HARDSHIP - what to do now....

[Amethyst]

The waiver has been lifted and along with it the detailed guidance on handling customers in financial difficulty.

Now whilst the waiver has been in place there has been a change in the way the banking industry is regulated - we used to have section 14 of the banking code, which was only voluntary guidance.....now we have BCOBS - regulated by the FSA, but the only part about Financial difficulty is not regulated but GUIDANCE and stated this

Dealings with customers in financial difficulty

BCOBS 5.1.4 01/11/2009 Principle 6 requires a firm to pay due regard to the interests of its customers and to treat them fairly. In particular, a firm should deal fairly with a banking customer whom it has reason to believe is in financial difficulty.

NOW, the part that many people havent understood in the past is that claiming financial hardship really had nothing to do with the test case.

It simply meant that you, as a customer, were complaining to the bank that they hadn't treated you fairly or sympathetically in times of hardship - in many cases by continuing to stack charges on even though you were shouting ''I can't Manage if you keep doing this'' and they ignored you.

Because of the test case, and the waiver, banks were putting ALL complaints on hold if they mentioned charges, and the FSA had to amend the waiver to allow complaints about charges during hardship to continue whilst everything else was on hold. That was because you werent complaining about them as unfair terms, simply because you were complaining the bank wasnt treating you fairly under first, the banking code, and later BCOBS.


I'm currently amending the full hardship guide, the position will change again with regards to the legal issue of charges, but the position on hardship remains the same - if you are struggling, contact the bank and complain - complain of the effect the charges are having on you, how they have pushed you deeper into hardship and how they arent treating you sympathetically and fairly and ask them to consider refunding you those incurred since the hardship began.

You should also speak with them about repayment plans on overdrafts, stopping future charges, moving you to basic accounts and helping you get things sorted.

We also have strengthened grounds for reclaiming charges for everyone else, and at the moment are asking people just to hang fire until the OFT make an announcement next week. BUT if you are in hardship and struggling, there is no reason not to complain to your bank about excessive charges.

I really hope that makes sense.

[Mochamoo]

Re: HARDSHIP - what to do now....

I feel exceptionally lucky to have got my pay out the other week...sounds like I made it just in time. Ive just done a hardship letter today for a friend...should I wait?

[Amethyst]

Re: HARDSHIP - what to do now....

Depends on the circumstances honey. Will help you with it.

drafted this so far...

WHAT IS FINANCIAL HARDSHIP ?

In making an assessment of financial difficulty the banks will take into account:

• evidence of changes in lifestyle, including loss of employment; disability; serious illness; imprisonment; relationship breakdown; death of a partner; starting a lower paid job; parental/carer leave; and starting full-time education;
  
  
• and evidence of the following

• items repeatedly being returned unpaid due to lack of available funds;
  
  
• failing to make loan repayments or other commitments;
  
  
• discontinuation of regular credits; (eg reduction in earnings / loss of income/benefits)
  
  
• notification of some form of insolvency or court proceedings
  
  
• regular requests for increased borrowing or repeated rescheduling of debts;
  
  
• making frequent cash withdrawals on a credit card at a non-promotional rate of interest; and
  
  
• repeatedly exceeding a credit card or overdraft limit without agreement (as an indication of hardship if you are receiving over £500 a year and you need to look at your budgeting)

Guidance under BCOBS states -

Dealings with customers in financial difficulty

BCOBS 5.1.4 01/11/2009 Principle 6 requires a firm to pay due regard to the interests of its customers and to treat them fairly. In particular, a firm should deal fairly with a banking customer whom it has reason to believe is in financial difficulty.

HOW TO APPLY TO YOUR BANK

STEP 1: Complete a Financial Statement form - Legal Beagles - be honest - there is guidance to help you complete the form but please ask if you get stuck. This will show the bank your income and expenditure and a general overview of your indebtedness. If you would like a team member to go through your financial statement before you submit it please either post it to a thread or email it to admin@legalbeagles.info. Details will remain confidential unless you give permission.

• STEP 2: Get together any letters of arrears, threats from DCA's, attachment of earnings, court claims etc against you to show that a removal/suspension of some charges will be instrumental in getting you back on track financially. You will need to send copies of these to your bank. Also evidence of benefits receipt or any illness which you think will help your case.

