HSBC Overdraft Court Claim - Help with defence and counterclaim

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Amethyst thanks for your reply

Yes they did know of my financial difficulty, but this did not stop them increasing the interest rate on the credit card from about 22% to 29.9%.

The thing his that my financial difficulty was completely resolvable. But I was either very profitable to they or they didn't like the fact I hand put in a complian in regards to the charges in 2008 like many other people.

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

( nb that is from 2006 and things were very different then)

What makes things different from 2006 and 2009, what had changed.

[Amethyst]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Amethyst thanks for your reply

Yes they did know of my financial difficulty, but this did not stop them increasing the interest rate on the credit card from about 22% to 29.9%.

The thing his that my financial difficulty was completely resolvable. But I was either very profitable to they or they didn't like the fact I hand put in a complian in regards to the charges in 2008 like many other people.

Is that the EGG credit card they increased the rate on ? Was that when they did that to everyone or was that directly due to not paying the bill by DD ?

Can we go to the beginning a bit. You have a court claim against you which is an amount made up purely of overdraft charges and interest on a HSBC current account.

You are defending the claim on the grounds of hardship/financial difficulty and a dispute over whether a term existed to enable them to unilaterally cancel your Direct Debits ?

Things have progressed since 2006 on the bank charges front as you are aware with the OFT v Abbey case, and presumably you are aware of the Foster-Burnell v Lloyds case ? There is another big case going through appeal process at the moment for HSBC unfair overdraft charges too. It isn't an easy claim but it can be done. Need to look at how the charges built up and why and what part of the 'debt' is directly attributable to charges.

If you could possibly post the full defence then we could have a look through and make sure it is as strong as it can be.

Who is the claimant and which sols are they using ?

Have you asked for copies of terms, your account agreement, notice of assignment, notice of default etc ?

You stopped using the account when ? 2008 ? Have you acknowledged the debt over the last 6 years ?

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Amethyst

The increase in interest rate was on the HSBC Credit card. This was despite me having a very good credit history and a property with a considerable amount of asset in.

When I get home I will provide more information.

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Amethyst

What is the other big case that is going through.

[Amethyst]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Thanks, it is worth having a look at it fully, even though we might disagree with your initial post, that doesn't mean we disagree with defending the court claim against you, just need to check out the right angle to take.

[EXC]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Amethyst

What is the other big case that is going through.

We're not at liberty to say at the moment I'm afraid.

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Amethyst in reply to your post above

I have received a court claim from Merlin and the solicitors are Shoosmith.

I have asked for the documents, and the solicitors have agreed to extend time to file defence, court has been notified.

Background

The defendant had been a customer of HSBC Bank plc for a period of over 15 years. The defendant opened a student current account on 07-10-1994 and during all the time had operated the account within the terms and conditions.

During 2008 and 2009 the defendant was in some financial difficulty and as a result was increasing using the overdraft facility on his current account to its full extent. Over a period of 18 months the defendant had occurred charges totalling over £1100. The defendant was finding it difficult to say within the overdraft limit as he was not alway provided with accurate information on his account balance. The defendant had on a number of occasions complaint about the charges and had told HSBC Bank that if there was not sufficient funds then they should not make the payment, but was told this was not possible. On 24th September 2008 the defendant made an official complaint into the changes but the complete was put on hold pending the test case.

On 9th January 2009 HSBC Bank sent the defendant a letter informing him that they were unwilling to renew the overdraft facility on his current account and that the overdrawn balance of £2025.51 was to paid by 10th February 2009. The defendant was unable to pay this amount in full and contacted HSBC Bank Plc to arrange an repayment plan. HSBC Bank allowed the overdraft to continue and and increased it to £2107 as the account was over the limit. It was advised that the defendant should reduce the overdrawn balance as soon as possible.

The defendant was finding it difficult to reduce the overdrawn balance and was still continuing to occur charges which was making the matter worse.

In February 2009 the defendant contacted his local blanch to make an appointment with the mortgage adviser to hopefully resolve his financial situation. An appointment was made for 12th February 2009 with Mr W-- . The defendant explained his situation to the mortgage adviser and a mortgage of £42000 was agreed to consolidate the existing mortgage, credit card debit and overdraft debits. All documentation that were required for the mortgage application were provided and a desktop values of the property was made at about £80000.

The defendant was told that all the information will need to be checked and he need to come a second time into the branch to finalise the mortgage. The defendant went the branch on 24th February 2009 to finalise the application. When the application was processed it was rejected and he was told the reason for the rejection was that the defendant had too much unsecured debit. The unsecured debit was about £23000 (this was just over x1 salary). The defendant was not happy with the reason given as the the whole point of the application was to consolidate this unsecured debit.

