Posts Tagged ‘debtors’

New Lending Code 3: mental health, responses

November 10, 2009
174. The appropriate response will differ in each case and could involve a range of approaches, including:
• working positively with an advice agency
• promptly carrying out agreed actions
• being flexible in responding to offers or schedules of repayment
• sensitively managing communications with the customer (for example preventing unnecessary and unwelcome mailings). [Reproduced with the kind permission of the British Banking Association -see link below]

 

Paragraph 174 has some useful pointers to the creditor on how to handle its dealings with vulnerable debtors.

These terms: ‘positively … promptly … flexible … sensitively’ give a clear indication of the manner in which companies should gear these particular contacts. This is in sharp contrast to the normally aggressive and harassing manner of most debt collection departments and debt collection agencies.

Sensitive in the context of this matter is defined as finely aware of the attitudes and feelings of others [The Penguin English Dictionary].

While I suggest the companies rethink their whole collection procedures in light of this advice, it will be a big advance if they do so at least for the vulnerable. Since the Consumer Protection Regulations already feature the idea of differences of approach to vulnerable consumers, there is now no excuse for creditors not making this policy for their internal procedures.

Those who prefer to handle their own affairs should note that the use of advice agencies remains an option, not a requirement. While the specialist charities do know their own fields, and offer more awareness, you should be careful about the awareness of any intermediary over your own situation.

Never allow yourself to be harassed over this by agents. Remember it is not your job to make the companies’ lives easier, but to get fair treatment – and to yourself behave fairly!

If companies fail to show this level of care in a case of mental health disorder they should be reported to the monitoring agency – The Lending Standards Board. If you feel the matter is serious I suggest you also report it to the Licences Section of the Office of Fair Trading.

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

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

How Will the New Lending Code take effect?

November 9, 2009

One can probably trace the genesis of the new Lending Code, from FSA bombshell about taking over the Banking Code, to realising parts belonged under the OFT, to realising that means rewrites, to thinking the best people to write it would be the current possessors, to conveying that information and then to actually confirming.

Only after that could the British Banking Association deal with the severe truncation of its code and the Lending Standards Board, as the prior Banking Code Standards Board is now known, start reorganising.

It was a severe disappoinment to me that he result of this meant the code was not ready for examination and comment long before it came into effect. Indeed it was not in sight until the moment of becoming The Code.

So it is no surprise to any of us if understanding how the changes in it will be worked is not yet extant.

In my discussions with the FSA, the BBA and the OFT – I have not attempted to ask the FOS yet – I have asked the following questions and made the following points.

1. How will the mental health section, pars 173-183, which is entirely new and very important for affected debtors, apply to existing cases

2. It seems likely that a court would interpret its application to an existing collection at any point of change; but what would be the relevant criteria for ‘change’?

3. Where a complaint has reached final response and is then either on its way to or with the FOS how does the FOS utilise pars 173 to 183. There are many ways to do this, including returning the complaint to the creditor or agent with instructions to reconsider it in light of the new pars.

4. In par 183 reference is made to the MALG advice of 2007 as further guidelines, virtually bringing the whole of them in to the code. These are about all vulnerable debtors ]probably including borrowers whether in financial difficulties or not. As this ties in firmly to the CPRs on vulnerable customers, adding a definition in part, to what extent are all vulnerable debtors assisted by the new paragraphs.

5. As the OFT is the enforcing agency, the FOS, and all debtors and their advisors, will need to know your position on them. Will you advise when the necessary advice is issued, and give details of that advice?

I would point out that the creditors, as large and powerful institutions and with various industry bodies, lobby intensively both on legislation, rules and codes, as well as interpretations. While there are seriously over-stretched charities who represent debtors they either do not specialise or are not big enough to offer a strong countering voice in this area.

6. The voice of the actual debtor is simply not heard and his lobby is weak. Even the ombudsman, the FOS, is actually funded by the industry, and its influence is very clear in process.

