Are FCA fairness rules meaningful during live disputes?

pw888

https://forums.moneysavingexpert.com/discussion/comment/81881078#Comment_81881078

I agree to an extent, hence,

"Obviously, just because a complaint is accepted by the FOS, it doesn't mean that all accounts be put on hold and all obligations be suspended. But surely enforcement should be proportionate to uncertainty? Especially given principles laid out in the FCA handbook."

The key point I'm making is "But surely enforcement should be proportionate to uncertainty?". I’m not suggesting enforcement should automatically stop whenever a complaint is raised. If a bank has set out a strong, evidence-based position, then paying while challenging may well be sensible.

I'm pointing out that where liability is genuinely uncertain and the firm’s own process is under challenge, shouldn’t enforcement be proportionate to that uncertainty rather than proceeding as if the matter is already settled?

The point about fairness being loaded in favour of the customer depends on the lens your viewing the sitaution from. Maybe from a redress point of view, you can make a good case but from a procedure point of view, I'm not so sure. From my perspective, I feel as though I'm being forced to go along with the lender's deeply flawed position for the sake of "creating problems for myself" further down the line.

What if a customer can't make the payments because they didn't budget for a debt that I didn't think existed and for good reason? There is also the emotional aspect of being pressured into making payments that haven't been properly justified. I don't think that just becasue a threatening letter is a systemic formality, it is an excuse for unnecessary stress.

I think you're also making yourself vulnerable to scammers by having a sort of, cave in to demands for payment that don't make sense for fear of the consequences mentality. The consequences for parting with the money could be worse. If the bank is genuine and is they are correct to request payments, they should make sure they communicate clearly as to exactly why and properly address any questions and concerns. This is also covered by FCA principles and my lender failed in this regard. They only have themselves to blame if they fall outside of this.

My FOS case worker has not recommended at all that I should make token payments in order to alleviate pressure for payments. I imagine this would be unwise but, again, it may depend on each individual case. Surely it would muddy the waters, especially when I have raised the concern that token payment may be taken as some kind of admission of liability or some kind of concession?. He did however informally request that the bank pause recovery activity. The arrival of the letter default notice seems to suggest that this has been ignored.

So going back tot the original question, it seems that the answer is still no. Although I agree with some of your points, your reply seems to argue the case for justifying the answer being no.

eskbanker

In my particular case, I also appealed to CONC 7.5.3 and CONC 7.14.1 with reagard to pausing recovery activity but it falls on deaf ears.

But does issuing a standardised boilerplate default notice in itself constitute "recovery activity" if it's simply reiterating their position that you owe them the money and that it's overdue - I'd have thought that "recovery activity" in this context would be the appointment of debt recovery agents or taking you to court?

MyRealNameToo

These things are always vastly easier to discuss with knowledge of the real circumstances rather than purely the hypothetical. I'm assuming this isnt all about the return costs on your previous thread about a part bought on eBay?

There's a reason why anyone professionally giving advice is required to capture all the details before giving any advice. In the absence of detail we have to talk about the general and there will be plenty of outliers where the advice would be very different.

It would make 0% difference to scammers, if you've paid a scammer by credit card if you ever pay off the debt or default on it will not impact them at all as they get paid up front and arent taking any credit risk. Similarly your bank isnt taking any credit risk on the scammers as any clawback is made against their merchant bank not the vendor themselves and its the merchant bank that is exposed if they cannot recover their funds from the merchant.

pw888

https://forums.moneysavingexpert.com/discussion/comment/81881281#Comment_81881281

I'm not really sure to be honest but I have worded the request to the lender in different ways and also used terms such as "demands for payment" which is exactly how CONC 7.5.3 is worded. CONC 7.14.1 states "suspend any steps it takes in the recovery a debt". You could argue about about semantics but receiving a default notice I would consider a "step".

I also don't think the fact that the letter was a standard template makes it any less unsettling from my own personal perspective although I would accept that I may be being over sensitive. I'm sure though, on the other hand, that there would be people who would take it worse then I have.

I still think it's very questionable whether it aligns FCA rules and principles about fair treatment.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81881381#Comment_81881381

My point about the generic letter wasn't so much about its impact but simply that if they're following a highly standardised process that's applicable to any account in this state then it becomes easier for them to defend against accusations of unfairness.

In terms of whether its content could genuinely be considered to be recovery activity, as opposed to notification that the account has progressed to the situation where its state is notified to credit agencies, etc, then it would perhaps be useful to see its exact wording if you're able and willing to share this?

Re "FCA rules and principles about fair treatment", is there anything specific that you'd be looking to rely on here?

born_again

As above a std letter will be system generated. Which has no idea on ongoing complaints.

It is simply programed to send the letter is no payment is not made after X period.

ManyWays

The default notice also threatens potential "court proceedings"

the exact wording of a default notice is set out in legislation. A lender has no option but to use that wording.