As the mortgage was rejected the defendant asked if he could apply for a consolidation loan for the overdraft and credit card debt with HSBC as this would help with his fanatical situation. HSBC Bank was unwilling to consider the loan or provide any other assistance.

On 16-03-2009 and 18-03-2009 the defendant was sent a letters informing him that is direct debit for Egg credit card and Bradford & Bingley Home Insurance had been retuned unpaid and cancelled.

The defendant contacted HSBC Bank to see if the direct debits could be reinstated but HSBC Bank refused to reinstate the direct debits mandates.

The defendant was extremely worried with his situation with the current account with HSBC Bank as he feared that all services will be withdrawn. In March 2009 he contacted the Financial Ombudsman and was advices to contact HSBC Bank and inform them that he was in financial difficulty and that they should look at refunding the charges applied under the terms of the FSA waiver.

Under the terms of the FSA waiver, banks must continue to process the claims of people in financial hardship. The definition of financial hardship is set out in the Banking Code Guidance to Subscribers. section 14.1: Subscribers will consider customers to be in financial difficulty when income is insufficient to cover reasonable living expenses and meet financial commitments as they become due.

On 16th April 2009 the defendant completed a financial statement over phone as instructed by HSBC Bank. The defendants was told that as he could make payments for essential items he was not considered to be in financial hardship as defined under the Banking Code. As the defendant was not able to cover payments to the unsecured debit he was considered to be in financial difficulty and HSBC Bank was not going to consider refunding the charges. He was advice that if payments to the unsecured debit could not be made then he should consider defaulting on those agreements.

The defendant was not happy with the response he received from HSBC Bank and was not willing to default on payments as this would coursed him problems in the future. The defendant continued with his financial difficulty by cutting cost on other essential living expenses.

In July 2009 the defendant received a small bonus payment (£700) from his employment as a result he was able to clear the overdraft he had with Halifax Bank and also decided to transferred all his banking services to them.

The defendant in August 2009 decided to approach RBS to hopefully to resolve his financial difficulty. A mortgage of £37500 was agreed to consolidate the defendants debits. The mortgage was approved, all legal work was done and the funds were available to the defendant in September 2009. The defendant paid the debit on his credit cards and was able to resolve his financial difficulty.

The defendant sent a letter dated 23 Sentiment 2009 to HSBC Bank to inform them that he wish to close the account as he no longer required it. As the defendant’s complaint into the charges was still on hold pending the test case, he informed them that once his complete was resolved and if any payment was required it will be made (the amount of the charges and interest was higher than the debit balance).

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

I will be making a defence and counter claim on the grounds of

1. Breach of contract

2. Unfair relationship under section 140A

3. Unfair terms in the contract reliant on Foster-Burnell v Lloyds

and anything else I can find.

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

You could have an argument that they knew you were in financial difficulty yet continued to charge you, but otherwise the stopping of the DD's will be viewed as a responsible preventative measure to stop you being charged more and more I think.

Yes they could try that argument, but that argument will fail as that was not what was communicated to me. And if that was the case why didn't they cancel all the D/D's and what other steps did they take to help with financial difficulty.

They did have a term in their 2005 t&c that did allow them to cancel the direct debit if they had returned the payment 3 times. That term was removed in the 2006 t&c as it would have contradicted the arguments in the test case.

[leclerc]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

2. in relation to the CCA does not apply to overdrafts as not covered by the Consumer Credit Act and therefore section 140A does not apply.

Another thing is the question of whether they ever did ask for repayment of the outstanding sum since their Particulars stated that you had contacted them saying you would pay them once the decision on charges was made. Did they ask you for a sum? If you were willing to pay when you had the money why did you not follow through?

Something else came to my mind in relation to cancelled DD's since they are treated the same way as Cheques, ie first time they are return to payee please represent and then the second time it is return to payee and is cancelled. That does not stop the company from setting up a new mandate for the amounts though. The consequence of not doing so is that if it is returned to payee please represent, it can lead to continuing cycle of charges for non payment which can sometimes have a knock on effect with the payee ie the other company also hitting you for multiple charges. When I worked for another bank we refunded charges on a multiple returned item on the basis that it should only ever have been returned twice.

Another aspect that is slightly odd is their decision on the original mortgage application seems daft if it would have saved you money and therefore reduced outgoings overall.

I am assuming that credit cards form a large part of the debt in regards to Financial Hardship which, to me, makes sense if they declined the FH case.

Hmmm, it would be interesting to see which terms and conditions you could rely on for Direct Debits being cancelled albeit Payment Services Directive might come into this one partially perhaps as I think it was in operation at this point.