7. Through the credit licences the OFT has considerable power to ensure better observance of rules and a more balanced judgement by the FOS; yet from the debtor’s point of view that power is used very lightly.

8. The OFT is the body upon which the debtor must rely to make sure the rules there are effective. This is a matter I will return to.

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

 

New Lending Code 2: mental health, systems

November 6, 2009

Debt and mental health
This section of guidance is relevant to both personal and micro-enterprise customers.
173. The impacts of financial difficulty can be especially acute for customers with mental health problems. Subscribers should consider their processes and systems to ensure that they can be responsive to a customer in financial difficulties, from the point at which they are made aware of a mental health problem. [Reproduced with the kind permission of the British Banking Association – here]

The Lending Code is now part of the formal equipment of the Office of Fair Trading, and sits more certainly side by side with holding of Credit Licences and with such fair dealings rules as the Consumer Protection Regulations.

Monitoring remains with the Lending Standards Board [that was the Banking Code Standards Board], but penalising becomes a matter for the OFT.

This is why this is such an important advance. It is now a requirement for creditors and debt collectors to take into account mental problems where there are financial difficulties. This is already covered in the CPRs, under the guise of vulnerable debtors. Vulnerable includes the elderly and those without funds.

While the Debt and Mental Health section is by no means as definite as I would like, it is such a big strengthening of the position of debtors with such health problem that the wording is to be praised as improving the experience of such debtors.

By featuring the good practice guidelines of the Money Advice Liaison Group, the other members of the vulnerable classification are effectively included. The more definite advice in the guidelines also becomes part of good practice.

It is also worth glancing at the 2005 comments of the Treasury Select Committee.

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

Lending Code Arrogance

November 2, 2009

Since I wrote on this three weeks ago I have been trying to find the text of the new code. Only today have I managed to get hold of it, and it came into effect yesterday.

While my criticisms of Paul Ross, Retail Banking director of the British Bankers Association, still stand, I am happy to thank him for his prompt response today with the inclusion of the link. I needed that since the normal searches revealed nothing.

Click here for the pdf. But don’t expect it to be that easy! Clicking for the pdf here takes you to this link where the pdf link does get the actual document. To me this run-around is a further sign of the arrogance I now see as normal.

This means that no attempt has been made to make the new text, or its new wrapper, easy to find. Yet the actual text and the changes may have massive impact for debtors [as it may do for all who deal with the banks and financial institutions for credit services].

The contempt shown for debtors, for consumers and for their advisors matches the experience of dealing with the worst of the banks.

I will post a series of blogs describing the terms in the new document. At first glance they look like the old with new numbering. But putting effort into a comparison would delay the presentation to you and it might in any case be a good idea to remind ourselves of the obligations on bankers under this new version of parts of the old Banking Code.

My next blog will however be a further attempt to self-therapy to deal with the anger I feel over the run-around. I will speak of Members of Parliament.

Joseph Harris

New Banking Code?

June 24, 2009

I assumed that the take over of the Banking Code by the Financial Services Authority (FSA) is going to make a much more useful regime, from the point of view of the debtor.

Now I am far less certain.

Catching up on material like the comments to the last review of the code, and comments on the FSA proposals, I find that the FSA proposals appear to change from the rule approach to a ‘principles-based’ one.

Now your guess is as good as mine as to what that means. Next month the FSA is to publish its proposals – for adoption in November. Do keep an eye open for these proposals.

The Citizen’s Advice Bureaux (CAB), for example, expresses great concern about the proposed changed of style and the fact that the enforcement will be even less than the limp penalties under the British Banking Association (BBA) regime.

CAB points out that the very ones who are most likely to suffer are the vulnerable, the very ones that any system of regulation is most vital to. And, boy!, what grand quagmires lie ahead for interpretation of principles.

The ordinary debtor already faces a seriously uphill struggle. The information most needed is obscure, the area is one they are not familiar with, and they face trained and professional takers backed by massive organisations who wear their legal departments like the six guns of a ‘black hat’ in western films.

