Inappropriate lending

[beckamojo]

Hi there, I wonder if anyone can help me because I dont really know what to do..

I have a cousin who has mental health problems and is on constant medication. His father died 6 years ago and he was left the family home, mortgage free. He is getting DLA and Incapacity benifit totalling around £550 every 4 weeks, he has managed to obtain 3 loans (2 secured on the house) and a credit card amounting to a total debt of over 25K costing him over £800 per month. All these loans have payment protection insurance attached to them. He did not understand what he was doing and applied for the above in order to up his income as he was struggling to live, he paid the loans capital into his bank account and then left it there to pay his way and the loans! There is no way that he understood what he was doing but as he failed to tell anyone in the family we had no idea what he was doing.

I dont know if there is anything we can do with 'irrisponsible lending' because if the lenders had done any kind of credit search they would have found that he is on benefits and could not meet the repayments and their PPI would never have paid out because he was already out of work.

Add further to this the fact that one of the loans he took out was with Blemain Finance for 5k but from what I can understand is now £18k with interest, charged over 25 years! You can see the problem that he has. This particular loan is charged to his deeds so he could loose his home.

Can anyone suggest a next move for us to help him.? We have opened a new account and he is paying the secured loans, but not the others.

I was thinking of going to citizens advice but still not sure if its the right place. In realistic terms what he needs is the debt gone so that he can eat!

I would appreciate any help from the team. Thanks very much.

[Amethyst]

Re: Inappropriate lending

Hi there beckamojo and a warm welcome to the site

There has been quite a bit of publicity over the last year regarding irresponsible lending and mental health and I will look up some references for you in the morning.

I would recommend you contact MIND - they are experienced in advising people with Mental Health difficulties in this type of situation - you can find them at Mind (National Association for Mental Health), theres also Rethink - Rethink index page and probably the best first point of call would be Citizens Advice. They have done quite a bit of campaigning in this area. Also your local MP might be able to offer some support.

The OFT undertook a consultation into irresponsible lending last year which a few of the big mental health charities responded to along with CAB and the lenders. The OFT bought out guidance for debt collection practise a while back too which includes issues of mental health.

I have seen a case recently (but can't find it right now will look again tmw) where someone in what sound like similar circumstances got the debt written off.

The PPI as you say, certainly shouldnt have been sold to him, and can be reclaimed but firstly I would look at the entire picture.

Also, is there any issue with his benefits not affording him enough to live on ?

Sounds like you are trying to get him sorted out and I hope the companies are being helpful though somehow i doubt it with people like Blemain.

Will get some bits together tomorrow for you and look up a couple cases of irresponsible lending that have been successful, it isnt easy, and I think thus far you have taken the right steps in keeping the secured loans being paid and a fresh account.

If you can list the creditors and the amount of debt that would be useful too as we have a fair idea how different companies operate.

Will come back to you tomorrow.

Ame
xxx

[Tools]

Re: Inappropriate lending

Also have a look at section 1C.5 here >>http://www.tlr.ltd.uk/resources/temp...endingcode.pdf

It reads

Health problems
We will take particular care if you are suffering from health problems, including
mental health difficulties, when we are made aware of this.
This includes:
● appropriately training staff to handle accounts, including those dealing with
complaints and collecting debts for us; and
● being sensitive to your condition and responding appropriately when dealing
with you or someone authorised to act on your behalf.
In order to do this we may need to ask for appropriate evidence of your health
problem and may need your permission to record this information on our
system.

[beckamojo]

Re: Inappropriate lending

Hi and thanks so much for taking the time to advise us, I did speak to Mind and they put me in touch with the National Debt Line who were equally helpful, they sent me lots of paperwork for budgeting and using this we found that our cousin has no money at all to live on if he pays his loans; in fact he is minus by about £80 per month!!! and thats before any utilities or food. He really is in a pickle.

My other problem with helping him is that because we have no legal rights due to data protection if the lenders wont speak to me and he cant understand whats going on, we are stuck. I thought of writing to them individually and asking that they duplicate all correspondence to us so we know whats happening. The National Debt Line also spoke of Court of Protection and us being his deputy but again he has to agree to this and I dont know how quickly we can get it going.

I am trying to get an appointment with my local CAB but do I need their debt help or legal help?

Thanks again for your help, keep it coming. :tinysmile_grin_t:

[enaid]

Re: Inappropriate lending

Hello Beckamojo, welcome to beagles.
I think if you just ring CAB explain the situation, they will be able to make you an appointment to see someone who is clued up on your problem. Also they may be able to speak to the bank on your cousins behalf. It would take a while I think to get Court of Protection or Power of Attorney, once again the CAB will best advise you on that matter too.
Enaid x

[Amethyst]

Re: Inappropriate lending

found that story.

