Posts Tagged ‘credit’

Does the FOS Work for Us?

April 14, 2009

I have earlier praised the Financial Ombudsman Service for its very existence.

My thinking is that it will act as a check on creditor failures to observe the rules, and that findings would take into account these rules in dealing as ‘piggy in the middle’.

Well I’ve been in ‘the waiting room’ of the FOS now for over a year and I am far less certain of this. Even more important I am very concerned at the extent to which the debtor has still to fight to get a proper hearing.

I cannot give you full details of the cases involved, since to mention the companies could well bring those savage legal departments sniffing like the monsters in any one of a thousand science fiction films! I can say that the process of the FOS is wearing for the debtor.

That process is three-stage. More if you take the delays into account.

The queue does of course relate to the changes in the volume of work, and the time it takes to train up; no basic criticism over that since it has to take the banks’ unfairness on its shoulders. and we know there is plenty of that.

First stage of actual process is with the adjudicator. Here one is dealing with a new process, so in essence it is necessary to repeat the arguments you have given to make sure they are fully understood, together with one’s perceived faults in the bank or credit card company response.

If you don’t like that – and from my experience don’t expect to – you can ask for the adjudication to be reviewed. If you don’t like that you can request your case go to an actual Ombudsman. Each time you need to re-present your case to some extent.

Now I am sure many people are happy with their experiences at the FOS so I am not going to dismiss its work out of hand, but sometime this year I will be dealing with an actual Ombudsman and that will certainly tell me whether I still have praise for the process.

Any way, for the umpteenth time now I am having to prepare my response to what I consider an appalling adjudication which reads to me almost like a letter from one of the companies.

I plan to write more on the service, and on the whole process, here, in my book, and on my website.

Joseph Harris
Debt Control Man

Can Debt Really be a Way of Life?

November 13, 2008
Life has a habit of knocking us off our perches, does it not?
Anyway I’m back with the blog and thought a quick review of the national and international scene might be worth the time.

I can actually remember when most people would at least be aware of the saying ‘neither a lender nor a borrower be’. And then, right at the beginning of the ’60s, came to our shores the first hire purchase company [Union Discount if I have the name right – started by the man who later created the Bank of Wales].

Hire purchase (h.p.) was quickly dubbed ‘the never-never’. I am still not sure if this meant you never finished paying, or if it meant that you never fully paid.

The first implied that the company had you in its grasp, the second that one paid in such small amounts over such a long time that you never really paid its value. When inflation was serious (remember it has reached 15 per cent a year within the past 40 years) of course the value of the cash used to pay was indeed well below the worth at the time the contract was signed.

It may have been at first that the loan was secured against the item, but later the loan became separate. In a way credit cards work on a similar basis except that the loan is never tied to any goods specifically.

Over the years the idea of credit grew and caught on. After all kings had always borrowed money – to fight wars if nothing else – and the Government of England had found itself with a debt in the seventeenth century.

That debt led to the creation of the Bank of England – a private joint stock company, empowered by parliament to handle the national debt!

The entrepreneur who had seen the opportunity later went on to bankrupt Scotland and force the union of the two countries. But that, as you can imagine, is a quite different story!

By about twenty years ago the idea of credit, that old frowned on idea of ‘buying on tick’, was accepted. Governments had early learnt how easy it was to run deficits on the nations’ dealings internationally – the balance of payments – and on the annual budget.

And we did not resist the idea of having more goods than we had earnt!

And companies, who always had been dealing with uncertainty, found debt a very good way of dealing with the lags between orders and delivery and distribution and sale. And then came the more relaxed control of the financial sector.

And the development of ‘derivatives’, and sub-prime mortgages. I don’t have to tell you much about those now, as they have been well discussed in the press, on radio and on television.

And in blogs…

I have seen all that well described as MLMs and Ponzi schemes, and the whole sector as a casino. And when those bastions of sobriety, the banks, joined in I am afraid there was nowhere else to go but down.

‘Down the rabbit hole,’ as Lewis Carroll put it so well, and in to Wonderland. Well a land in which the great and the good certainly seem to have well-developed senses of self-delusion.

And you spotted how our very own Gordon has taken centre stage, as though born to acting.

