Commentary on Barclays FirstPlus Loans?

[Des Colada]

Hello All,

I have been trying to research Barclay's FirstPlus loans but do not seem to find any comment on this site. I am sure I am wrong in this and wondered if someone could point me in the right direction please?

Regards

Des Colada

[ReddhLegend]

Re: Commentary on Barclays FirstPlus Loans?

Here is what was sent to the OFT in 2009 about First Plus. Those over on FPC know this info all too well....our fight continues to bring justice to all FP prisoners.

Re Complaint against First Plus Financial PLC / Unfair Contract Clause Terms

Further to my initial complaint, First Plus has published its financial accounts to 31 December 2008. Contained within these accounts is further evidence to substantiate the claim I am making against them. Additionally, this letter will also deal with how they advertise and sold their product and make reference to UCCT regulations, along with the OFT Guidance on Second Charge Lending.

By way of reminder, the interest rate clause within my agreement with First Plus reads:

"We may from time to time vary our interest rates. We may increase or reduce our interest rate for one or more of the following reasons, namely, to reflect a change which has occurred or which we reasonably expect to occur in interest rates generally or to ensure that our business is carried on prudently, efficiently and competitively."

When questioned about their interest rate policy they stated:

1 their rates are not linked to publicized base rates
2 falling house prices have meant they cannot reduce rates
3 they make comparison to new loans currently on offer in the market place and insist rates to current customers are competitive in comparison

Before moving on to information within their accounts, I would first like to deal with the above points raised.

Their advertising literature ( copy attached) makes reference to the fact that loan rates may go up or down “to reflect, for example, trends in interest rate movements”. They make reference to nothing else and the inference is clear. They also have amended the wording on their interest rate change letters (historic copies of which they are refusing to supply customers). They have historically used wording “the recent Bank of England decision forces Firstplus to increase APRs” and over time have changed this wording to state along the lines of “due to increases in our underlying costs”. This is clearly misleading and a clear attempt to distance themselves from base rate links when it does not suit them to be linked (ie in a falling market). Customers are also being told they cannot have access to historic letters as part of Subject Access Requests, claiming they are mass printed externally but the truth is that they do not want to knowledge of historic wording to be issued to those who have not held copies. Thankfully, I do have copies of interest rate change letters and the historic inference of a link to base rate is perfectly clear. I have attached specimen letters.

They also added the caveat to more recent loans stating a link to FHBR, again inferring a link to its customer base but denied by the lender. They have previously stated the following in advertising,

“Rate Increase - frequently Asked Questions

Why has my rate increased?
The interest rate on your loan is variable. This means that your rate could go up or down.

The way in which our interest rates are calculated is based on the Finance House base Rate (FHBR). Please refer to the terms and conditions on your credit agreement or visit www.fla.org.uk for more information. However any changes to the Bank of England interest rates or FHBR could affect the rate we charge our customers.

They state also in another point relating to customer information:

I wasn't aware my rate was linked to the FHBR. What's this?
The way in which our interest rates are calculated is based on the FHBR. Please refer to the terms and conditions on your credit agreement or visit www.fla.org for more information.

This is a clear abuse of the term variable and the way in which the lender is using the term to suit its own purpose, for its own gain and to the detriment of its customers, including myself.

2 House prices – Page 2 of the attached literature is quite clear – WE LEND TO PEOPLE NOT PROPERTY. It explains why they are the best choice and states clearly “This means we do not need to rely on the equity in your home to provide you with an affordable loan over an extended period”. Since they made their statement about house prices, market trends have started to increase and I understand the lender is no longer making reference to house prices which underlines how it has been clearly misleading its customers.
3 The reference to market comparison is irrelevant. They are no longer lending to new customers and the economic climate along with the outlawing of PPI sales which were key contributors to income, has meant that lenders have changed their lending and pricing criteria considerably to new entrants. This has no bearing to existing, contracted and tied in customers. The market is significantly less competitive to new customers lenders due to the loss of companies like First Plus, Picture and, as I hear recently, First National Bank.


Faced with this base level of information, I do question whether in fact the loan has in fact been missold and I will ask the FSA to make judgment on that as FirstPlus entice customers in, their literature makes you think in a certain way when the reality and experience of the loan in practice is a completely different thing.

