Musashi vs HSBC-help needed!

[Musashi10]

Hi there.

I am in desperate need of some informal assistance with this problem, especially regarding the legal arguments which I find hard to understand which varies greatly to what I probably think is fair or unfair.

This has a very long history and I will summise as best as I can and any further detail can be provided.

14 years ago I set up an HSBC account.
12 years ago I applied for a graduate account with HSBC which came with an interest free overdraft. It was agreed at the time that I would recieve £1500, then upon graduation this would be reduced on a sliding scale over 3 years in £500 segments until the balance was 0.
The above never happenned.
Just over 2 years agoI recieved a letter from them saying they are taking away my overdraft facility after a review and they want immediate payment of the full amount within a month.
I could not pay the full outstanding amount and offered at the time 33% of my disposable income as repayment.
This was rejected and several threatening letters ensued.
I then investigated my account and found that the equivalent amount that they were asking for, had been applied to my account over its lifetime in charges (if I include interest on those charges its virtually exactly the same as the amount owed) after several more threatening letters and after reading up about bank charges I put the account into dispute.
I also as a gesture of goodwill set up a standing order of £12/week to put into the account which at the time they were still charging interest on dispute it being in dispute. they themselves cancelled the SO.
As the bank case vs OFT I recieved several updated letters all the same as everyone elese.As soon as the case was fionished I recieved a demand from metropolitan for the full outsanding amount to be paid.
I sent a letter back saying that although the test case was not successful, it does not mean that I can not dispute the account and the charges levied against it. HSBC replied to this by saying that they have no further comments to make on the matter and this was their final reply.
More letters and phone call from DCA
I sent a letter back saying that I am still disputing the account and under 13.6 of the banking code they should not be seeking to collect the debt until the dispute is resolved.
Furthermore, and this is quite important, I said to them that how can I even access the dispute properly when I have TWICE paid £10 to HSBC for a SARS. And on both occasions they have never produced a signed original copy of the contract.
the letter was ignored. And yesterday I got the standard letter from the sols saying that I have two weeks from the date of the letter (already dated about a week ago!) otherwise they're taking me to court.

Now I am at a loss as to how to proceed and any advice wold be appreciated.

synopsis of the points which I think are not correct but not sure how this legally affects the case.

1. That the debt was not reduced on a reducing scale as agreed-it would not exist if it had-this is not responsible banking.
2. that it is unreasonable to charge over £100 for 1 charge (imo of course)
3. The charges are unfair (and possibly unlawful)and not in consumer interest
4. that they closed my current account without even notifying me
5. That they won't provide me with an original signed agreement
6. they did not act reasonably when I made serious attempts to negotiate a reasonable payment plan.

[Amethyst]

Re: Musashi vs HSBC-help needed!

I think your case would be best dealt with by the Financial Ombudsman rather than the courts, but lets look at a couple bits first.

From what you have said I take it you have continued using the account up until the time they removed the overdraft ? then complained about charges etc ? Did you stop using it at that point ?

The £12 a month standing order, what account was this being paid from, and where to ? How did HSBC cancel it ?

The 'sliding scale' aspect of the account, was this an informal arrangement with the bank and did you make any actions to enable it to happen (eg have your overdraft level below £1000 after the first year, £500 after the second etc) or is that kind of arrangement standard with the graduate accounts ?

Legally at the moment charges is a very difficult area, fair treatment and handling of your acount by the bank is easier through the FOS.

Regarding your points


1. That the debt was not reduced on a reducing scale as agreed-it would not exist if it had-this is not responsible banking. as above - your behaviour with regards the account will have an impact on how this point is taken into account.
2. that it is unreasonable to charge over £100 for 1 charge (imo of course)
was this after they removed your overdraft ?
3. The charges are unfair (and possibly unlawful)and not in consumer interest
yes - what level of charges is on your account over the period you held it?
4. that they closed my current account without even notifying me
did they ? was this after they had 'closed' the dispute following the test case and after you had arranged the £12 week or before ?
5. That they won't provide me with an original signed agreement
They dont really need to though they should give you the T&Cs of the account when you opened it. The Consumer Credit Act sections applicable to original agreements don't apply to bank accounts.
6. they did not act reasonably when I made serious attempts to negotiate a reasonable payment plan.
This I feel is the most serious and likely issue to gain you a refund of charges since notifying them of issues with the account, a removal of the account from collection agencies and returned to HSBC and for the bank to accept the repayment proposals put to them, if reasonable on your IE sheet, and a freeze on interest and charges etc.