[Amethyst]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

[MENTION=8640]leclerc[/MENTION] s.140 unfair relationship does apply. It's only part V that doesn't.. (I'm not actually sure if you were saying it doesn't apply or if you were quoting something Nats, with the 2. at the front but thought I'd reply anyway)


There is a decent summary of Foster Burnell here - with some ideas for banks to defend against the arguments used... which is useful from our end to know where to strengthen arguments.

[Amethyst]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Also might be of help http://www.legalbeagles.info/forums/...ight=scrivener


also some historical terms in http://www.legalbeagles.info/forums/...-Terms-Library

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

Amethyst thanks for your reply.

I have done the unfair relationship section, now just left with unfair terms.

Unfair Fair Relationship

The defendant contents that the relationship between the Claimants and the Bank was unfair within section 140A of the Consumer Credit Act 1974.

Under section 140B the Court is given wide powers in relation to the orders it can make under the section including (under 140B(1)(b))

The defendant contends that HSBC Bank Plc had treated him unfairly as result of him making a complaint into the overdraft charges in September 2008. The overdraft was withdrawn without any worming or any reason given, his financial difficulty was not considered, his mortgage and loan request was unfairly refused and his direct debits were unfairly cancelled.

In HSBC Bank's Amended Defence and Counterclaim in the test case it was stated:

"HSBC and First Direct Relevant Terms and Condition have at all material times encouraged customers to contact the bank to discuss their borrowing requirements (for example, “The most suitable form of borrowing will be agreed between you and us” : HSBC July 2001 Terms and Conditions Section 1 clause 7)

HSBC Bank also informed the defendant on his statements the following:

“If you contact us to discuss your overdraft requirements we may be able to help you reduce your fees or suggest more suitable ways of borrowings.”

The Banking Code to which HSBC Bank is a signatory, states the following:

14.1 We will be sympathetic and positive when we consider any financial difficulties you may have. Our first step will be to try to contact you to discuss the matter.

The defendant contends that HSBC Bank Plc did not act sympathetic and positive when considering the defendant's financial difficulties and did not offer or consider the most suitable borrowing.

The defendant's mortgage application was unfairly refused. The defendant had applied for a mortgage of 52% loan to value. There was no issue with affordability as the loan was about two times annual salary and there would have been no other borrowing. The defendant also had a very good credit history with no adverse information on his credit file. He was in a permeant employment with the same employer for over 4 years and worked in the utility sector, so had job security.

The refusal to also look at a application for a loan to consolidate the HSBC Bank overdraft and credit card was also unfair. The defendants financial situation was not in a state that he was not creditworthy for any form of credit.

The interest rate on the overdraft was 19.9% and on the credit card the interest rate had been increased to 25.9% in March 2009 and was further increased to 29.9% in August 2009.

HSBC Banks assertion that the defendant should enter a debit management plan was unfair as this would have prolonged his financial difficulty to his detriment and the benefit of HSBC Bank.

Debit management plans are only effective in situations where debtors income has fallen and is likely to increase in the future. The situation was quite different here, where the defendants income had not fallen or was unlikely to increase. But the defendant had sufficient income to accommodate a consolidated debit and also had more than sufficient assets to provide security.

As the defendants relationship with HSBC Bank had been a very long one (over 15 years) he was under a misconception that if his own bank was unwilling to lend to him then others where unlikely to as well.

The defendant contends that the informal overdraft request, which was within the terms and conditions of the agreement, had a negative effect on the defendant's assessment of risk within HSBC systems. The defendant knew that missing payments or defaulting on agreements would effect his credit rating and make it difficult to obtain credit. HSBC Bank did not inform the defendant that informal overdraft requests and return items will effect his ability to obtain credit with them. This had resulted in a failure of open and fair dealing with the defendant. HSBC Bank may have taken advantage of the consumer’s lack of experience, or weak bargaining position.

[tm166]

Re: HSBC Overdraft Court Claim - Help with defence and counterclaim

leclerc

As for the direct debit, I think it best that we don't make comments on speculation on what might have happened. I have all information and will be able to defendant any argument advanced. If the D/D had been represented it would have been paid as the account was back within the limit two days later. It takes 3 day for the DD to be processed.

i also think you don't understand what a breach of contract is. I have read the t&c and a failure to follow my instructions on making payments is a breach of contract.

Have a read of this

Breach of contract

Judge Cronin also found that at one point the bank had failed to obey an instruction from Miss Lewis to freeze her overdrawn account, allowing more payments to be made, which increased her debt.

http://www.bbc.co.uk/news/business-14046113