MBNA loan prescribed terms

[Pouring Rain]

Hi there

I've got a copy of the agreement from OH's MBNA loan. I read that the prescribed terms need to be exactly stated. On the agreement I can see that instead of describing the loan as the 'Amount of credit' they have used the term 'Cash advance'. Does this make it unenforceable?

Also I'm not sure how to calculate interest to check if the interest amount is correct.
I don't know if anything else about this agreement is unenforceable - can someone take a look?

[insomniac]

Re: MBNA loan prescribed terms

Have you a clearer image, as Im afraid I for one cant read it very well :tinysmile_cry_t:

What I can see is the APR label doesnt have the word 'variable' after it suggesting its a fixed rate APR or this is missing.

Try this for working out monthly payments:

http://www.pem.co.uk/common/calculators/loan.html


Also have a look at statatory instrument 2004 No1482 on opsi.gov website for regulations brought in jun 2006.
http://www.opsi.gov.uk/si/si2004/20041482.htm

If your loan predates this (I cant read the dates) Im not sure what regulates the layout prior to this coming into effect- perhaps someone else might know?

[Pouring Rain]

Re: MBNA loan prescribed terms

Hi insomniac

Thanks for replying. I've uploaded the front and back now as attachments so maybe you'll be able to zoom in to read them. The agreement is dated August 2006, so it pre dates the coming into force of the 2006 Act.

I'll have a look at that loan calculator, thanks. I read on another thread that APR isn't actually the prescribed rate of interest, or so that was my understanding of what was quoted

Wilson v First County Trust Ltd - [2001] 3 All ER 229

VC Sir Andrew Morritt
Further, it is not the omission of every term of the agreement which leads to the consequence that the court cannot make an enforcement order. There will be a failure to comply with s 61(1)(a) of the 1974 Act if the document which is signed is not in the prescribed form or does not conform to regulations made under s 60(1) of the 1974 Act. Regulations made under s 60(1) may--and, in the case of the 1983 regulations, do--require a great deal of information (in addition to terms prescribed for the purposes of s 61(1)(a)) to be included. For example, the annual percentage rate of charge for credit (APR) must be included in a regulated consumer credit agreement--see reg 2(1) of, and Sch 1 to, the 1983 regulations--but a statement of the APR is not one of the prescribed termsset out in Sch 6 to those regulations. A court is not prevented from making an enforcement order if the failure to comply with s 61(1)(a) of the 1974 Act is the omission of a term which is not a prescribed term--see s 127(3). In such a case the court may, if it thinks fit, make an enforcement order which directs that the agreement is to have effect as if it did not include the term which has been omitted from the document signed by the debtor-- see s 127(5) of the 1974 Act.

So now I'm wondering if just relying on the APR alone that MBNA has actually another misstated prescribed term...still waiting for someone here to tell me :tinysmile_cry_t:

[Pouring Rain]

Re: MBNA loan prescribed terms

Just tried to use that loan calculator, Insomniac, and it comes out at £3,740, but the agreement states the interest is £4,126 - so something not working there:tinysmile_cry_t:

[calamity jane]

Re: MBNA loan prescribed terms

The Agreement states that the first payment was due 4 months after the funds were released. Therefore when calculating the payments, the interest accrued over the first 3 months would have been included in the calculation.

Try the following calculators

APR CALCULATOR - (To find the actual rate to use in the Deferred Payment Calculator)

DEFERRED PAYMENT CALCULATOR


CJ

[cds]

Re: MBNA loan prescribed terms

I think dualcalc is the only reliable calculator used to be available from the oft website,

cds

[Pouring Rain]

Re: MBNA loan prescribed terms

Thanks calamity jane and cds, I didn't notice the first 4 months, adding that in works.

What I've noticed are two things about the prescribed terms when I read up on the 1983 regulations.

Firstly that the rate of interest as one of the prescribed terms is not the same as the APR. APR is defined elsewhere in the regulations and specifically in relation to rolling-interest accounts. I did read somewhere in a post by PT on another site that it came out in a judgement that APR was not one of the prescribed terms, just a required term. So checked with the regulations and it is written as different. So I'm wondering if this means that one of the prescribed terms is missing - the rate of interest.

Secondly I have read up on PT's thread OTR that one of the things wrong with Egg agreements is the term 'Approved limit' not 'Credit limit', and that also is counted as misstating the prescribed terms. Following that line of argument on my agreement here they should have used 'Amount of Credit' not 'Cash advance'. When I looked through the regulations for the terminology, there is nowhere where 'cash advance' is used. 'Cash price' is used in hire purchase agreements to relate to the price of the goods being bought under the loan agreement, and 'advance' is used to mean the deposit amount the debtor puts forward under a hire purchase agreement where the loan is not 100% of the price of the goods. So it could be argued that 'Cash advance' being used instead of 'Amount of credit' is actually not a correct term.

I think these are my two issues with the agreement, both on the prescribed terms, which should mean the agreement is unenforceable.

[insomniac]

Re: MBNA loan prescribed terms

It might be worth checking up against the Statatory Instrument 2004 No1482: http://www.opsi.gov.uk/si/si2004/20041482.htm as these maybe more current than the 1983 rules.

Also try asking the credit law expert at your local trading standards if they have one as they have been helpful for me. They would at least give you a neutral and unbiased view from us all here perhaps - in the rush to look for mistakes I for one have been guilty of mis-spotting!

That said APR I think is required for advertising so you can compare fairly but i cant remember off the top of my head now for the '74 act.

[Pouring Rain]

Re: MBNA loan prescribed terms

Thanks insomniac, just out of curiosity, if you don't mind me asking, what was the mis-spotting you did? Was it on the prescribed terms?

[Pouring Rain]

Re: MBNA loan prescribed terms

Insomniac, thanks, I checked out the 2004 amendments, and yes, it makes a big difference in how I read the agreement. It seems that they have it right, the APR comes under the Key Financial Information as it should, then the interest rate comes under the Other Financial Information as it should. It looks here like the annual interest rate works out the same as APR so that is why I thought it was just a repeat of the same thing.

Strange isn't it, that the prescribed terms are now interspersed with the required terms by law. Your advice caught me in the nick of time, just before I was going to send a letter off to them and get myself into trouble with the wrong argument.

It looks like they have followed the regs to the letter, EXCEPT the fact that they have used the term 'cash advance' rather than 'amount of credit'. I wonder if that is a strong enough case for unenforceability. We haven't got PT's conclusion to his Egg agreement thread OTR on the issue of 'Approved Limit' instead of 'Credit Limit'. I might just wait a week or two to see what happens with that.

[insomniac]

Re: MBNA loan prescribed terms

Thanks insomniac, just out of curiosity, if you don't mind me asking, what was the mis-spotting you did? Was it on the prescribed terms?

Arent the 2004 regs hard work to read eh? I ought to have a refresh.


My mis-spot was the total cost of loan (credit+interest) was missing but apparently this isnt a prescribed term for loans with variable rates as it cant be known at the loans inception. If it is written in, there was an OFT PDF I read where how to guestimate it.


What I found odd though is if the total amount of the loan on a variable rate isnt required on the above grounds, how on earth can they guess the total charge for credit? oh well



My agreement looks well written according to the 2004 regs, but its looks 95% likely they paid a secret commision to the broker......which gives me a bite at making the loan voidable

So I guess where there's hope........

Did you involve a broker , PPI or pay any upfront fees by any chance that arent listed on the contract? Might be worth double checking!