Credit Agreement Breach

mgarl10024

Hi all,

My other half had a 0% purchases card with a well known Credit Card company and was happily using it. However, without warning, the credit card company drastically lowered her limit to just above her current balance even though her circumstances hadn't changed. I'll stress that while we don't know their reasons for doing this, they really don't matter as it is the credit card company's right to adjust the limit as they wish.

Our issue however is that they appear to have breached their own agreement. The signed Credit Agreement clearly says “If we decrease your credit limit we will let you know before the change takes effect.” however the first my partner knew about it was a letter received over a week after the change.

This may sound trivial, but this caused a number of problems - namely that in the time between the limit being reduced and the notification being received, my partner had innocently gone over the new limit (which she didn't even know was there). Cue overlimit fees, threats of credit file updates, hassling from Collections dept etc. which the credit card company refunded, compensated for, and eventually corrected.

However, the issue of the notification timing remains. I put it to the credit card company that their notification was not as per the Credit Agreement, and they first assured me that they always notify in advance. Once I showed them that the letter received after the change mentions how "this may come as a bit of a surprise" proving that there was no earlier notification the credit card company then changed their mind and said that they "operate a different policy" to that in the Credit Agreement!

I suggested a tongue-in-cheek example whereby we would stop paying our credit card as we have opted to "operate a different policy" to that in the Credit Agreement and it was clear that this would not be to their liking. :-)

I found it staggering that a company would be issuing Credit Agreements (indeed, if you applied for the card today you'd get this very one) which they are not intending to follow.

I asked the Credit Card company to either
- change the policy they operate to reflect the credit agreement
or
- reissue the Credit Agreement to all customers, new and old, with corrected terms.

They have currently refused to do either, having found "no mistake" in an internal review, and while my Complaints Handler can see the disparity he feels that he is not in a position to move this any further and suggested the FOS.

Since the initial complaint, the Credit Card company has further reduced my partner's credit limit, and once again only notified a week after this had happened. This shows to me that this is not just a mistake but really is their intention/policy.

My question is where to go?
- I phoned the Financial Ombudsman Service and they said that as the Credit Card company has compensated my partner to her satisfaction that they have returned her to the position she would have been in and that they have no further powers. They advised that I could raise a case and that they might find in my favour, but that either of my suggested resolutions (outlined above - changing policies or reissuing Credit Agreements) would be beyond their powers.
- I phoned the Financial Conduct Authority and they said that while they could not get into a single dispute (and we don't want this as it is a wider issue as it affects may consumers) they would be happy to investigate, but could not promise they would take any action or even keep me updated as to any action they did or did not take. Sounds quite woolly.

So I'm a bit stuck. Where to now? I just can't seem to get anyone to take a Credit Card company's breach of a Credit Agreement as seriously as the Credit Card company would take a consumer breaching it.

Bantex_2

You have been refunded any charges. What is the issue?

rh41

Every credit card agreement I have has a separate clause allowing immediate decreases in the event that fraud or hardship is detected.

I would drop it not worth your energy

GingerBob_3

Bantex wrote: »

You have been refunded any charges. What is the issue?

As the OP suggests, the issue is one of principle. If you breach your T&Cs in even the smallest way there's hell to pay. They, on the other hand, can breach them with impunity and the customer can't do a thing about it. It's a one way street as far as they are concerned. OP, if you ever miss a payment with this company see if they'll overlook it and NOT put a mark against you at the CRAs; oh No! They just HAVE to report the truth, as they call it.

Thrugelmir

mgarl10024 wrote: »

So I'm a bit stuck. Where to now? I just can't seem to get anyone to take a Credit Card company's breach of a Credit Agreement as seriously as the Credit Card company would take a consumer breaching it.

So what's the real concern? As there's obviously another side to the story. Lenders are coming under ever increasing pressure to lend responsibly and ensure that it is affordable to the borrower.

jonesMUFCforever

OP please be very honest with yourself at least if not us on here - if they had given you advance warning of the reduction in limit - would you have gone out and spent to the max?


I would be more worried about WHY they are doing it - is there something in the background which has made them do this??

mgarl10024

Thanks for all your replies - it is great to get other views.

jonesMUFCforever wrote: »

OP please be very honest with yourself at least if not us on here - if they had given you advance warning of the reduction in limit - would you have gone out and spent to the max?

I'll be very honest - the answer is no. This was also one of the reasons the credit card company gave as why they choose not to inform us in advance.
As background, we use the 0% cards as a form of slow stoozing and have bank accounts with the funds earmarked. I don't believe in spending on things we don't need just to increase the stooze pot.
Whilst I don't agree with it - I respect their decision - if they want to adjust the limit that is their call to do so, and as a matter of principle I would not want to force them into a position they don't want to be in (i.e. if they don't want us to have a balance on the card then I do not want to put one on there) by suddenly spending.

Bantex wrote: »

You have been refunded any charges. What is the issue?

Thrugelmir wrote: »

So what's the real concern?

GingerBob has summed it up nicely.

jonesMUFCforever wrote: »

I would be more worried about WHY they are doing it - is there something in the background which has made them do this??

I agree. The reason is quite baffling and unknown. My partner, like me, has other credit sources and mortgages, all paid on time and marked as "satisfactory". In fact, we normally score very well in credit rating terms as our respective records are unblemished in any way, and my partner and myself recently applied for new credit cards with two separate companies and both accepted with limits far in excess than even the original, let alone reduced, limit with this company.
I've advised my partner to check her records (by requesting statutory records) in case something has crept on there that shouldn't be - and if there is something, it clearly didn't spook the new credit card companies we are using.

Thrugelmir wrote: »

Lenders are coming under ever increasing pressure to lend responsibly and ensure that it is affordable to the borrower.

Yes, and they say that they have reduced the limit because they are a responsible lender, but given our financial position and the fact that two other companies immediately accepted us for other cards, I suspect that is a smokescreen and am confident that this is not an issue of affordability.
However, my issue is not with the reduction - as I say above I respect their decision - the issue is about their lack of adherence to the Credit Agreement.

rh41 wrote: »

I would drop it not worth your energy

I do take your point. I have nothing really to gain from this. I just find it really irritating (as GingerBob summed it up) when the relationship between the consumer and the credit provider is clearly imbalanced.
If the credit card company can choose to ignore the agreement, what is the point of issuing them at all?

drunk1

This has happened to me once with Bank of Scotland.

Had a £2600 limit initially, I was looking for extra funds as renovating a house and potentially required extra funds so requested a credit increase online to £3500 which was granted.
Roll forward around 4 weeks later, my limit was reduced to £1400 for no apparent reason. A few days later a letter came through blah blah blah...
Anyway I phoned as I was amused why it had been lowered and requested the account be closed as £1400 limits are useless to me in the grand scheme of things. Was offered no explanation as to why it happened. Was offered £50 to keep my account open, but requested I wanted a explanation as to why I was deemed my limit to £3500 and then slashed to £1400 within a 4 week period. Was put on hold and was advised from a underwriter that a slight change on my Experian (new application to other CC) had appeared and because I requested the limit increase & new card at same time a computer thought I wasn't good enough for my limits. But got my £50 and the underwriter offered to put it back to £3500 no hassle.
As for breaking agreements, you'll just waste time. Their argument that if they notify you first of a decrease you'll just spend up to it is valid, not matter if you say you're stoozing and have the funds to clear, they don't know that and even if they did who's to say you would? As long as they can prove they notified you within a reasonable time in writing from the decrease regulators will always find in their favour. My advice would be move on, clear the card and get another 0% if you're unhappy.