Wrong %APR - dispute with Bank

manny_2

Hi everyone

I am presently in correspondence with my bank about the 12.9%APR they quoted (and I agreed, at the time, without checking its correctness) for a Personal Loan. I've been repaying on that basis for 1.5 years. Now, looking back at old leaflets they issued, I've seen that for a loan of that amount at that time, the rate quoted was 9.9%APR. The leaflet is clear: 'these are the rates that will be applied to your account'. So I asked the bank to recalculate my loan at 9.9%APR offered instead of the 12.9%APR that they do not seem to be entitled to charge. It would make a big difference - at the amount I'm paying per month, the capital sum would be well down by now and all would be paid off much sooner.

Their reply was that advertised rates are only 'typical' and actual rates offered are 'subject to status' - and I did agree it, didn't I?

I say that the leaflet made a clear offer of a certain rate that will be applied to any Personal Loan that is granted, without any ifs or buts or any hint that actually a different rate may be applied. I can see nothing in the overall Terms and Conditions that would over rule this clear offer - no mention of 'typical rates' or 'subject to status'. I'm asking them to point out where in the documentation I was notified that the bank will actually set any rate it sees fit, regardless of the rate it advertises. I'm saying I accepted the rate given, in good faith, without checking its correctness, and the onus is on the bank to act correctly within their powers, and to put right any breach of those powers that may be discovered.

If they can't produce that 'chapter and verse', then I'd like advice and experience about what to do next. In USA, with others in the same position, we could bring a Class Action against my bank, and many other banks too, I'd guess!

[Deleted User]

The key to what interest rate you should be paying on your loan lies in your copy of the agreement you signed.This should state the amount you borrowed, the all important interest rate, repayments etc...

You are out of the cooling off period by a very long time and whatever the amount stated on the agreement you signed is - unfortunately you are stuck with it.

manny_2

Thanks, this is very helpful.

A bit more background. Been with this bank for 13 years now and found them reasonable enough to use for all purposes without shopping around.

The present loan was the third consolidation/renegotiation of a loan that started 3 yrs previously. First and second times I got 11.9%APR, exactly as advertised, no problem. Come the third time (the present loan) I got 12.9%. Yes, my fault - though surprised and worried, I just assumed that was the correct advertised rate at the time. Then just recently I checked and found that the advertised rate for that time was 9.9%APR. I rang and said 'there's been a mistake - can you put it right' but no - apparently there are no mistakes - it must be due to my 'status' at the time, so suggested I should write in. The written reply says "our advertised rates for Personal Loans are 'typical' and subject to status" (which was news to me), and that as I did accept the rate offered, that's it.

Having received year after year an update list clearly stating "these are the rates that currently apply to your accounts (as from such and such a date)" and never having seen any suggestion that these rates are in fact
merely 'typical' and subject to status, I truly didn't know that any other rate might be applied - why should I, the bank didn't tell me. I was relying on the clear honest "this is our tariff" message of the leaflet (though I admit I didn't take note of the actual rate offered), and the lack of any statements from the bank to qualify or contradict that message. I had no doubt that, if the bank offered me the loan, it would be at the currently advertised rate. Wouldn't a Small Claims Judge hold that to be a reasonable and correct belief, given the bank's published material, supported by my past experience? Why should I think to doubt the correctness of the rate offered?

If a store advertises goods at a particular price for a given period, they don't have to sell it to me if they don't like my face, but if they do, they have to honour the advertised price. If they'd also stated, somewhere I could reasonably see: "advertised price is 'typical' and subject to status", then they could indeed charge me any other price they wished. But in this case the bank didn't state that.

Looking forward to your further comments!.

[Deleted User]

When you took out the loan you are now disputing the interest rate of - the onus was on you to ensure you understood the terms and conditions before signing on the dotted line. The onus was also on you to check you were signing for the correct product. Caveat Emptor and all that. Banks DO make mistakes. But if you compound those mistakes by not reading properly what you are signing, you will have a hard case to prove.

Your agreement should clearly state exactly what interest rate you were being charged. This is regardless of what is typical or not.

I am wondering if in fact, at the time you took out the loan - the bank had more than one type of your particular loan on offer, with varying rates of interest and differing T&Cs. There is a possibility they got mixed up in your application - however, it does not get away from the issue of checking what you are signing for.

I think the way forward now is for you to make a formal written complaint to the Bank, enclosing copies of your documentation to support your case.

If you are unhappy with the reply, then take it to the Banking Ombudsman. (You need to go thru the Bank's complaints procedure first).

manny_2

Hi Ice

I did understand the T&C's - I correctly believed that nothing in the T&C's says that the %APR will be different from that advertised. I therefore trusted that the 12.9%APR offered was as advertised - it's true that I didn't check and notice it should have been 9.9%. But the bank was acting outside its stated terms. The onus is on the bank to stay within its own terms and to put matters right when a breach is noticed. The onus isn't on me to call them to task within a cooling-off period, otherwise I'm stuck with it.