The stance of First Plus currently seems clear. They are adamant that their interest rate policy follows no rate trend and that their decisions are based purely upon their “commercial judgment”. I have attached a chart that plots interest rate movements since the inception of my loan and the trends are clearly apparent. The accounts provide an insight into their commercial judgment and some salient points need raising:

1 the notes to the accounts reference the fact that the business is now noted as a GOING CONCERN and that the auditors have requested written support from Barclays for the business
2 Page 31 of the accounts state that Barclays own funding is linked to Bank of England base rate, thus its own interest charge during 2008 decreased in line with downward movement. Interest expense dropped from £200m in 2007 to £174m in 2008. Note also the significant falls in base rate did not occur until early 2009 which will make even bigger savings to their interest expense.
3 Interest income for the business, as no new loans are now being taken on, increased from £254m to £268m but is now only likely to change with movements in their customer interest rates.
4 Additional income from the sales of PPI, went from £132m in 2006, to £101m in 2007 down to £27m in 2008. This is a huge fall in income and one that is having to be compensated for in other areas. The only other area of income they have any control over is the interest income determined by the rates they charge current customers.
5 The drop in their own costs and the avoidance of passing these savings on to customers has seen them increase the gap between interest income and expense from £54m to £93m. The gap for 2009 will be even bigger with base rate at 0.5%. This gap has been created to enable the business to survive knowing the market conditions dictate that few customers are able to settle their contracts by cash, remortgage or other resources, thus we are, in essence, captive.
6 The change in status of the accounts to GOING CONCERN has meant they have had to note previously “denied” events, such as the fiduciary duties regarding the payment and receipt of commissions for the sale of PPI. They are also being heavily targeted for the misselling of PPI and have had to put aside £8m as a provision for the year. Barclays have had to put £9m liquidity into the balance sheet and the losses posted for the year to 2008 would have been well in excess of £20m had they not manipulated £40m of additional income through the non-passing on of interest rate falls.

All of the above has massive implications when reference is made to Unfair Contract Clause Terms. First Plus clearly state they can do as they please in the application of their commercial judgment and will not disclose to anyone the nature of their interest rate clause that would enable customers to plan and budget for the future ( as their literature alludes to also). Action has already been taken against Barclays Investments and Woolwich for clauses within their products (one investment, one mortgage) where the argument for “reasonableness” in the justification of action is simply too vague. The FSA acted against Woolwich over a mortgage term that stated that they could vary rates for any valid reason (http://www.fsa.gov.uk/pubs/other/barclays.pdf ). The ruling was that the term gave the firm excessive discretion in varying interest rates. First Plus behaviour and term is no different. The investment product scenario was very similar.

With regards to the Unfair Contract Terms guidance, the first point that jumps out, underlines all of the above completely,

"A standard term is unfair 'if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer'- Regulation 5(1). Unfair terms are not enforceable against the consumer. The requirement of 'good' faith embodies a general 'principle of fair and open dealing'. It means that terms should be expressed fully, clearly and legibly and that terms that might disadvantage the consumer should be given appropriate prominence - see below. However transparency is not enough on its own, as good faith relates to the substance of terms as well as the way they are expressed and used. It requires a supplier not to take advantage of consumers' weaker bargaining position, or lack of experience, in deciding what their rights and obligations shall be. Contracts should be drawn up in a way that respects consumers' legitimate interests. In assessing fairness, we take note of how a term could be used. A term is open to challenge if it is drafted so widely that it could cause consumer detriment."

It also states,


"10.4 A term which merely says that variations will only be 'reasonable' or will only be made 'reasonably', is unlikely to be any fairer than one which contains no such qualification, unless there can be little doubt in a reasonable consumer's mind as to what sort of variation, broadly speaking, such wording allows, and in what circumstances. Where the criteria of reasonableness are vague, or clearly meant to include the best commercial interests of the business, there will be scope for the supplier to change the bargain unfairly to the detriment of consumers, simply on the basis that he needs to protect his profit margins."

The evidence of the accounts shows that the business would essentially now be insolvent without manipulating the interest rate clause “to protect its profit margins”. Its underlying costs have massively reduced and there is no argument possible that they can present to change what is clearly shown within their accounts. I am not free to exit my contract, I am tied into my contract and the nature of the bargain I am faced with is one-sided against me and breaches Unfair Contract Clause Terms.

