OFT requires MBNA to improve debt collection practices

[Legal Beagles]

The OFT has imposed requirements on credit card lender MBNA to secure improvements to the way its in-house debt collection arm deals with customers in financial difficulties.

More...

[jumper999]

Re: OFT requires MBNA to improve debt collection practices

Great link thanks, lets hope the other lenders/creditors become more aware of this too.

[leclerc]

Re: OFT requires MBNA to improve debt collection practices

Press releases 2010 -


OFT requires MBNA to improve debt collection practices

136/10 14 December 2010
The OFT has imposed requirements on credit card lender MBNA to secure improvements to the way its in-house debt collection arm deals with customers in financial difficulties.
An investigation was launched by the OFT after Citizens Advice raised concerns about MBNA's practices when dealing with consumers in financial difficulties or their appointed representatives.
The OFT found that the company was not being sufficiently clear when communicating with customers in financial difficulty who were offering token payments, and was in some cases failing to follow its own policy or procedures by bypassing customers' appointed representatives.
MBNA has cooperated fully during the investigation and is in the process of addressing the issues. As a result of the requirements, which take effect on 1 January 2011, MBNA must:

• make it clearer in letters sent to customers in financial difficulty that it will accept the repayment amount they have demonstrated they can afford to pay, and
• maintain its policy of only contacting customers who have appointed a representative to act on their behalf if the customer or the representative has given permission or confirmed that the representative no longer acts for the customer; or the expected payment has not been made and MBNA has made reasonable efforts to contact the representative without success.

The requirements do not preclude MBNA from sending statements of account or other communications in accordance with statutory obligations.
Ray Watson, Director of the OFT's Consumer Credit Group, said:
'Our investigation found problems with the way MBNA communicates with customers in financial difficulties. MBNA has agreed that it will make its debt collection letters clearer and clarify its policies and procedures for dealing with appointed representatives.'
NOTES

1. The full name of MBNA is MBNA Europe Bank Limited. Download the requirements imposed on MBNA (pdf 61kb).
2. Under the Consumer Credit Act 1974 (CCA), businesses that offer goods or services on credit or lend money or are involved in activities relating to credit or hire must be licensed by the OFT. The OFT has a duty to protect the interests of consumers by monitoring the fitness of those holding or applying for licences.
3. Under the CCA, where it is dissatisfied with any matter in connection with a business, a proposal to carry on a business or any other conduct by a licensee, associate or former associate, the OFT may impose 'requirements' on the licensee. Requirements may require a business to do or not to do (or to cease doing) anything specified for the purposes connected with addressing the OFT's dissatisfaction, or securing that matters of the same or a similar kind do not arise.
4. There are two ways that the OFT can impose requirements. Firstly, the OFT may issue a formal notice to the business informing it of the requirements it is minded to impose. The business may then make representations to an adjudicator who will consider these and make a determination. The business has a right of appeal to an Independent Tribunal. Alternatively, the business may propose requirements and if these are in the same terms as the requirements the OFT is minded to impose, the OFT can impose these requirements without proceeding with the formal notice. Under this procedure, which has been used in this case, the business does not have a right of appeal to the Tribunal.
5. A breach of a requirement can lead to a maximum fine of £50,000 per breach and/or be grounds for revocation of a consumer credit licence.
6. All licence holders and applicants, including lenders collecting their own debts, are expected to adhere to the minimum standards set out in the OFT's Debt Collection Guidance.
7. As a result of OFT's discussions with MBNA, the company has also agreed to publicise more widely its criteria for accepting Individual Voluntary Arrangement proposals made on behalf of debtors by Insolvency Practitioners, by writing to the Insolvency Service and the two main industry bodies, the Debt Managers Standards Association and the Debt Resolution Forum. The OFT encourages other lenders to take a similarly open and transparent approach.