[Musashi10]

Re: Musashi vs HSBC-help needed!

Thanks for the reply.

Just to answer the questions that you raised.

1. Yes, the account was used until they took away the overdraft facility. I already had another current account and I switched to this for my main banking. So yes they suspended my account so I could not use the account.
2. I paid the £12 from my other current account by standing order. It was cancelled when they closed my account, which seems to have occurred 12 months ago.
3. The sliding scale aspect was at the time a standard condition of all graduate accounts at that particular time and was advertised as such. I say condition, I’m not 100% sure of this because I have not been provided with a copy of the original t&cs but this is how it was sold to me.
4. After they removed the overdraft, fees applied to the account went down to £12+ monthly interest, this was when my account was in dispute.
5. The total level of charges if I include interest is £1400 and the total owed on the account is approximetly £30 more than this,
6. I have had no official letter telling me that my account has been closed. Last year, after a long period of paying £12 by standing order into the account, I noticed that the payments were being rejected. I also stopped receiving bank statements from them. When I issued a 2nd SARs no additions were made to the account from the time the above ceased. When I spoke to Metropolitan collections, they told me that the account had been closed by HSBC. Therefore, I can only assume that it has been closed, but have yet to receive any official documentation saying that is the case.
7. “[FONT='Verdana','sans-serif']They dont really need to though they should give you the T&Cs of the account when you opened it. The Consumer Credit Act sections applicable to original agreements don't apply to bank accounts”[/FONT]
From my readings of the law in this regard, I have seen documentation saying that overdraft agreements are subject to CCA, unless they send a letter of compliance to the OFT determination within 30 days of the agreement opening to both myself and the OFT . Failure to do so, means they do have to act in accordance with CCA.

Thanks again for the response.
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I would also like to stress that the total amount of charges and interest mentioned is over the entire life cycle of the account for the pasy 6 years.

[Musashi10]

Re: Musashi vs HSBC-help needed!

Any help with the above post would be greatly appreciated.

On another note I recieved ANOTHEr letter from DG sols today. It says

"Dear...

This letter confirms that, as requested, our clients are prepared to hold this account in abeyance while the matters raised have been looked into.

This concession is granted soley in the light of your cuurent financial circumstances. You must contact us on...if your financial circumstances change.

Upon expiry of the above period we will require your proposals for repayment of the debt"

[Amethyst]

Re: Musashi vs HSBC-help needed!

Did the charges carry on after they suspended/closed your account ?
How long after you stopped using the account did they close it and send the debt to a DCA ?

Letter from DG is a good step, they are giving you space to sort finances out and hopefully, although I think you should check with them, that interest and charges are frozen whilst the account is in ''abeyance''. You still want to be in touch with HSBC over the hardship angle on your claim - I dont know how much communication you had with them and whether you told them of financial difficulties or just sent a standard 'give me my charges back' type template letter ?


Regarding the CCA - I dont think anything is to be gained by pushing for an agreement. Case law to read is Coutts v Sebastyn - this has a quote of the determination and discussions around it, there is also a couple threads on here Overdrafts CCA - Legal Beagles Consumer Forum is one.

[Musashi10]

Re: Musashi vs HSBC-help needed!

Thanks.

I have read that case and the summing up says that unless they (bank) complies with the determination then the O/D is invalid.

"The Claimant avers that the OFT Determination applies in the current proceedings and that the Defendant has failed to satisfy the conditions laid down to benefit from such Determination, the effect of which is that the Defendant must be able to show that the agreement complies with the form and content requirement of Part V of the CCA 1974, specifically s.60 and s.61 of the Act."

To answer the questions.

Yes the charges and interest continued until they closed my account. Since then nothing has been added.

I have not made a hardship angle on my claim either to HSBC DCAs or DGs (although I maybe able to).

My letters started off with the basic template letters and have continued with those arguments + other added arguments which they have yet to get back to me with.

[Amethyst]

Re: Musashi vs HSBC-help needed!

Yes indeed. The rest of the CCA does apply.

THE DETERMINATION: The Determination (which is signed by the Director of Fair Trading) is made under section 74(3) of the Act. 21 December 1989.