Making reference to the OFT Guide for Second Charge Lending the activities of First Plus contravene a number of the guidelines provided. In it is stated the overriding principles of all businesses operating shall be the need for appropriate consumer protection and fair business practice. I have asked for transparency on how First Plus calculates and decides on movement in interest rates, when previously the links to base rates were clear and in more recent times, have been “changed”. First Plus could not be any less transparent if they tried, simply trying to justify that their “commercial judgment” applies but will not disclose any further than that because of “commercial sensitivity”. Fair and Clear contract terms are also required in plain and intelligible English. They simply state the term “variable” at point of sale and leave you to believe the “variable” they use is the one that applies in the mortgage sector. Failing to explain how they define variable means that they fail to comply to this point also.

It is stated that Advertising must be compliant and the attached literature may well tick the statutory boxes. However, the loan and business it advertises differs vastly from the loan in practice. The “low cost” solution, the “people not property” claim, the lack of explanation regarding working of interest rates in practice are 3 but areas where the advertising falls foul of my experience of the loan in practice. For me, the misleading nature of the true reality of the costs of borrowing and the agenda of the lender over the term of the agreement need to be covered in far more detail than simply quoting the APR and “total amount payable” based on the day one repayment. Your section 3.6 is simply not explained at all by the lender. They clearly did link their loans to base rate in an increasing market but now they found troubled times coupled with a falling market, simply resorted to lists of “excuses” as to why they would not reduce rates – property values falling, competitor pricing – matters covered earlier. Reference is made to brokers, and I was a victim of Central Trust, who failed to disclose their commission at point of sale, failed to disclose or offer any alternative to First Plus and, on the matter of a separate complaint, misrepresented and sold the PPI policy in an appalling manner.

In Section 4.4 you mention the nature of rate changes in terms of contractual experience. You state “rates should only be increased on a loan to recover genuine increases in costs which have an effect on the loan and should not be misused, for example, to take advantage of a borrower’s lack of ability to end the agreement. Clear explanations should be given to customers prior to rates or charges changing.” First Plus have technically increased their underlying customer rates as their own funding costs, the interest on their own loan to Barclays, is linked to Bank Base rate. Thus their own funding costs have dropped by 4.5% in the last year and not one penny has been passed on to customers. As such we have faced huge perceived increases from where we would expect loan rates to be. My loan started at 9.4% in 2004, increased to 12.1% and I would now expect to be paying at least 4.5% less. Their overheads have reduced as they are now purely an administration business to manage the existing loan book and it is clear they are using the drop in their funding costs to increase their profit margins by holding customer rates to cover the loss in PPI income streams, as well as trading losses in general. Clear breach of this regulation and UCCT. The current market means that I, as well as many others, cannot end the agreement and this knowledge is understood by the funder due to its knowledge of the lending markets.

The business is clearly acting in breach of these guidelines and needs action as alluded to in your section covering Regulatory Compliance and Enforcement.

I have also been interviewed by the BBC Radio Show, Moneybox who had their Compliance Expert review the First Plus interest rate term and he was of the opinion that the term clearly breached UCCT regulations, to the extent that left unaltered would deem the loan potentially unenforceable. First Plus were given an opportunity to respond and said nothing more than “we are doing nothing wrong.” The attitude of contempt they are showing towards consumers is appalling.


In summary, the position is thankfully now pretty clear following the publication of their 2008 accounts and the business is simply milking its customer base to protect is trading position in breach of UCCT. It is clear the business would essentially have failed without this action and the use of “commercial judgment” for a business that has lost £50m over the last 2 trading periods and weakened its balance sheet through losses and dividends by over £100m over the last 4 years, then I fail to see how it can gain any sympathy for its actions.

I not only require the interest rate clause changing to something clear and agreeable, I require it backdating to inception of my loan. If they simply change the clause now, at the bottom of the interest rate cycle, when they have increased the gap between interest expense and income to the levels they will have done by now (my estimate is this will now be in excess of £150m with BBR at 0.5%) then any changes will be to the sole benefit of FP and to the detriment of myself and other customers. . I expect the lender to oppose any changes due to the damaging nature of the changes but that does not make their actions “correct” or justifiable in the face of regulations that exist to protect consumers.

What has been apparent over the last months during my dialogue with the likes of FSA and FLA has been the complete inability of anyone wanting to take serious ownership of issues and wanting to pass “hot potatoes” around. I have experienced the FLA flagrantly allow FirstPlus to avoid telling me how they calculate their interest, instead colluding with the lender to provide an answer, telling me it dealt with the matter, when in truth they were trying to deflect me to another part of the Lending Code. I declared to the FLA that I was prepared to declare a vote of “no confidence” in their position as an independent adjudicator by allowing a lender to simply ignore their own Lending Code.