------------------------------- merged -------------------------------
REQUIRENIENTS IMPOSED BY THE OFFICE OF FAIR TRADING
('OFT') PURSUANT TO SEC'TION 33A AND SECTION 33D(4) OF THE
CONSUNIER CREDIT ACT 1974 ('the Act')
REQUIREMENTS RELATING TO:
MBNA Europe Bank Limited (Consumer Credit Licence Number 363167),
registered office address: Stansfield House, Chester Business Park,
Chester, Cheshire CH4 9QQ
THE OFT REQUIRES AS FOLLOWS:

That as of the 1 January 2011
1) MBNA Europe Bank Limited shall:

a) maintain its policy that when MBNA Europe Bank Limited has established that a customer is in financial difficulties it accepts the
amount that they have demonstrated that .they can afford to pay and will improve its confirmation letter ('Confirmation Letter') to make this
clearer; and

b) improve the clarity of its Confirmation Letter to advise of the steps that may be taken, including the fact that MBNA Europe Bank Limited
sends a notice of impending default at least 30 days before it is registered with the credit reference agencies (if such notice has not
already been given).

2) MBNA Europe Bank Limited shall maintain its policy that if a customer has requested all future communications should be made to an appointed representative, including a debt management company, it will deal with the representative and not the customer. Under this policy, from the 1 January 2011, NlBNA Europe Bank Limited shall only contact the customer directly in the circumstances described below (which will be communicated to the customer upon the representative's appointment):

a) MBNA Europe Bank Limited may contact the customer directly if:

i) the appointed representative has given permission or informed MBNA Europe Bank Limited that it is no longer acting as the customer's
representative
ii) the customer has informed MBNA Europe Bank Limited that he or she wishes MBNA Europe Bank Limited to contact him or her directly, or
that the appointed representative is no longer acting for him or her

b) MBNA Europe Bank Limited may also contact the customer directly to confirm whether their representative is still acting if all of the following
apply:

i) the expected payment has not been made
ii) MBNA Europe Bank Limited has attempted to contact the appointed representative at least three times since the expected payment was
not made; and
...
III) no response has been received from the appointed representative and at least 14 days have passed since the initial attempted contact.
c) MBNA Europe Bank Limited may continue to send directly to customers statements of account and any other communications that MBNA
Europe Bank Limited reasonably believes it is obliged to send directly to the customer under applicable law or regulation.

ANY FAILURE TO COMPLY WITH THE ABOVE REQUIREMENTS WILL RENDER
MBNA EUROPE BANK LIMITED LIABLE TO FURTHER FORMAL ACTION BY THE
OFT. THIS COULD INCLUDE THE IMPOSITION OF FINANCIAL PENALTIES
PURSUANT TO SECTION 39A OF THE ACT AND/OR THE REVOCATION OF
MBNA EUROPE BANK LIMITED'S CONSUMER CREDIT LICENCE PURSUANT TO
SECTION 32 OF THE ACT.

[di30]

MBNA/Financial Difficulties/Slammed

From OTR an article in regards of MBNA and Customers in Financial Difficulties.

http://www.moneysavingexpert.com/new...m_campaign=box

MBNA slammed over unfair debt collection tactics.

Credit card lender MBNA has been slapped on the wrists for its poor treatment of customers struggling to make repayments.

More to follow on above link.........

[leclerc]

Re: MBNA/Financial Difficulties/Slammed

They are responding to the published statement which is on another thread here. They have been given an order which is to be in place by 1st January 2011 with regards to dealing with customers in financial difficulties.
OFT requires MBNA to improve debt collection practices - The Office of Fair Trading

See above

[Angry Cat]

Re: MBNA/Financial Difficulties/Slammed

MBNA, have been riding roughshod over customers for years!

http://www.oft.gov.uk/shared_oft/pre...quirements.pdf

Will MBNA change?
I doubt it!

[QCKate]

Re: MBNA/Financial Difficulties/Slammed

Good to see something being done about MBNA They are bullies and try to trap people into making payments before saying if they will accept a customrers offer of payment. They also lie about the regulations they have to comply with.

QCK
:bedjump:

[Caspar]

Re: MBNA/Financial Difficulties/Slammed

OFT imposes requirements on MBNA - 14/12/2010

Credit card lender MBNA has been rebuked for its treatment of struggling debtors after the Office of Fair Trading imposed requirements on the firm.

The OFT reprimanded the firm over the way its in-house debt collection arm dealt with customers in financial difficulties following concerns raised about the firm’s practices by Citizens Advice.

An investigation by the regulator found that MBNA, a subsidiary of Bank of America, was not being sufficiently clear when communicating with financially strapped customers who were offering token payments, and was in some cases failing to follow its own policy or procedures by bypassing customers’ appointed representatives.