The FSA, the FOS and the OFT are all supposed to be making that ‘playing field’ more level and refereed. With this change in prospect my fear is that the field will turn into a blood bath of the innocent. Just like Peterloo.

[Peterloo happened shortly after the Battle of Waterloo and named as a disgraceful mirror of that greatness. It happened on St Peter’s Field near Manchester in 1819. This peaceful meeting was demanding the reform of the parliamentary system – déjà vu!

The crowd of over 60,000 unarmed civilians was charged by cavalry. The whole history of the period was one of the two Britains; that of the industrial and agricultural owners and that of the ordinary people. At least Peterloo shamed the political leadership and reforms followed.

The great 1832 Reform Act was one and the introduction of a civilian police force another. The latter unarmed in response to the shame of Peterloo.]

Joseph Harris
Debt Control Man

Bailiff Power: “We have the balance wrong”

June 13, 2009

Every time I think I have reached the bottom of this government’s inanities over bailiffs I am apprised of further actions which make sense only if these people are in the pay of the financial casino.

Thanks again to the Zacchaeus 2000 Trust I have learned of the Bill introduced by Karen Buck M.P., (Labour for Regent’s Park and Kensington, North), a few days ago under the ten minute rule. It has gone now to second reading which is a triumph for her preparation work which has taken a year.

[Most often ten minute rule Bills are killed at birth!]

In her introductory remarks Ms Buck offers these points which are worth some thought by us all: Bailiffs (Repeals and Amendment) is the title of the Bill and it “… make requirements in respect of the use of force and forcible entry by bailiffs; to make provision for the reference to court of certain cases involving vulnerable clients; and for connected purposes.”

“… Debt and debt recovery action have become a reality for ever larger numbers… the arrival of a bailiff is, for many of those people, the ultimate trauma and humiliation… people have had heart attacks when the bailiffs have arrived. The mental and physical stress… is one of the worst things that will ever happen to them in their life.”

She points out that not all bailiffs fail to be as helpful as possible. But “… many.. are desperate and vulnerable people, and many are also victims of error. … even the actions of bailiffs who behave entirely reasonably… are disproportionate and excessive.”

“… it has become clear to me that we have got the balance wrong,… we need to review… We must certainly not, in any circumstances, think of escalating the powers available to bailiffs, and the Government should rethink their approach to regulation.” [my emphasis]

“… In my local authority alone, and in respect of just… council tax… more than 13,000 cases ended up in the hands of bailiffs over a three-year period.”

“What does it mean… It means fear and trauma for people, particularly children. I have heard of moving cases… children have refused to leave the house or have insisted on having the lights out at home because they are so frightened of a bailiff… seizing their television or computer.”

“… also means an escalation of the original debt, which simply compounds the problems that caused the financial crisis in the first place.”

“For one single parent with three children, one… disabled… (a) parking fine, about which I was making representations, had escalated from an original £60 to £700 by the time the bailiffs arrived.” [my emphasis]

In another “… two sets of bailiffs (were) chasing the same debt. Payments had been made to and acknowledged by the council, but did not then appear on the system.” [my emphasis] This lady wrote “… each party refers me to the other, the fees are ever increasing and.. threatening the removal of goods for the same amount.”

The Bill’s aims “.. are threefold. The power of forcible entry into a person’s home and the power for bailiffs even to use force against debtors are far too extreme to be given to civilian enforcement officers. The balance has been tilted too far against the householder’s right to be secure from trespass into their home. ” [my emphasis]

“… overturns a long-standing common law tradition,… in the Tribunals, Courts and Enforcement Act 2007… some p[owers] have not (yet) been brought into effect… such powers should be repealed.”

“… the power to enter domestic premises forcibly… for collection of criminal fines is already legal, and that too is creating appalling distress for many vulnerable households. Many… fines are levied on people on low incomes for offences such as the non-payment of TV licences, fare dodging and truancy.”

