Posts Tagged ‘creditor’

New Lending Code 8: mental health, DMHEF evidence form

November 18, 2009

179. The Money Advice Liaison Group (MALG) has produced a Debt and Mental Health Evidence Form (DMHEF) which provides a standardised methodology for advisors and creditors to share relevant information about the customer’s condition from health and social care professionals. [Reproduced with the kind permission of the British Banking Association -see link below]
180. Subscribers are encouraged to consider the DMHEF if it is presented by the customer or their adviser (with the customer’s consent). [Reproduced with the kind permission of the British Banking Association -see link below]

I am not a great one for forms. I find them limiting rather than liberating, and often used to avoid real thought by creditor representatives. Filling them in is often a battle of understanding the intentions of the setter, and wondering if the reader will understand.

However, if kept relatively simple and used as a basis for discussion, thather than an avoidance, a well designed and focussed one can contribute greatly.

And this form is on pointedly directed at cases where the debtor has a number of professionals involved, and enables a gathering of information to advise the debtor on suitable action.

It has been developed by the Royal College of Psychiatrists for MALG to support the MALG guidelines. It is available from http://www.moneyadvicetrust.org/content.asp?cid=88  (adviser version) and http://www.moneyadvicetrust.org/content.asp?cid=89 (creditor version), with  advice on how to complete the form here  www.cml.org.uk/cml/filegrab/GuidanceFinal8808.pdf?ref=5990 .

Joseph Harris, Debt Control Man
Author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk

Get the DMHRF here http://www.moneyadvicetrust.org/section.asp?cid=53
The new Lending Code is here http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=1758
The MALG 2007 submission to the review of the code is here http://www.moneyadvicetrust.org/download.asp
And the Treasury Select committee view is here http://www.publications.parliament.uk/pa/cm200405/cmselect/cmtreasy/274/27406.htm#a18

 

Lending Code secrecy ‘is a disgrace’

October 12, 2009

I have just released this press release; as you see it is a matter of some seriousness

The new Lending Code, which replaces the credit and financial difficulties sections of the defunct Banking Code, is due to come into effect on November 1. Some nineteen short days away.

There is to be no public sight of these changes, nor any consultation process before these changes come into effect.

Specialist author Joseph Harris – Debt Control Man – has been trying to get sight of these changes since June. He has been told they will not be released until they are in effect on November 1 by Paul Ross, the man who is writing the new document for the British Bankers Association, in an email.

“This is a clear case of dictatorial behaviour,” declares Mr Harris. “It is a disgrace that no one concerned with the field, nor any debtor – whether defaulting or not – has any idea how the changes will affect them.

“Vince Cable was wrong when he said Gordon Brown had changed from Stalin to Mr Bean. On the basis of this secrecy and undemocratic behaviour he remains Stalin.”

Phone calls and emails to the FSA and the OFT result in classic Civil Service dropping the query into the new virtual filing bin.

“Even though there are many rules to help debtors negotiate the treacherous waters of finding the best way for their needs, too many creditors and debt collectors – including the biggest companies – do their best to sidestep them.

“Lack of a clear knowledge of what is happening among debtors and their advisors leaves these worst companies a window of opportunity to harass and bully particularly the poorest and most vulnerable debtors,” adds Mr Harris, author of Control Your Debt Crisis on Your Own Terms http://www.controlyourdebtcrisis.co.uk/book-cydc/cydc_Book_intro.shtml .,

“It is also a tragedy that the opportunity to include the requests of the Treasury Select Committee in 2005 and of the Money Advice Liaison Group has been lost.”

While most of the Banking Code is being operated as statutory Code of Practice directly by the FSA, the credit and financial difficulties sections move to the The Office of Fair Trading to sit beside the OFT’s duties controlling issue of Consumer and Business Credit Licences.

Joseph Harris, Debt Control Man

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

When to Go Bankrupt

November 15, 2008

Since contemplating bankruptcy for myself I have generally advised against it. At the same time every person’s situation is different.

So noting the new figures for bankruptcy and the chilling of the financial ‘institutions’ to their customers I revisit the matter.

According to This is Money personal bankruptcies rose seven per cent in the third quarter, against a year before.

The number of families whose lives were turned upside down in the three months July, August and September is 13,653. Bearing in mind that bankruptcy lasts a minimum of a year, and that maybe it takes another five to recover, that suggests the number of families affected now are around 200,000 – and rising.

That will soon be one household in ten; an epidemic!

Apparently financial institutions are forcing these bankruptcies, just at a time when their own debt is being ‘socialised’ and they are walking away from their mistakes with their yachts intact.

However let me steer myself away from the politics of this…

While there may be cases where the banks will recover more in this way, than from an intelligent approach, my own experience tells me some of the banks are incapable of understanding the difference between different situations.