• STEP 3: Write to your bank, We do not supply a template for this letter as everyones circumstances are different. In the letter you need to list the reasons, using the guidance above, why you consider yourself in financial difficulty and list any enclosures of letters/demands from creditors.

• STEP 4: Send the letter, evidence of hardship, financial statement and list of charges incurred since your circumstances worsened to the bank complaints department by recorded delivery if possible. KEEP A COPY FOR YOURSELF.

• STEP 5: 5 days later telephone your bank and check they have received your complaint and are reviewing it.

WHAT HAPPENS NEXT ?

Then your bank has 8 weeks to make a final decision as to whether you are in hardship and what assistance they are intending to offer you.

Please be aware that the banks do NOT have to offer you a refund at all, if they do then they may wish to pay it directly to your creditors expecially for mortgage arrears. In our opinion this is a good way to do it as the intention is to get you out of immediate crisis. Always ask for receipts for any direct payments.

Refunds, if any is offered, will directly relate to your evidenced hardship.

Alongside offering a refund, if at all, the bank may try and assist you in your financial difficulty by cancelling direct debits, moving you to a basic bank account or recommending you seek the assistance of debt charities such as CCCS. They may also put a halt on future charges, move your account, if in debit, to collections and work out a repayment plan with you.

This is not a quick fix solution, and the bank are obliged to look at your entire circumstances.

The Bank may also ask you to complete their own version of a financial statement - commonly the CFS (common financial statement). You can find a copy of this Money Advice Trust - Welcome to the Common Financial Statement.


SHOULD I SPEAK TO THE BANK BY PHONE ?

Your bank may wish to speak to you on the telephone to go through your circumstances, this is fine too, however if any offers are made ask for details in writing, by email or post, before agreeing to anything.

BE VERY CAREFUL OF THE BANK OFFERING YOU MANAGED ACCOUNTS or CONSOLIDATING DEBT into a LOAN or REFERRING YOU TO FEE PAYING DEBT MANAGEMENT COMPANIES - if these options are offered please post for advice and a complaint can be made under TCF (Treating Customers Fairly) and under BCOBS.



IMPORTANT

Please start a thread in our Hardship Forum and ask any questions as you go along. And keep us updated as to progress. This will help you, and others in the future.

Please post up your draft on your thread and we can help you



WHAT IF THEY REFUSE TO HELP ?

If your bank refuse to help you or they don't respond with a final decision within 8 weeks, and you consider yourself to have a good case, then you can take your complaint to the Financial Ombudsman Service.

You will need to send them copies of all letters, evidence, and responses from the bank.

You can view the forms needed to complain our complaints procedure and how to complain .

They do have a bit of a backlog but you should have a resolution within 90 days maximum.

[catinahat]

Re: HARDSHIP - what to do now....

That's very helpful Ame thank you XXX
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oh that's fantastic news! Very well done lol Cat :-)) XXX

[natweststaffmember]

Re: HARDSHIP - what to do now....

Amethyst, I was sidetracked yesterday but I'm not today.
A couple of points: I have NEVER agreed with the FSA With regards to the £500 per year in charges so can that be taken out.
Furthermore, can you make sure that you have the fact that the charges are from the account that is opened and is regularly used TODAY, not in the year of the flood when I was evicted in 1999, 2006 but where the thread of eviction exists today or the specific hardship relevant.

Those are my initial thoughts and I think it may be worth having a mull over what I have written.
Furthermore please emphasize the REFUNDS were never a dead cert and that the FOS were not going to automatically overturn it. It is about helping someone through a period of hardship and making sure that the charges do not WORSEN that hardship by taking budgetary money away from those priority creditors.

[Amethyst]

Re: HARDSHIP - what to do now....

I thought I had covered those parts, but yes they need making clearer....I did remove the £500 but I have put it back in as guidance and reworded it. I'll complete the work on that tmw and replace the hardship guide, thanks for the input it is appreciated.

[natweststaffmember]

Re: HARDSHIP - what to do now....

Do you want me to sound out the FOS on this one or is the comments they gave MSE enough for the time being?

[Amethyst]

Re: HARDSHIP - what to do now....

happy with MSE's FOS stuff

[natweststaffmember]

Re: HARDSHIP - what to do now....

I understand.