Banks write off £100,000 after irresponsible lending claims

'Vulnerable' borrower who overstated his income was allowed to sign up with five lenders with no proper checks

• Rupert Jones
• The Guardian, Saturday 28 January 2006
• Article history

A "vulnerable" man earning £150 a week managed to rack up debts of more than £100,000 across nine personal loans in what his brother claims is the latest example of irresponsible bank lending.
The 50-year-old warehouseman has a poor understanding of financial matters and had no hope of ever repaying the loans, according to his older brother, Colin Griffiths.
Following Colin's intervention, and the involvement of Guardian Money, all five lenders have now decided to write off the loans. One of them, Sainsbury's Bank, says the loan application should not have been approved and steps have been taken to ensure this does not happen again. But others, such as Barclays Bank, say they lent the money based on inaccurate information provided by Douglas Griffiths about his income and outgoings.
The case coincides with a new study highlighting serious failures in banks' lending practices. uSwitch.com, the online and phone-based comparison service that helps customers find a better deal, claims almost nine out of 10 credit card borrowers were issued cards without the lender checking that they could afford to repay the debt.
Late last summer, Colin discovered that Douglas, who lives in north London, had taken out a string of unsecured loans that he could not afford to repay. In all, he had borrowed around £70,000 between July 2002 and May 2005, saying that he needed the money for home improvements. This total is made up of:
· At least two loans - £7,000 and £15,000 - from Barclaycard. It appears the £15,000 loan was taken out to repay the £7,000 one, plus provide extra cash. Monthly repayment: £407.56.
· Two loans - £25,000 and £500 - from Barclays Bank. Monthly repayment (on the £25,000 loan): £481.48.
· Two loans - £7,000 and £12,000 - from Halifax. It appears the £12,000 loan was taken out to repay the £7,000 one, plus provide extra cash. Monthly repayment: £221.66.
· £7,500 from Sainsbury's Bank. Monthly repayment: £191.81.
· £5,000 from Liverpool Victoria. Monthly repayment: £117.97.
· £5,000 from Tesco Personal Finance. Monthly repayment: £74.92.
With many of the lenders selling him payment protection insurance too, the total debt soared well over £100,000.
However, as many of the lenders pointed out, Douglas did not help his case by telling them he earned £400 a week. In fact, his take-home pay was £125 a week at the time and is now £150-£160.
Colin acknowledges his brother is at fault but says he is the victim of irresponsible lending because he was a vulnerable man who did not understand the implications. Furthermore, he says the lenders failed to verify his brother's affairs to properly assess whether he was able to meet the repayments.
Colin is particularly critical of Barclays because Douglas has his current account with the bank, and therefore it would have been easy to see he could not afford more than £800 a month in loan repayments to the Barclays group.
"My older brother and I have done our best to look after him. It should be the institutions' responsibility to protect people like Douglas as well, and they haven't," says Colin, 62, who lives near Milton Keynes. On being told that the lenders had agreed to wipe the debts, his reaction was: "What a relief!"
Douglas Griffiths says he accepts he lacks knowledge when it comes to financial matters and has found the whole experience distressing.
After Colin took up cudgels on behalf of his brother, and then Guardian Money got involved, things started to move fairly quickly. Sainsbury's Bank - in a letter signed by Justin King, the boss of the supermarket group - moved swiftly to rectify the matter. It said the loan application was "processed incorrectly and therefore should not have been approved", and added that the loan had been cancelled and wiped from Douglas's credit file.
Tesco Personal Finance says it has written off the outstanding balance, adding that, as a responsible lender, "we take the circumstances of Mr Griffiths' case very seriously".
Liverpool Victoria says it has also decided to write off the debt on a goodwill basis, though adds: "Our staff followed absolutely the correct procedures." It says it had no reason to ask for written proof of income because credit searches did not turn up anything untoward, and that it acted responsibly because it declined a request by Douglas to top up his £5,000 loan.
Meanwhile, the Halifax says it suspended the loan some weeks ago, which means no interest is accruing, and adds: "We will write this amount off."
Barclays says it is committed to responsible lending, but this is dependent on the customer providing accurate information. "Having reviewed the sales of the loans to Mr Griffiths, Barclays found that Mr Griffiths overstated his income, underestimated his expenditure and understated the level of his existing debts. Had we been in full possession of the true facts, this would no doubt have affected our decision to lend," says a spokesman.
He adds that Mr Griffiths appeared "confident and self-assured" during the application process, but says: "We are taking steps to write off the debts."

[Amethyst]

Re: Inappropriate lending

Can you list the loans and cards and the companies A nice letter to each and a copy to your local MP is possibly a good starting point. We can quote irresponsible lending studies, FLA code etc. Also is there any medical evidence, like a letter from his GP, you can get to show he is vulnerable. Of course we have to be careful with regards the secured loans. Blemain aren't the friendliest people (unless they are selling you someting of course), so expect some opposition. We should also do full DPA requests and CCA requests. I would though try and get a letter to the companies to deal with you as well as himm and yes CAB are best to advise on that - will he attend a appointment with you?

Hopefully that story above will give you some hope


The OFT has previously provided some clarification on what constitutes irresponsible lending in its general fitness guidance (OFT 969) and there is pre-existing guidance, particularly that available in the OFT's 'Non status lending guidelines' issued in 1997.