The subsequent requirements take effect on 1 January 2011 and will require MBNA to make it clearer in letters sent to customers in financial difficulty that it will accept the repayment amount they have demonstrated they can afford to pay.

The lender will also have to maintain its policy of only contacting customers who have appointed a representative to act on their behalf if the customer or the representative has given permission or confirmed that the representative no longer acts for the customer; or the expected payment has not been made and MBNA has made reasonable efforts to contact the representative without success.

Ray Watson, director of consumer credit at the OFT, (pictured) said: "Our investigation found problems with the way MBNA communicates with customers in financial difficulties.

"MBNA has agreed that it will make its debt collection letters clearer and clarify its policies and procedures for dealing with appointed representatives."

The requirements do not preclude MBNA from sending statements of account or other communications in accordance with statutory obligations. In a statement the OFT added that MBNA had been fully co-operative with the investigation.

An MBNA spokesperson said: "As a result of ongoing dialogue with the OFT, we have agreed to deliver greater transparency in some of the communications we have with our customers in financial difficulties.

"We believe these changes are enhancements to our existing strong practices; we are in the process of implementing them now."

[pompeyfaith]

MBNA debt dealings 'must improve'

14 December 2010 Last updated at 11:32 MBNA debt dealings 'must improve'




Credit card company MBNA has been forced to improve the way it deals with customers struggling with debts after intervention from a regulator.
The move comes after the Office of Fair Trading (OFT) investigated the firm's in-house debt collection arm.
The review found that customers did not know if partial payments to start paying back debts had been accepted, and MBNA had bypassed debt advisers.
MBNA said it had agreed to "greater transparency".
Agreement The investigation began after Citizens Advice raised concerns with the OFT. It was worried about how MBNA dealt with customers in financial difficulty.
As a result of the investigation, the lender agreed that - from January - it would make it clear in letters to customers whether it would accept repayments at a level they could afford.
It would also ensure that it would deal with a debt adviser appointed to act on a customer's behalf, instead of bypassing this representative and dealing with the customer directly.
Direct contact would only occur if the adviser had given permission, they no longer acted for the customer, or a payment had not been made and the representative could not be contacted.
"Our investigation found problems with the way MBNA communicates with customers in financial difficulties," said Ray Watson, director of the OFT's consumer credit group.
If MBNA fails to keep to the new agreement, it can be fined up to £50,000 per breach.
A spokesman for MBNA said: "As a result of ongoing dialogue with the OFT we have agreed to deliver greater transparency in some of the communications we have with our customers in financial difficulties.
"We believe these changes are enhancements to our existing strong practices. We are in the process of implementing them now."

http://www.bbc.co.uk/news/business-11991536


About time too but why has it taken this long for the OFT to step in.

[Legal Beagles]

OFT requires MBNA to improve debt collection practices

The OFT has imposed requirements on credit card lender MBNA to secure improvements to the way its in-house debt collection arm deals with customers in financial difficulties.

More...

[Angry Cat]

Re: OFT requires MBNA to improve debt collection practices

The Office of Fair Trading has at last decided to impose 'Requirements' on MBNA Europe Bank:
http://www.oft.gov.uk/news-and-updat...ss/2010/136-10

Quite clearly, the OFT do not know quite how long this has been going on and;
how MBNA, have been off loading disputed accounts/agreements by selling them off the debt buyers; bulk debt buyers.

Only a wrist slap, though by the OFT!

Will the OFT take enforcement action in the future?

Of course not.
The mighty Bank of America (BoA) is involved...

[pompeyfaith]

Re: OFT requires MBNA to improve debt collection practices

Consumers have made many complaints about this outfit over several years quite amazing how the OFT has only just imposed sanctions now after a complaint by the CAB.

The OFT is also wide off the mark as to the actions MBNA use it goes deeper a lot deeper.

[pompeyfaith]

Re: MBNA/Financial Difficulties/Slammed

There are 4 threads on this subject now with replies on them all.

Can someone merge the threads please to make it easier to follow.

Thanks

[Amethyst]

Re: MBNA/Financial Difficulties/Slammed

will do

[di30]

Re: OFT requires MBNA to improve debt collection practices

Sorry PF......

Just came across your post now, apologies folks for missing the original post in regards of MBNA and for posting the news on another/separate thread.