This rate issue has been passed around by a number of regulatory parties before falling at your door and having seen the previous actions on an investment product ruled on by the FSA, guidance given to Woolwich over a similar lending term, then the only reason the OFT would do anything other than rule against FirstPlus would indicate other “agendas” at play. It is clear the resolution to this matter will put serious financial strain and potential insolvency of that business should its parent, Barclays, not wish to assist but that is ancillary to the issue. If they cannot financially support the changes needed to put this matter right then it underlines the guilt in the application of their term in the first place that is the only thing that has kept them solvent in recent times.

I now call on the OFT to deal with the information presented in a timely manner and let me know how you will be approaching the lender concerned to make the changes they must make to protect not only my future, but that of many thousands of others, who face future financial ruin when all they went in search of was “an intelligent financial solution”, “a low cost loan that could save you 50% in monthly outgoings (before increasing them 100% over the course of the loan!!)” and wanted to do nothing more than do as First Plus said “Relax and get on with your life with a First Plus loan”.

I look forward to your confirmation of receipt of this information and confirmation of the timescales within which I can look forward to necessary changes being recommended.

[Liveinhopei]

Re: Commentary on Barclays FirstPlus Loans?

Does anyone think that the recent exposure of Barclay's practices will now lead to FirstPlus also being forced to come clean? Barclays must have earned a forune from FirstPlus over recent years. Must admit that I am severely dissapointed in their business ethics and heads must roll. Britain was an example to the World--greed by some has now made us a laughing stock. FirstPlus typifies this.

[shell]

Re: Commentary on Barclays FirstPlus Loans?

So how is this new Libor scandal going to affect First plus customers? I know they are going to say they didn't use Libor to determine interest rate increases, it was only by FHBR.

Well I have a letter from F/P saying

"The overall price of Firstplus secured loans, including our ability to amend prices, is determined by a range of factors, including:

- Amendments to the London Inter-Bank Offered Rate, Bank of England Base Rate and Finance House Base Rate"

So I'm curious.

[biondani]

Re: Commentary on Barclays FirstPlus Loans?

Not just First Plus. I'm with Future Mortgages who use the 3-month libor + X% to calculate my rate. Can't remember X at the moment. Barclays could have cost me thousands.

Ian

[Des Colada]

Re: Commentary on Barclays FirstPlus Loans?

Hello Folks, it's been a while since I first posed this request. Just thought I would add my input as a way of keeping this fresh. So I am still trying to pay off my BFP loan, it's been running for about 8 years and I seem no closer to seeing light at the end of this tunnel. As ReddhLegend says, this really does feel like a prison. I had a close friend die just over a year ago and she left me some money in her will. It was a not insignificant account. I contacted BFP and again asked for an early settlement figure. When the solicitors letter arrived I thought there had been some horrible mistake, because according to them I still owed over 80% of the original amount. When I calculated what I had already paid them (over the past 8 years) it amounted to 90% of the original amount.

So it looks like, by the time I finish paying these loan sharks I will end up paying around one and a half times more than the original amount.

I should probably add that in the time between taking out this loan and my understanding of the whole thing now I would happily admit to how naive and ignorant I was of what I was getting into. Had I seen a statement on the contract that stated something like "final repayment amount estimate" I would have never signed the contract because it would have been very obvious what a bad move that would have been. As others (the Citizens Advice Bureau) have stated "you signed the contract so you have to see it through".

But as ReddhLegend says, it's like a prison sentence.

I just want others who may view this message thread to know that you are not alone in being in this horrible fix, others are there with you and are feeling just as desperate.

Des Colada.

[skeetergirl]

Re: Commentary on Barclays FirstPlus Loans?

Surely, there must be issues in their contracts that can be challenged, has anyone looked, they got caught redhanded misselling ppi. they cant have got the contract right. Anyone fancy checking one.

[Des Colada]

Re: Commentary on Barclays FirstPlus Loans?