But then aren’t all politicians? [Paulson on his knees to Pelosi – I ask you!]

Meanwhile the massive $707bn that Paulson and Bernanke twisted arms to get the US Congress to approve to buy ‘toxic’ [don’t you love that term? It means poisonous!] debts from the banks is now not going to be for that.

Whatever; its purpose appears to be to pay the gambling debts of those big businesses, rather than to spur the US economy, which has a really big hangover from the ‘credit economy’.

Not incidentally that the $707bn tag is even very relevant to the new debt we are all going to have to pay off some time – through taxes – which as already reached about $2trn [that’s $2,000,000,000,000]. Maybe it needs some more noughts. It is big for sure.

It is about $300,000 for every man, woman and child on the planet – assuming a population around 6.7bn. In English say £200,000. But the possible real amount of toxic debt – silly me, I mean derivatives including sub-primes that have gone sour [not all have] – is about five times that.

So you owe a million; so do I. that puts our personal problems in perspective, huh?

Joseph Harris

Debt Control Man



Negotiating With Creditors for Changes in Terms and Loan and Debt Schedules – 5

September 27, 2008

There are just a couple more thoughts I would like to share with you on this topic. These relate to what changes any debtor might ask a creditor to grant.

But first let’s consider how much room a creditor has to grant variations. Well, look at their terms and conditions. The creditor assumes the right to change any terms and conditions.

So they can change practically anything in light of a negotiation. Unless of course they want to admit force majeure, unfair practice and any other weaknesses in their position.

So ignore any ‘we can’t do that’. You can point out to them that they may wish not to follow some path, but they themselves declare there is no actual restriction on their action – let alone in a reasonable negotiation.

I think the actual amount of repayment is a fairly obvious matter we have dealt with. But I do wonder if the frequency is carved in stone or set in concrete. Whether it might make sense to alter that is for a particular debtor in a particular circumstance. But don’t be afraid to seek it if you need it.

Any debtor is going to be in default or risking default because of changes; there can be so many of these I won’t list or example them.

But the solution to the new situation can be any one of a number of things or a combination of some of them.

It may be that the only route you can see is having all your debts written off. Now this is expressly mentioned in the Banking Code Guidelines as an option. So don’t be afraid to suggest it if it is appropriate.

It is more likely that your problem is a lowering of expectations and so a lowering of the sum available for repayments. It may be that you have a ‘between jobs’ situation with an assured income to start ahead.

Think what that requires from your point of view, don’t worry about the creditors’ view – any creditor is well able to worry for themselves.

You might need a break from payments for some months. You might feel able to meet the repayments on the sum as it is, but fear the worry of interest costs. Your proposal should reflect such need.

The balance can be frozen. Payments delayed. Interest rates reduced. Payment amount varied.

You may be going into hospital, or have some other serious interruption in your normal life. Or you may have to deal with the effects of such an interruption afterwards. Talk to the creditor. There are many provisions which protect you in these circumstances.

And the creditor is not excused from due diligence just because there is an outstanding debt.

Do You Feel Well Advised on Credit, Debt, Finance?

August 28, 2008

In a modern world these matters are crucial. Half a century ago in England and Wales and indeed in most of the world the mantra that was just starting to go out was: “Neither a borrower nor a lender be”.

But today the oil of society has become credit—and its siamese twin partner, debt. And most of us are borrowers who hold the debt.

Realisation has grown of this. In the past few years there has been a flow of legislation and regulatory duty to help the ordinary consumer. You and me. I was considering this when I came across the Financial Services Authority (FSA) consultation paper review, put out in April this year.

In its retail distribution review the FSA goes for a simplified structure where there would be independent advisers on financial matters, sales persons and organisations would not be advisers as well and a third arm would be the Money Guidance set up which I have this page on

While I think this may at root be a good idea, I wonder how independent advisers will make their income without charging us. And wit the Money Guidance free advice service and such excellent charities as the Citizen’s Advice Bureaux and National Debtline.

Of course if advice and sales are mixed the inevitable leading will happen. Unless the agent has deals with all suppliers—quite a task.