This is commonly seen in debt management plans where the lender may be very happy to freeze interest and accept the monthly amount being offered, but it is still obliged to send a default notice that reads as very threatening even if they have ZERO intention of going to court.

A creditor should not start court action where a debt is in dispute.

It would help a lot if you could say why the debt is disputed. Not your debt, identity theft, statute barring, affordability, failure to produce CCA agreement, or what?

pw888

https://forums.moneysavingexpert.com/discussion/comment/81881408#Comment_81881408

Ok but what if the account turns out not to be in that state after all? That's kind of the point I'm getting at. That's why customers have access to official mediators such as the FOS so a definite decision can be made. Just because a bank (or any other business for that matter) affirms something is so, it doesn't mean that it definitely is. The standardised process is designed to fulfill compliance based on presupposition that the debt actually exists. There seems to be no contingency for if it might not exist.

So for example, I imagine the system will consider things like, has a payment been made? Is it in arrears? How long for? etc before it triggers a generic default letter. Should it not also consider if there is there a "CONC 7" issue or something like that? If not then information reported to CRAs is potentially bogus.

I don't think it makes the point about receiving a threatening letter or being told to expect strikes on your credit report is distressing any less valid because it is the result of an automated process and potentially an idle threat. If it creates such a headache to stop this kind of letter during a dispute, would it be appropriate to send an email to warn the customer about it and to disregard it for now maybe?

I don't think it is appropriate to send a letter that has an actual date for a deadline to make a payment that lists consequences for not doing so. Certainly not when the debt has never properly been explained and evidenced properly.

Going back to to my example, it's also interesting to note that the CRA reporting so far seems to be an idle threat. My credit report on the MSE credit club (transunion I think) shows the account in question as closed and settled at zero balance for many months which aligns with what my expectations are.

I don't have my default notice to hand as I left it at work but with regard to the FCA rules. I have appealed to CONC 7.5.3, 7.14.1 and 7.15.10 with regards to the "recovery activity", "demands for payment", "reporting to CRAs and court proceedings. Even if they are idle threats, it still seems inappropriate to make the threats without adequate justification. I have also pointed to DISP 1.4.1 and 1.4.2 due to the poor handling of my original complaint which essentially questioned why the debt exists and no sensible answer or evidence was forthcoming. Also the broader principles outlined in PRIN 2.1.1.

I just want to clarify for others reading that the topic of the post wasn't to discuss the details of a current dispute that I'm in and seek advice per se, it is literally just the question in the title. My current situation has obviously triggered me to post this thread and I'm using as an example to draw upon the illustrate my broader point but the question is about the system in general and can apply to any hypothetical situation. I apologise if I have caused any confusion. I may make another post about my case when it is finally concluded to explain the detail. The FOS has provisionally ruled that the bank acted unfairly and that my expectations are the ones that align with reality. I have been advised the lender want to escalate the decision to the Ombudsman so could be a few more months potentially.

I can imagine that people who work in banks may have to deal with difficult customers who will make any excuse to try to get out of paying bills. I can sympathise with the fact that it may be difficult to differentiate between this and somebody, like myself, who is genuinely perplexed by a bizarre decision that has put me in this situation. I have never missed any payments before in my life and I always try to pay anything I owe ASAP to avoid interest.

eskbanker

I just want to clarify for others reading that the topic of the post wasn't to discuss the details of a current dispute that I'm in and seek advice per se, it is literally just the question in the title. My current situation has obviously triggered me to post this thread and I'm using as an example to draw upon the illustrate my broader point but the question is about the system in general and can apply to any hypothetical situation.

I don't think it's meaningful to try to find a one-size-fits-all answer to a broad and hypothetical question, as it'll be so dependent on circumstances!

You've identified some specific CONC 7 provisions that offer some protection:

A firm must suspend any steps it takes or its agent takes in the recovery of a debt from a customer where the customer disputes the debt on valid grounds or what may be valid grounds.

A firm must not ignore or disregard a customer's claim that a debt has been settled or is disputed and must not continue to make demands for payment without providing clear justification and/or evidence as to why the customer's claim is not valid.

but these are still subject to interpretation - in your specific case you feel that the firm is taking debt recovery steps by sending a default notice and that it hasn't provided adequate justification for applying the disputed charges. Clearly the firm disagrees, and although FOS is provisionally siding with you, the firm continues to contest this. Equally clearly, others' circumstances will differ, so that's probably about as far as it's possible to go if you don't wish to give undue prominence to your own case?

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/81880495#Comment_81880495

That unfortunately does not clarify anything, so still leaves it hard to answer.

If you do not think the amount is due because you paid and can evidence you paid, but they are claiming they never received the funds then that is fundamentally different to a failed chargeback/S75 claim, or just that for some other reason you do not feel you should have to repay a debt.