Now I'm waiting for the bank's second reply, in answer to my request that they show me exactly where I was informed that the advertised rates are merely 'typical' and subject to status. If they can do that, then my case is probably scuppered. If they can't, then yes, you're right, a formal complaint, with documentation. If that doesn't do it, then you suggest the Banking Ombudsman - what about a Small Claim in the County Court, or referring the matter to Trading Standards?

Everyone's time and attention is much appreciated.

DiggingOut

I think if you try to go to court without trying the banking ombudsman, the court will want to know why you didn't go to the ombudsman (instead of tying up court time). That is what they are there for.

Personally, I think your case is pretty weak -- you signed a contract that presumably stated things clearly. Unless you can prove that they somehow misled you at the time of the contract being signed by concealing what it said, it seems pretty shaky.

That said, they don't want hassles, and you may be able to get something out of them.

I'm not saying they did right by putting you on this rate, it doesn't sound to me like they did. And I have a lot of sympathy for your position, and see nothing wrong with pursuing it with them.

But in legal terms, I think they are on pretty solid ground. If you go into a store and an item is mispriced, they are not legally bound to sell it at the price (morally, I think they should). This is comparable in legal terms.

If they had been undercharging you all this time, and came back to you and said, "Our materials said 8.9%, but we made a mistake, you owe us," would you pay up or would you point to the contract?

manny_2

This dispute still trickles on.

I read somewhere that there's a government investigation into banks who advertise an attractive x%APR for a loan of £y, but when you apply the APR is often more.

It's like companies that advertise goods for one price, as a come-on, but when you get there they're charging more.

Does anyone know where I can find out more about this investigation?

I now know that "all" banks do this, but most of them do state, if only in small print "advertised interest rates are typical and subject to status" or similar.

My bank does it, did it to me, but the point is, they can't show me any such small print anywhere. Check yours, Moneysavers!

Is the above practice
a) with the small print; and
b) in the absence of any such small print
sneaky but legal, or is it illegal misrepresentation?

System

A court simply wouldn't even entertain this - having read this 'problem', I, to be honest, found it comical.

Right, I apply for a credit card, and get a good APR, my girlfriend applies for one and gets a poor APR (because she is linked to her mothers address and she has had a CCJ in the past). It's called credit rating - people who are seen as reliable, have never missed payments etc get better APRs, those that are seen as a risk get APRs either average or poor (poor in my girlfriends case being something like 24.9% APR with Barclaycard some 18 months ago - I got 13.9%).

As has been said, you get a load of paperwork sent for you to sign - two copies - one to keep, one to sign and send back usually. If you did not check this then that is totally your fault. Your eyes settled on the pen, your hand picked it up, and your hand made the pen make a mark, called a signature, on a line on the paper.

Somewhere on that piece of paper, or one with it, would have been something the do with the Consumer Credit Act 1974. There may have been something to do with a cooling off period too, where you could have paid the money back within 14 days without any penalty (not entirely sure on that, others may correct me).

The law allows you the opportunity to change your mind, yet you 'kick up' 18 months later!!! Totally, utterly, unbelievable!!!

In the USA, people are taken to court for anything - but even the courts there must surely laugh at this as a contract has been signed by you, and in law that is legally binding. That contract ends when you pay what you owe.

Obviously, from your post, you never make any mistakes. Nothing is EVER you fault.

If we were in the USA, I'd sue you for the wear on my carpet, as I was rolling around laughing at your attempt to blame the bank for something which you've demonstrated is totally your fault.

Sometimes, I'm ashamed to be British. The reason - I have to share the country with people such as the original poster.

Don't get me wrong, most people are fine. But there's just too many people who are totally clueless.

Who's next on your blame list? Been to the supermarket then found something is £0.01 cheaper somewhere else? I'll cover my eyes now shall I?

System

Oh yes, the government is looking at the APR thing.

In my opinion it's giving in to those silly people that can't get their head around credit rating.

So in future we'll see forms in extra large print so people can't MISS what the APR is for their loan.....cough......cough......splutter.

Robert_Sterling_3

APR Regulation

Ever since the APR was invented there has been a government regulation that says that in advertisement the font used for the APR must be at least as large as the font for any other number shown in the advertisement. [ or words to that effect ]

shonky_aussie

The Consumer Credit Act regulations are being changed from 31/10. Up until now a bank has been able to advertise their "typical APR" as long as they offer it to 50.1% of their contracts. This % will increase to 66.6%.

I guess my question - who actually regulates this? I've tried OFT who manage the CCA, however they effectively say that it is a self-managed %. Seems a little weak.

But that said - always look to see if a lender uses risk based pricing. If they don't these are usually your best bet so you don't get a shock on your rate when it is offered.