But by splitting the tasks it may simply put an extra cost on the consumer. Presumably these qualified commercial advice specialists will have legal liability for their advice. That might be a good thing. But how many people will be attracted to advice with the costs and trouble of the qualification, the cost of legal insurance and the problems of attracting custom?

There is plenty of meat in the report, and I may return to it after the final report comes out in October. I just wonder how many people would seek advice from an independent advisor before making a purchasing decision.

Joseph Harris
Debt Control Man

Dealing With Creditors

August 12, 2008

Normally dealing with a debt is straightforward. You borrow money, agree a payback schedule and keep to that schedule. Everybody is happy and normally—if your creditor is one of the banks or credit card suppliers—you get phoned from time to time with offers of more money at special terms, including periods at 0% credit.

Who can resist—and don’t they love you when you say ‘yes’!

But when you tell them there is a problem or miss a payment or two how that changes. Suddenly you are besieged with hostility and suspicion. Your character credit becomes zero, never mind about your credit rating.

Not all companies are like that. Some show the greatest sympathy and helpfulness; others take a bit of pushing to meet you where you are now, rather than where you were.

But far too many decide it is open season on debtors and you are subjected to all sorts of threats, phone calls and horribly officious-looking letters. And whatever you say or write seems to be brushed aside.

And when you phone, or are phoned, you rarely speak to the same person, and sometimes not even with the same call centre. Every time you are invited to repeat all your submission to them and each time there is a promise to put it on the computer.

You have no idea what they might put on the computer, of course.

So, if you follow my advice, you write letters. And then, often as not, any reply ignores most of what you have written. You do have to persevere.

There are rules that the creditors must follow. And they are a lot more in your favour than creditors would like you to know. The rules are contained in law, regulation, licence and code.

Remember this next time there is one of those phone calls or letters.

Joseph Harris
Debt Control Man

How’s Your Financial Competence?

July 19, 2008

I ask not out of nosiness, but because tomorrow various arms of the financial great and the financial good are gathering together in Cambridge [Money Guidance Pathfinder conference] and in three days will, it seems, work out how to teach us all better money management.

Well. No. I’m being unfair. This process started here in 2006 when the Treasury declared it would happen. And they did this because the OECD decided it should [though you will hear the government take the credit as though it was all their own work!].

And what it seems they are actually discussing is the detail of a pilot progamme in the north-east and the north-west of England to start next year.

The idea behind it is to give much more, and much more readily available, information on what credit in particular and money management in general is all about. And I think we have to applaud the idea, and the fact that it is making progress – it may even be that the UK is moving faster than any other country on it.

The conference includes banks as well as existing free information providers like the Citizen’s Advice Bureax, so there is a chance it really will deliver good advice.

But why, whenever I see the word stakeholder in these announcements, do I feel about to be in need of the guidance of Caveat Emptor[let the buyer beware – or look for the small print – or hold tight to your purse]?

At least we can watch and wonder with the hope that in a few years most people really will be made more aware of the dangers of bad money decisions, without the need to have been through the nightmare of bad debt first – as so many of us have been.

I am writing a blog page on the Money Guidance process, but I will take a few days to put it together.

Joseph Harris

A Very Gloomy Outlook

June 30, 2008

It would seem that the Bank for International Settlements has a very gloomy view of the years ahead .

That may have many effects, and for anyone owing money it could suggest that conditions will be changing. For that reason you need to be sure you have flexibility in any arrangements you have. Don’t tie yourself to a rigid repayment system if you can possibly help it, and try to make sure there is some arrangement for flexibility in repayments when the need arises.

All easier said than done perhaps. But if you don’t ask there is no chance of getting some room for unforeseen problems. If you do ask you may be surprised what may be possible. and feel free to shop around; I doubt if any particular supplier of credit can claim your loyalty.

These days we are all numbers on a computer!

Starting at last

June 26, 2008

The first part of my step by step book on controlling creditors and debt collectors is almost ready. It is about forcing them to obey the law in England and Wales. There are variations in the law in Scotland and in Northern Ireland, and of course in the different countries of the European Union.

I will publish it here soon and also put a lot of information and advice on this blog.

I have been there and done it! So I can guide you to better control of your debt crisis.

Joseph Harris