Guide to Claiming Hardship - updated February 2009

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THIS IS CURRENTLY BEING UPDATED FOLLOWING THE TEST CASE JUDGMENT AND THE WAIVER LAPSING - PLEASE POST ON THE FORUM FOR ADVICE and read HARDSHIP - what to do now.... - Legal Beagles

FOR REFERENCE BCOBS STATES
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GUIDANCE ONLY

Dealings with customers in financial difficulty

BCOBS 5.1.4 01/11/2009 Principle 6 requires a firm to pay due regard to the interests of its customers and to treat them fairly. In particular, a firm should deal fairly with a banking customer whom it has reason to believe is in financial difficulty.

Principle 6 - Customers' interests A firm must pay due regard to the interests of its customers and treat them fairly.

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With the waiver on bank charges complaints remaining on hold for the foreseeable future and with the banks continuing to unfairly overcharge many of their customers, along with the general recession, more and more people are falling into hardship.

If you are struggling to cope financially then you MAY be able to ask your bank to consider your claim as exempt from the waiver and consider an interim payment.


WHAT IS FINANCIAL HARDSHIP ?

In making an assessment of financial difficulty the banks will take into account:

• evidence of changes in lifestyle, including loss of employment; disability; serious illness; imprisonment; relationship breakdown; death of a partner; starting a lower paid job; parental/carer leave; and starting full-time education;
  
  
• and evidence of the following

• items repeatedly being returned unpaid due to lack of available funds;
  
  
• failing to make loan repayments or other commitments;
  
  
• discontinuation of regular credits;
  
  
• notification of some form of insolvency or court proceedings
  
  
• regular requests for increased borrowing or repeated rescheduling of debts;
  
  
• making frequent cash withdrawals on a credit card at a non-promotional rate of interest; and
  
  
• repeatedly exceeding a credit card or overdraft limit without agreement (and, in this regard, where a complainant has incurred over £500 in unauthorised overdraft charges in the previous 12 months, that is to be treated as indicative of financial difficulty).

HOW TO APPLY TO YOUR BANK

Whether you already have a claim in progress with the bank or on stay in the courts then the process is the same.

• STEP 1: Complete a Financial Statement form - Legal Beagles - be honest - there is guidance to help you complete the form but please ask if you get stuck. This will show the bank your income and expenditure and a general overview of your indebtedness. If you would like a team member to go through your financial statement before you submit it please either post it to a thread or email it to admin@legalbeagles.info. Details will remain confidential unless you give permission.

• STEP 2: Get together any letters of arrears, threats from DCA's, attachment of earnings, court claims etc against you to show that an interim payment will be instrumental in getting you back on track financially. You will need to send copies of these to your bank. Also evidence of benefits receipt or any illness which you think will help your case.

• STEP 3: If you already have a list of the charges you are claiming then update that with any new ones, recalculate interest to date and include with your letter.

• STEP 4: Write a letter to the bank explaining you wish to reclaim your charges under the Unfair Terms in Consumer Contracts Act and would like them to consider your complaint and refund under Financial Hardship. We do not supply a template for this letter but there are many examples on the site which are linked to below. In the letter you need to list the reasons, using the guidance above, why you consider yourself in financial difficulty and list any enclosures of letters from creditors.

• STEP 5: Send the letter, evidence of hardship, financial statement and list of charges if you have one to the bank complaints department by recorded delivery if possible. KEEP A COPY FOR YOURSELF.

• STEP 6: 5 days later telephone your bank and check they have received your complaint and are reviewing it.

WHAT HAPPENS NEXT ?

Then your bank has 8 weeks to make a final decision as to whether you are in hardship and what they are intending to offer you.

Please be aware that the banks do NOT have to offer you a refund at all, if they do then they may wish to pay it directly to your creditors expecially for mortgage arrears. In our opinion this is a good way to do it as the intention is to get you out of immediate crisis. Always ask for receipts for any direct payments.

Refunds from some banks may be a % of your claim, others may directly relate to your evidenced hardship.

Alongside offering a refund, if at all, the bank may try and assist you in your financial difficulty by cancelling direct debits, moving you to a basic bank account or recommending you seek the assistance of debt charities such as CCCS. They may also put a halt on future charges, move your account, if in debit, to collections and work out a repayment plan with you.

This is not a quick fix solution, and the bank are obliged, under the banking code, to look at your entire circumstances.

The Bank may also ask you to complete their own version of a financial statement - commonly the CFS (common financial statement). You can find a copy of this Money Advice Trust - Welcome to the Common Financial Statement.


SHOULD I SPEAK TO THE BANK BY PHONE ?

Your bank may wish to speak to you on the telephone to go through your circumstances, this is fine too, however if any offers are made ask for details in writing, by email or post, before agreeing to anything.


THE AMOUNT OFFERED IS LESS THAN MY CLAIM

Under the waiver terms any settlement you are offered and accept now can not be deemed in full and final settlement of your claim. If your claim is in court, leave it there, you needn't do anything. Any repayment now will be taken off any final settlement after the test case conclusion. It does leave the door open for you, on the conclusion of the test case, should it be in our favour, to go back and reclaim the remainder of the charges and interest due to you. If the test case does not go in our favour (extremely unlikely in our opinion) the bank cannot reclaim any payment made to you now, back.

If your hardship continues, or worsens following an interim payment, you can go back and ask for a second payment. However you will need to evidence where the first payment went and show you have been making efforts to sort things out.



IMPORTANT

Please start a thread in our Hardship Forum and ask any questions as you go along. And keep us updated as to progress. This will help you, and others in the future.




SOME EXAMPLES OF HARDSHIP LETTERS

http://www.legalbeagles.info/forums/showpost.php?p=102682&postcount=32

http://www.legalbeagles.info/forums/showthread.php?t=79

http://www.legalbeagles.info/forums/showpost.php?p=79427&postcount=5


Please post up your draft on your thread and we can help you

Best of Luck xxxx


WHAT IF THEY TURN ME DOWN ?

If your bank turn you down for a refund of charges after claiming hardship or they don't respond with a final decision within 8 weeks, and you consider your self to have a good case, then you can take your claim to the Financial Ombudsman Service.

They are currently finding in favour of claimants to the region of 84% of claims.

You will need to send them copies of all letters, evidence, and responses from the bank.

You can view the forms needed to complain our complaints procedure and how to complain .

They do have a bit of a backlog but you should have a resolution within 90 days maximum.

If you are turned down for hardship, remember your claim will stay in the system for the conclusion of the test case.