This morning the new boss of Barclays, Antony Jenkins was interviewed on the Today program (radio) (http://www.bbc.co.uk/news/business-21423691), he was very keen to get over how Barclays wanted to rebuild itself around a more 'ethical' business. He was clear that Barclays should not sell products that were not in the interests of the customer. HOWEVER, he also fell back on the old "new management" mantra "I don't want to dwell on what was done in the past" - which is just another way of saying "If you got screwed by us in the past then what happened in the past should stay in the past"

Perhaps we should be petitioning him directly to look again at the crooked contracts supplied to customers of Barclays FirstPlus? They also mentioned a twitter conversation and I am sure that, if this subject was raised there, it would raise the profile of all the Barclays FirstPlus victims?

Comments please?

Des

[Celestine]

Re: Commentary on Barclays FirstPlus Loans?

I can't find the Twitter conversation....any ideas?

[Des Colada]

Re: Commentary on Barclays FirstPlus Loans?

I can't find the Twitter conversation....any ideas?

Didn't find anything specific but searched for FirstPlus, Barclays FirstPlus etc. Tweeted on @BBCr4today , @Barclays , in the hope that someone would notice it. Raise the profile seems to be the way to go and hopefully someone will EVENTUALLY realize that Barclays FirstPlus customers are, in fact, victims. As the new high profile boss, Antony Jenkins is not going to want a lot of media attention on yet another unethical section of his business.

[Des Colada]

Re: Commentary on Barclays FirstPlus Loans?

It's been over a year since I posted on this subject and in the past 12 months nothing has changed. Barclay's first plus continue to rake in profits by milking it's existing, locked in, customer. I tried to find out how much was left to pay on this some time ago and the solicitors letter that came back (that's the only way to have a conversation with them now, through a lawyer) basically stated that I still had the original debt to pay back even though if you calculate what I have already paid them I have paid off the actual loan a long time ago. Now I am just paying interest it would appear - but there's no documentation to show any of these details, no monthly (or yearly) statement of the account. It's like living a prison sentence.

Has anyone ever won an "unfair contract" case with these leeches?

What galls me the most about this is that had the original contract shown what the final repayment amount would be I would NEVER have signed off on it.

Des

[Des Colada]

Re: Commentary on Barclays FirstPlus Loans?

Here's a great article from September 2013 that highlights the plight of many Barclay's First plus customers. It also pretty much describes the situation with my loan. I paid off what I borrowed but now have more than the original loan to repay due to interest alone. He's completely right - we are the forgotten victims and no one is prepared to acknowledge we exist - just look at the pithy response from Barclays "A spokesman for Barclays says: ‘We do not accept that any of our terms and conditions are flawed. We have complied with our obligations on statements. We have not applied excessive interest rates.’ "

In other words "we know it's unfair practice but you can't get us on anything".

The article is here; http://www.thisismoney.co.uk/money/c...base-rate.html

[Des Colada]

Re: Commentary on Barclays FirstPlus Loans?

My BFP loan got sold to "ElderBridge" at the start of the year. To date (in line with so many others) my interest rate has remained high and I am not even sure what rate it is currently sitting at. I saw on another forum that a BFP loanee stated that he had been getting account statements, I don't think I have ever seen a statement of my loan account with BFP. I don't expect that to change now that Elderbridge (I guess the name suggests that they will see you into old age while paying off this debt), but I am going to write to them asking for a settlement ammont, how much is left to pay and what the current interest rate is on the account. I will also ask them how often I should be seeing an account statement.

It really is the debt that just keeps taking .....

[meellis]

Re: Commentary on Barclays FirstPlus Loans?

You could do with sharing any info with Fred on here he two is fighting FP with others and you might have something that helps each of you.

[Worthington]

Re: Commentary on Barclays FirstPlus Loans?

The key issue here is that the contracts could be challenged in court under UTCCR rules as essentially First Plus/Elderbridge have changed their terms and conditions from what we all signed up for. We clearly thought we had signed up for a Variable Rate loan but BFP have fixed the loan rate since 2008. There is little point writing to BFP/Elderbridge or the Ombudsman because the Ombudsman will only direct you to a court if you believe the contract is unfair.

So we are left to individually fighting Elderbridge, who by the way are the owners of this debt or to see if many of us could take out a class action case agianst them.

It may be best if one case goes to court and we see what the result is before considering a class action. However, any individual ruling in the County Court will not apply to any future claims as they are taken on an individual basis for decision. There is little point debating this further as I have seen these threads on many websites for FP go round and round and go nowhere. BFP/Elderbridge must be smilling at the moment as they see all of their customers, and that is what we are as all blow and no go. Apart from Halifax and a few others of course. Who has taken action.