On the whole they will have less to gain from forcing bankruptcy, than from an intelligent agreement.

I always say it is better to talk to the creditor, persistently, than to just assume there is only one way to go… downhill!

When you do talk, or write, remember that one operative may have a quite different way of dealing with customers than the one sitting next to her.

You may have to contact a different department; or the Chief Executive Officer of the creditor. Don’t be afraid to. He uses the smallest room just like you do.

If you are in a position where you obviously cannot pay what is the point of wasting company resources chasing you? It is poor decision making on the part of the creditor.

And if you have assets what is the point of forcing a sale of them at a time when the cash gained will be minimal.

And if you are in a position to offer something, what is the point in saying ‘no’ if the offer presented to the creditor is reasonable in your personal circumstances.

It is surely all good accounting, and straight common sense.

Although knowing what I do about derivatives, toxic debt, dark pools and the other arcane forms of gambling in the financial casino I don’t think anyone can accuse the financial ‘institutions’ of being blessed with common sense.

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.

Negotiating With Creditors for Changes in Terms and Loan and Debt Schedules – 3

September 22, 2008

‘Terms’ covers a multitude of sins. It is really a reference to the small print. Bear in mind that there has been no real negotiation in setting up the loan. There is a take it or leave it view about this.

Among the things that are in the terms are ones about the creditor making changes without your agreement. This probably is in legal gobbledegook and covers almost every condition in the contract. Were I to face the need to argue any of this I would almost certainly look for the force majeure argument to be a major defence.

It really is part of the fair treatment argument, and thee are several areas where I am itching to get public debate started. But this will be after I have produced a good help for all those with debt worries.

In that situation you have almost certainly been charged unreasonably high interest rates. I am putting ‘unreasonably’, but the creditor would obviously argue the opposite. Yet if your rate has been increased and you phone to ask for it to be put down again it is almost certain that there will be some movement in your favour.

Even if you do not have debt worries and your credit rating has not changed it is likely that your interest rate has been increased. Bank of England interest rate has been at or below 5% for months, or longer! I can see a strong case for a rate of 8%, 10% – at a pinch 12%. But tell me if you can how 15%, 18%, 22%, 29% and even 40% can be justified.

With these rates i am making reference only to the big name banks, credit institutions and loan companies. I abhor, but am not here dealing directly with, the Mail Order companies that charge interest at all. as for those which charge a point below 30% and 40% I have no polite words.

And I am not directly talking of the appalling of the outfits like the Money Shop that charge rates northward of 100% p.a.; I have heard there are ‘payday’ loans that work out at up to 600%. For any rate that is above 20% I declare the regulators are asleep at the wheel. Indeed I would want enquiries into any rate that is more than 5% above Bank Rate.

So there are my markers. Interest rates are not simple, and confusion is deliberately employed. It is relatively simple to ensure that complex methods are simply not permitted. I know of no reason for having them.

Be absolutely clear that interest means you pay back to the creditor more than you originally borrowed. The higher the interest rate the more you pay back. In some cases, where the repayment sum is low and the interest rate not low, the debt can continue for ever!

If you do not understand interest rates believe me that a lot of people do not. If you are one you are not alone. Then seek advice. All the charities will be pleased to work out for you how you are placed with your own debt.

So do not accept that you must suffer unreasonable interest rates. You may have to argue it all the way to the Financial Ombudsman Service, but I hope that any creditor guilty of charging unreasonable rates will have their licence revoked, however big they are.

Joseph Harris
Debt Control Man

Negotiating With Creditors for Changes in Terms and Loan and Debt Schedules – 1

September 16, 2008

When you have sent you creditors your second letter, or if the matter of your having trouble keeping up payments has come up another way with them, you are deep in negotiation territory.

Even if you choose to use an intermediary—with a debt management plan, or an IVA, or consolidation—you must take charge of how it is to be done and what it will cost and how long you will be tied to repayments; and all the other changes of terms these moves entail.

It is because you become at the mercy of a routine system through this that I strongly advise doing it all yourself. The best of the intermediaries still have you as only one of a large number of clients. And they can tie you to something that can in turn become difficult to maintain. So at least make sure you understand exactly what is on offer. Always ask questions—and insist on an answer you understand.

If you watched the stream of of highly paid workers being summarily dismissed by the collapsing banks you should note how easy it is to go from easy control of your finances to loss of control. Was it Lehman Brothers in New York whose workers average a monthly pay cheque of $330,000; that’s about £160,000 or £1.9m a year.

You can imagine what rents or mortgages they pay, cars they drive, clubs they belong to. How they eat and pass their day is easy to adjust, if uncomfortable, but these call for many judgements abut their future objectives; staying in the loop or making a life change!

Suddenly they are going to have no income, and their insurances may well be on the line too. These were regarded as safe, well-paying jobs with prospects. When disaster strikes it usually comes unheralded or with little notice.