“… the issue here, too, is one of proportionality,… I also seek a statutory procedure requiring bailiffs to return cases involving vulnerable and impoverished debtors to the courts or the creditors, and powers to allow people subject to any bailiff action to apply to the courts for any bailiff warrant to be suspended… (this) is (currently) available only to people subject to county court bailiff warrants.”

“… case law, which holds that a distress warrant cannot be withdrawn once it has been issued. That directly contradicts the national standards for enforcement agents, which suggests a procedure enabling the bailiff to return cases of vulnerable fine defaulters to the court.”

“… disproportionate fines are being paid by benefit claimants and other low-income groups, intensifying the poverty that pushed many of them into debtY Finally, we need a statutory provision for bailiffs to accept ‘affordable payments’, with a definition of what that might mean in practice…”

“… I believe that they need greater protection, and above all, to be freed from the fear of the implementation of the excessively harsh powers held in reserve in the legislation.”

The Bill has six more stages; second and third reading in the Commons; first, second and third readings in the Lords; and signature by Her Majesty. It is only a pity that with this government tottering and the next election in any case but a year away the chances of it becoming law are slim.

But ‘good on yer’ Karen Black; you’re one we need back in the Commons. And keep it up Zacchaeus Trust; we need you.

Debt Control Man

Low Cost Online Bankruptcy

April 11, 2009

Let me just apologise for the long gap in my blogs. Sometimes things do not go as one would like, and – as Robert Burns put it – The best laid plans of mice and men / Gang oft aglay [’aglay’ is Scots dialect for ‘awry’, or simply ‘wrong’ – ‘gang’ for ‘go’ – ‘oft’ is short for ‘often’.]

 

I am now back with some moderately good news for low income readers with debts below £15,000. A new service – DRO, Debt Relief Orders – is now in effect according to The Financial Times.

 

This enables those who qualify to become bankrupt for £90, as opposed to the £500 or so in court fees for the conventional service. Access is through a third party, with the Citizens Advice Bureaux the most often mentioned in reports and comments.

 

This can be a great relief to those caught in the debt trap with no way to pay, and with creditors or their debt collecting agencies harrassing [forbidden under the Consumer Protection Regulations 2008].

 

With the trend for the economy down the likelhood for most of us of getting an income to beat our present ones is small. And for the small debtor [and £15,000 is small today] this is a helpful possibility.

 

I have now my website – http://www.controlyourdebtcrisis.co.uk – open and the first part of my book on offer. My debtwiki has been massively spammed and I am just in the process of turning it into a conventional Debt Dictionary.

Look forward to your visit.

Joseph Harris

Debt Control Man

Card Firms Giveth, Card Firms Taketh Away

November 28, 2008
How is it, that when I saw Peter Mandelson was involved, I started looking for the catch?
Our Business Secretary with Gareth Thomas, Consumer Affairs Minister, held a meeting with credit card companies [not sure who came, but I’m looking!] to get more time for debtors to organise their affairs. The target was described as ‘breathing space’. http://uk.reuters.com/article/personalFinanceNews
Now I am not even sure how that fits with the information that the reason for the meeting was to express concerns to the representatives about the high level of interest rates charged on credit and store cards.

And a joint statement declares: ‘…the … industry would report back in two weeks’ time [sic – note superfluous “…’ time…”] on a set of fair principles to help card borrowers to manage their debts… [my italics and my disgust!].

I’m not asking you to share my despairing feelings about the poor grammar from senior members of the government, but I am asking you to note how debtors will be hurt, not helped, by all this.

Bear in mind the Consumer Credit Licence, the Consumer Protection Regulations 2008 and the Banking Code all give much better protection than a set time. Not to mention the directives of the European Union Commission – of which Lord Mandelson was, until recently, a Commissioner. Is he with the people or with business?

AND let us be quite clear, this is an attempt to steal the right to represent oneself. An attempt to breach ancient British law.

The new dictatorial requirement will be that ‘…customers in difficulty would now get 30 days grace … IF [my emphasis] a debt advice agency was [not “is”, note] helping … a repayment plan…’. Further in this from this arrogant group ‘… could be [my emphasis] extended for a further 30 days subject to demonstratable progress being made…’.

