Blemain Finance Unfair Charges & Redemption Figure

[Ruby50]

Good Morning All, I wonder if I can draw on the experitse, knowledge and experience of those who have had dealings with BF.

The details and concerns are as follows:
Secured loan taken out in 2004 - £18900, settled in 2008 - £19,343. The breakdown of this is: £8,233 (rebate), costs & charges (£195), redemption admin fee (£395), default interest (£177), legal doc fee (£690). I did ask for the formula as to how these figures were reached and was sent some strange numbers from taken from the office of fair trading website. Rule 78 was used I believe.

Is there any challenge in the way this loan was calculated, 4 years later the loan had increased. I tried to address these concerns with BF but obviously i just got pushed aside and a letter was sent to justify their actions but i want and need to challenge its fairness. Any views and opionions and quesrions on this would be grately appreciated.

[Sparkie1723]

Re: Blemain Finance Unfair Charges & Redemption Figure

Hi Ruby50,
I believe that rule 78 was not used in settlement calculations from 2005 onwards.. ...I'm pretty sure the OFT sent an advise out to lenders to tell them to cease using it..............I'm sure someone will be along to correct me if I'm wrong.
Sparkie

[Ruby50]

Re: Blemain Finance Unfair Charges & Redemption Figure

Thank you Sparkie. So the question will be was it lawful for the loan to be calculated via R78 when the loan was settled in 2008. Maybe other members will come forward with their views on R78 and when it was abolished.

[Ruby50]

Re: Blemain Finance Unfair Charges & Redemption Figure

Does anyone have any knowledge on my original post?

[Fred]

Re: Blemain Finance Unfair Charges & Redemption Figure

Does anyone have any knowledge on my original post?

The rule of 78 basically means you are penalised by paying your loan off early as it relies on calculating your interest on/over 10 years less a rebate, calculated, using the rule of 78.

The use of the rule of 78 is considered "unfair" on loans (especially) over £25K (Evans vs Cherry Tree Finance LTD) also the "fairness" is coming into question over longer term loans.

The OFT in its report , "Non status lending-Guidelines for lenders & brokers" revised in Nov 1997, stated that lenders should stop using the rule of 78 in relation to unregulated secured loans.

[mariefab]

Re: Blemain Finance Unfair Charges & Redemption Figure

Because the loan was taken out before 31st May 2005 the loan would have been regulated by the Consumer Credit Act 1974.
R78 would apply because it was commonly used to calculate early repayment costs at that time and how ERCs are calculated depends on when the loan was taken out not when it was settled.

[Ruby50]

Re: Blemain Finance Unfair Charges & Redemption Figure

Thank you very much for both the responses.