It is things like this I urge you to think about when deciding how to negotiate. What objectives to set yourself, how to think through your living costs, what the size of the debt is and the realistic chances of repaying it

Always remember you are the only one who really knows your position and needs. Your wants may have to be revised. But you should think of living a reasonable life even in this situation.

And seeking all the advice and information you can.

Joseph Harris
Debt Control Man

Your Debt Crisis, Making Notes

August 26, 2008

I don’t know anybody that really enjoys the nature and the discipline of making notes. And I most certainly include myself. But, in my view, notes you must make.

Unless you manage to come to a very quick agreement the debt negotiation can take months. I have four accounts entering their sixteenth month, and set fair for a few more. Don’t worry if they take time.

What is important is to realise that you cannot commit all that is happening to memory. Your memory is probably better than mine, but can you remember a phone call you made six months ago? Unless you are a rare person with a photographic memory I doubt it.

In negotiating for a settlement to your debt you will be approached by phone and by letter. Each time a record of some sort is placed on your computer file.

But will it be the same as what you believe took place? You won’t know; no-one is going to tell you. But your creditor will use that record to judge you, the debt, and how he wants to pressure.

So you must make a full note of the conversation. You can have pen and paper ready by the phone. Or ask the caller to wait while you get them, or get the file you have on that particular creditor.

And what should the note say? First the name of the caller, the company, and if it is not the original creditor the the name of that one. The date is vital, and the time of the call is important.

It is also a good idea to ask where the caller is based. The conversation will go differently if you are being called from a call centre in Bangalore, than if you are being called from one near your home.

You can interrupt the conversation to make a full note if you feel you need to. Sometimes a statement by an agent is so outrageous you want to make sure that it is recorded in full. The agent at the other end is making notes, and the conversation is also being recorded that end.

You are fully entitled to have the time to make your own notes, even to make your own recording if you have the equipment and the know-how.

If the creditor’s agent does make an outrageous statement you need to follow up with a complaint to a superior. This is best done in writing, since it makes a record that must be responded to. And it is available for the FOS or other third party to read and understand the failings of the creditor.

Recently, in a debt case before the FOS, I had a creditor pass the debt to a debt collector. I phoned the creditor and first received a helpful response and a promise of a return call. The young lady who returned the call refused to contact the FOS to confirm that the case was before them.

I now have a rather apologetic letter from the office of the Chief Executive Officer of that organisation. And I wrote to both the FOS and the Office of Fair Trading informing them of this failure.

How do you think the FOS will view that creditor when dealing with my debt case? And how will the organisation be viewed with other cases that go before it? And how will that look on the file of the Credit licence of that organisation at the OFT?

You have power to defend your position. Use it.

Joseph Harris
Debt Control Man

Posting Your Debt Letters

August 22, 2008

I am very keen on writing letters. I think it is much easier to make your points clearly and get them across. Also it is by far the best record you can make of your debt experience, and how your creditor is behaving.

But it has just been brought home to me that delivery of those letters is equally important. And this is because of an experience I am in the middle of.

In the afternoon of August 12 I sent important papers related to a debt by Recorded Signed For from our local sub-Post Office. I was assured that this would go with the Royal Mail collection man who was bustling around at the time.

It is some time since I used recorded delivery—as it used to be known—and then it cost 88p and I was able to track the course of its progress online, and it was delivered by the third day.

This time I paid £1.50 and online only reveals when it has been delivered and signed for. I am still getting “Come Back Later”, and today is August 22. As a comfy ride for Royal Mail you cannot query its delivery until 20 working days have passed—which in this case means September 1.

Normally, for cost reasons if nothing else, I sent letters—debt or otherwise—by straight first or second class, according to my sense of urgency. I cannot think of one that has not been reliably delivered, and usually within one, two or three days.

I am quite convinced now that this is lost. And, one other sign of Royal Mail’s self love and contempt for its customers; you cannot contact a live human being in the operation. Usually when something like this happens I write to the Chief Executive Officer and complain to the Office of Fair Trading.

But I will have to wait a bit longer before anyone will listen to me. Lucky it wasn’t done because of time constraint. But when the importance is to be sure it arrives this kind of service seems to me the very worst of what British is all about.

So, while I might have recommended using this signed for system for really important papers, I cannot recommend it any longer. Especially not when some aspect of your debt negotiations has serious time constraints.

Within a realistic price structure I do not know of any alternative way to be secure in the knowledge of delivery. I would say it is worth checking with the recipient.

But then again the big creditors have two problems for debtors. First I have found that the internal distribution service can hold mail up for a week. Second it is not easy to know where the letter has gone to unless you have addressed it to a named individual.

So I can now say with some certainty that I will in future be sending my mail by ordinary post, and my best suggestion to you is that you do the same.

Joseph Harris
Debt Control Man