on credit cards as a result of taking her eye off the ball. This totalled somewhere in the region of £3500.

Her bank manager had invited her in for a review of her account, (a standard yearly review which in my experience is usually just an operantly for them to try and sell you products) and at the time she was still very upset and vulnerable from the breakup of her relationship. Upon reviewing her credit card debts it was suggested that she take out a lone to pay them off, reducing the +20% interest rates to 10.5% on a loan. She had also expressed the desire to start saving some money for a rainy day in case something cropped up that she needed to pay for. Here's the shocking bit; her bank manager encouraged her to open an ISA and take a larger lone of £6000, depositing £2000 from the loan in the ISA to quote: 'get her started'.... My mother, not realising that this would be costing her more in loan interest than she gained in ISA interest accepted this advice and the bank setup the loan, ISA account and made the transfers.

My mothers intent was originally to consolidate her debt, cut up the cards, and start living within her means. However with a source of funds now readily available from her ISA account she was not strict with herself as planned and over 18 months dwindled the ISA down to nothing.

She as now been educated by me regarding debts and savings and how debts should be paid before you start to save, however she's still stuck with the 7yr loan to pay.

She was also advised to take payment protection out. They did explain it, however she was worried into it with scenarios that actually aren't true. She was and still is very secure in her job of near 20yrs, and she gets a good deal on sick pay. She also has the deeds to a £180k house with no mortgage.

Any advise on what the best approach to complaint and recompense in this case would be much appreciated.

Many Thanks,

Steve

_Andy_

The problem I can see you having is it's her word versus the bank's - i.e. there won't be any proof of that conversation.

ILW

So, they reduced the amount of interst she was paying and started a svings account as she said she wanted to save something. With the exception of the PPI, what is the complaint?

BoGoF

In all honesty I think the only part of your post worth claiming about is the potentially missold PPI, more advice can be found on the PPI board but as you have said it was fully explained any claim may not be successful.

With regards the rest of your post, how can you prove your/her version of events. At the end of the day nobody forced her to take that amount of money.

LovelyLeeds

taylor_s wrote: »

Any advise on what the best approach to complaint and recompense in this case would be much appreciated.

I can't see on what basis she can complain. If you take out all the emotion you have put in your post and just type out the facts, then I think you will see that, logically, there are no grounds for complaint and certainly no recompense.

Tixy

The problem is that Lloyds or any bank don't claim to be financial advisors. They simply offer products to the customer (I agree they'll probably have used a hard sell), but if mother said she wanted some emergency savings then what they provided to her allowed her to have that.

She may well have a case to put in a complaint about the PPI.

Good to hear you are advising her now - hopefully she is now living within her means and can afford the loan repayments? If she can afford more a month then look to see if the loan allows overpayments, so that she clears it quicker and pays less in interest overall.

taylor_s

She was advised to take a larger lone than needed and put the extra money in savings account. In fact, the bank made the transfer. Ignoring the fact she spent the money (as this was not the intent at the time), they advised her to take a lone at 10.5% and put it into a savings account at 2.5%. So if she'd left the money alone it would be costing her 8% to keep it in the account. This is bad financial advise and make no sense to do.

BoGoF

Even if she was 'advised' does not make it compulsory to accept.

She must have signed the loan agreement and ISA application, no?

opinions4u

I could have a smaller mortgage if I used my contingency fund to reduce the debt.

But my contingency fund is more important to me than the interest it would save me having a smaller debt.

taylor_s

I see where you're all coming from, I really do. And I can separate the emotion as I would have the same reaction of disbelief no mater who it was.

It just doesn't make sense financially and I would have though that they had a duty to give good advice. If anyone had gone in and said they wanted to take out a loan to put into a savings account it would be my expectation that that person would be educated that this is not saving but costing them money. So to advise her that this would be a good idea when this is not what she original wanted seems like they are taking advantage to make more money. Her intent was to consolidate debt and live within her means putting what was left over into savings. The though of 'starting her off' never entered her mind. I know all this is difficult to prove, but my original reason for posting was to see if there was any duty to give good advise, or see if the banks are just allowed to give people bad advise in order to make as much money from them as possible.

BoGoF

As Tixy said in post #7 they don't claim to be financial advisors.

At the end of the day if the bank had offerred your mum a higher loan than just enough to consolidate I bet she would have took it.