"1. Under the powers conferred upon me by s.74(3) and (3A) and s.133 of the Consumer Credit 1974, I, the Director General, being satisfied that it would not be against the public interest to do so, hereby revoke with effect from 1st February 1990 the Determination made by me in respect of Section 74(1)(b) and dated 3 November 1983 and now determine that with effect from 1st February 1990 Section 74(1)(b) shall apply to every debtor-creditor agreement enabling the debtor to overdraw on a current account, under which the creditor is a bank.
2. This Determination is made subject to the following conditions:-
(a) that the creditor shall have informed my Office in writing of his general intention to enter into agreements to which the Determination will apply;
(b) that where there is an agreement between a creditor and a debtor for the granting of credit in the form of an advance on a current account, the debtor shall be informed at the time or before the agreement is concluded:
- of the credit limit, if any,
- of the annual rate of interest and the charges applicable from the time the agreement is concluded and the conditions under which these may be amended,
- of the procedure for terminating the agreement;
and this information shall be confirmed in writing.
(c) that where a debtor overdraws his current account with the tacit agreement of the creditor and that account remains overdrawn for more than 3 months, the creditor must inform the debtor in writing not later than 7 days after the end of that 3 month period of the annual rate of interest and charges applicable.
3. In this Determination the terms 'creditor' and 'debtor' shall have the meanings assigned to them respectively by Section 189 of [the Act]. The term 'bank' includes the Bank of England and banks within the meaning of the Bankers' Books Evidence Act 1879 as amended."

74(1)(b) which is referred to above is (and is in relation to part V of the CCA)

74. – (1) This part …. does not apply to –
(b) a debtor-creditor agreement enabling the debtor to overdraw on a current account

So basically, they do not have to provide a credit agreement in the same way a loan/credit card would, but they have to write to you detailing the credit limit etc as in the determination. Not sure where you have the 30 days thing from, however all that is needed is a letter from the bank saying they intend on entering these type of contracts and that the determination applies, overall, not for each specific account, so the fact they didnt write to the Director General for your account won't invalidate the OD.

41 So far as condition (b) is concerned, therefore, the only question is whether it was satisfied in relation to the original agreement for the overdraft of £2,000. As to that, I agree with the judge that Coutts' letter of offer dated 5 April 2002 contained all the information required by condition (b), and that the condition was accordingly satisfied in relation to the original agreement. In my judgment this conclusion is unaffected by the provisions of section 82(2)(a), on which the appellant sought to rely.

Theres a bunch of examples of what does and doesnt apply at the end of the CCA which I'll dig out for you if it will help.

Not sure that it is all particularly relevant as your issue doesnt rely on the CCA, it is more relevant to debt collection and lending standards guidance.

[Amethyst]

Re: Musashi vs HSBC-help needed!

I agree with you DG's letter is unusual if you have not claimed hardship. Although I presume when you made the offer to pay off the debt at 33%, and when you arranged the £12 pcm payments you discussed financial circumstances ?

[Musashi10]

Re: Musashi vs HSBC-help needed!

I'm not sure where the 30 days thing came from either, but I think it is when you enter from a letter from the dti.

"However, I should note that any Bank wishing to avail itself of the benefit of the Determination must notify the OFT of its intention to do so and is required to provide information to the prospective debtor. Specifically, the creditor must provide, in writing, at the time the agreement is concluded or before details of the credit limit if any, the annual rate of interest and any charges available, and the process for terminating the agreement. Typically banks make such information readily available via a variety of media on an ongoing basis."

And if they haven't, they need to comply with the entire CCA I believe.

Yes when I tried to negotiate a repayment plan I did send off income/expenditure details but this was a few years ago and HSBC claimed to have never recieved them.

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There are indeed many arguments that I have at the moment, but I want to explore the legalities of all of them.

THat there was a proper agreement was one of them.

That they followed the correct guidelines is another, which I don't think they did throughout-but i'm not sure what would be the consequence to them if they didn't.
That the charges are unfair and contrary to the Unfair Terms in Consumer Contracts Regulations 1999. Regulation 5(1) (good faith/imbalance of position of the two negotiating parties)-I believe that the judgement was on section 6 only and not section 5 and the judge said they could be open to attack on this front.

That their was misrepresentation on their part when the agreement was sold to me (reducing scale not applied)