My own experience is that I have negotiated for myself with 11 companies, and none of these negotiations were completed inside the incredibly restrictive 60 days of this great gift from the keen brain of the Lord Mandelson. In fact I have four negotiations which are taking over 18 months.

Who is to judge, in the terms of this carve-up, what is demonstrable progress. In negotiation one is in a starting position of disagreement, and the idea that one side or the other may be an arbitrator is nonsensical and dictatorial.

And, by the way, what about the role of the Financial Ombudsman Service which this undercuts in the most destructive way – certainly from a debtors’ point of view.

And the industry has ‘…agreed to look at [my italics] its practice of risk-based re-pricing…’. Readers of this blog will know I wrote a series of articles many weeks back on the disgusting level of interest rates. That the government has only just paid attention to we ordinary people who are truly hurting shows how little regard it has for us.

A government spokesman is reported to have said the government is ‘unhappy’ about ‘increases of up to 10 per cent OR MORE [my emphasis]’.

Well, I don’t know about you, but I want a government that is raging angry about such profiteering and instead of inviting the sector to make the debtor’s position worse is prepared to actually make them obey the existing regulations.

That the negotiations appear to be set on limiting our options, and not improving them is worrying to say the least.

Are we truly in the middle of the new Feudalism, my fellow serfs?

Joseph Harris

Debt Control Man

debtcontrolman.wordpress.com

 

 

 

 

 

Getting Good Information on Debt, Debtors and Creditors

September 7, 2008

I sought to have my affairs handled by a commercial company and by a leading charity in debt advice. To say both made a hash of the information I gave over the phone is to be very polite about it!
One charity, which handles debt management for you if you wish, told me I would not get debts written off. So far I have five of my debts written off and another two put on ‘no chase’.
So you see why I say ‘do it yourself’.
I know this will not suit everyone, but I do urge you to learn all you can before you make any decision about what to do. This means you will be more certain that your action is right for you. Today the emphasis is on the debtor – that’s you and me – being treated with respect and with sympathy.
There are rules about what these creditor companies and debt collecting companies can do. Primarily their behaviour is in the hands of the Office of Fair Trading, which issues licences to trade in credit, and in May 2008 set up the Consumer Protection Regulations, and in the voluntary code—the Banking Code.
To outline them here would be impossible, but just a few things to bear in mind. However unpleasant any representative of the creditor or of the debt collector behaves they have no right to enter your premises, much less take any of your property. To reach this stage there must be a court case and you must be notified of that and have the right to be present in person and/or be represented by a lawyer to present your case.
Only the court can give permission to distrain your goods or your home, which latter would normally be only in a mortgage matter or where you are deemed to be able to pay but refusing.
That would be a long way down the road. Only an authorised bailiff has the right to physically enter your home and possess anything that is yours. And he must be formally appointed by the court. If, let us be quite clear, a creditor or a representative does behave with any unpleasantness or aggression (or with threats or pretending to have official documents when they do not) they place themselves in the wrong. And they can face penalties – including losing their licences to trade.
Always keep your nerve in these situations – easier said than done, I know – and always be honest and seek a fair settlement.
Making sure you seek information and advice has an important use, reassuring you of your right to be treated fairly and with respect. When you deal with creditors you need to be able to demonstrate that you have sought advice. And you will find a lot of genuine advice and help from the organisations mentioned, and from others.
Chief among them is your local Citizen’s Advice Bureau. Now you are not going to enjoy this experience, but grit your teeth and set to. The interviewers at CABs are volunteers – trained – but volunteers, so do treat them with respect and thank them for their help. There are so many of us (and so many others with other problems) that they are not going to be able to give you a lot of time.
But there is a lot of useful material available on their computers and it is a good idea to ask them for print outs of what the interviewer thinks might help you.
Definitely get as much information as you can and ask as many questions as you need. It is your life you are dealing with, after all.

Joseph Harris
Debt Control Man