Consumer Credit Act 2006

3.9 The 2006 Act broadened the fitness test to include credit competence
and to specify irresponsible lending as an example of an unfair or
improper business practice. It also enables the OFT to impose
requirements on individual licensees where we are dissatisfied with any
matter in connection with the licensee's business or conduct, and to
impose financial penalties where these are breached

FLA Lending Code (as Tools posted above)



UTCCR part 25 (These quotes from OFT 854)



4.48 Section 25(2B)32 specifies as an example of an unfair or improper
business practice a practice in the carrying on of a consumer credit
business that appears to the OFT to involve irresponsible lending.


4.50 The fitness guidance sets out the OFT's general approach in relation to
irresponsible lending. In particular, lenders should take reasonable care in
making loans or advancing credit, having regard to the interests of the
borrower. They should undertake proper and appropriate checks on the
borrower's creditworthiness and ability to repay the loan and to meet the
terms of the agreement. The checks should be proportionate, taking
account of the type of agreement, the amounts involved, the nature of
the lender's relationship with the consumer, and the degree of risk to the
consumer.

[Tools]

Re: Inappropriate lending

Also be aware that when they try to collect on these debts they will have to follow the OFT's Debt collection guidance which include

2.12 Examples of unfair practices are:

• b. visiting a debtor when it is known they are vulnerable, for example, when a doctor's certificate has been provided stating that the debtor is ill
• c. continuing with a visit when it becomes apparent that the debtor is distressed or otherwise vulnerable, for example, it becomes apparent that the debtor has mental health problems.

[scoobydoo]

Re: Inappropriate lending

I hope you really get some help with this as I know of a very similar case that has happened recently.

Can I ask what was actually put on the forms as the reasons for the loans?
Were the loans applied for in different ways i.e in person and or by post?
Is part of your claim that they would have been aware of the mental health issues or just that the income was not sufficient to cover the loans?

[beckamojo]

Re: Inappropriate lending

Hi, thanks for all this information it looks hopeful.

Firstly I have contacted citizens advice and I await their call back.

His loans are:

Blemain for £5000.00 with PPI and Interest it looks as though its now 300 payments of £113.00 for a total of £17,239.65 and this is secured on his home.

Woolwich for about £12,000 but not sure, however a recent annual statement says there is 10,809.19 left to pay and this is costing 150.48 per month, this is also secured on the house but is a repayment mortgage.

Barlcays loan £?, we cant get Barclays to talk to us but going by the monthly repayments of £331.96 I guess that this is not secured on his house although he is paying for PPI on this as well.

He then has a Barclays credit card with a balance of 2,019.05

I am in the process of getting a letter from his GP regarding his medical condition.

Hope the above info helps. Thanks again you are lifesavers. :tinysmile_grin_t:
------------------------------- merged -------------------------------
Hi Scoobydoo,

From what he says, and it is sketchy, I think he took all of them out over the telephone. I did ask what he told them the purpose of the loan was for and again he could not remember but thought he may have said for a holiday.
He says that they would not give him the loan unless he took out the PPI so he agreed because he needed the money - he had no idea what PPI was and if they had bothered to check they would have found out that he was on benefits and unable to make repayments, as it was he used to loans to make the repayments!!! Its only now that he has used up all the loans and cant meet any further payment that he came clean and told someone what he had done.

Whats more worrying is that he had no idea that these loans were secured on his home.

Its all very sad, he cannot retain any information, one of the symptons of his condition, so if someone had told him something on the telephone he would forget it later. This is why we feel that there is irresponsible lending here.

Also even if we manage to get this debt cancelled there is nothing stopping him doing it again, he told me he viewed the money as income.

[magiciansgirl]

Re: Inappropriate lending

Hi, so sorry to hear about this. There are several threads about Blemain on here which you should take a look at before tackling them. But in essence, they are probably charging buildings insurance as well as PPI, this is a trick of theirs, and they claim that if they are not notified that there is buildings insurance in place they are justified. Also, if your cousin has missed or been late with any payments they will have been charging £30-£35 per letter and phone call (they are bullies) and after 28 days they charge interest on the charges as well as the loan. This all adds up to outrageously unfair charges. On their website they now have a link where you can make a written complaint and since October last year they have had to have a compliance dept. However I wouldn't recommend approaching them until you have the GP's letter. Others here will be able to advise you on possibly sending them a Subject Access Request as a concerned party.

[scoobydoo]

Re: Inappropriate lending

I agree you need all the info you can get to decide how to tackle this - an SAR letter seems appropriate . Would he sign one if you explained what it was for?

Then maybe the FOS could help as a last resort but may be some appropriate letters we could help you with would be a first step

[Amethyst]

Re: Inappropriate lending

I was reading somewhere you can ask for a note to be put on your credit file to stop people offering you credit - its kind of like blacklisting yourself.

[beckamojo]

Re: Inappropriate lending

Sorry guys I dont know what SAR stands for, but he would sign letters if he understood what we were for, he just has no idea about banking and finances. He has written a letter to his GP so that I may contact them to organise social services etc.

Blacklisting yourself does seem like a great solution for him, do you know how we do this.

Still waiting for citizens advice!!

[Paule]

Re: Inappropriate lending

It is a Data Protection Subject Access Request

All the info is in this thread
Legal Beagles