Labels: Bank, Banking, Ethical, Ethics

Labels: Collecting, Debt Collection

Labels: Irresponsible Lending

The other day I wrote an article about a letter that HFC bank was sending out to consumers. The letter appeared to be violating the Office of Fair Trading (OFT) Debt Collection guidelines.

In that article I reveled how HFC Bank, a proud part of HSBC was violating numerous sections of the Debt Collection guidance issued by the OFT. After calls to HFC from ourselves and reading what appeared in This is Money, no other conclusion can be made other than HFC Bank and HSBC feel they are clearly the superior party when it comes to compliance with debt collection guidelines.

It was nice to read the quote from the OFT about HFC Bank and HSBC making an end run around the appointed third party debt representative. “The OFT said it does not comment on individual cases before investigation. However it did state that, in accordance with its guidelines, any bank sending out such letters is partaking in a 'potentially unfair business practice'. It added that banks must deal with a customer's appointed debt manager and not contact them directly.”

Look, this isn’t rocket science here. The OFT debt collection guidelines are either government direction to provide clarity about the treatment consumers should receive when in debt collection or they aren’t. Apparently HFC Bank and HSBC both feel they can intentionally ignore the OFT.

A spokesman for the bank said: 'We still believe we have the right to contact our customers directly.' He added that the bank preferred to work with 'large and reputable' debt advice organisations, not smaller companies of which it has limited experience.

And that’s the whole point isn’t it, the bank does not have that right to do that. The consumer is free to choose who they want to represent them when they are in trouble and HFC Bank and HSBC should have no voice in who the company thinks they should go to. That’s like a car manufacturer tell you that you can only use their lawyers or solicitors to represent you against the manufacturer in case of a complaint as the result of a defect.

HFC Bank and HSBC you get the “You Suck” award for the day.

Labels: Debt Collection, HFC Bank, HSBC, OFT

Labels: Accident, Credit Card

Labels: get out of debt, Individual Voluntary Arrangement, Insolvency Practitioner, IVA

Labels: debt, get out of debt, IVA, UK individual voluntary agreement

Credit card companies are facing a huge loss in revenue through the course of the past 5 years. With revenue practically splitting in half, credit card companies find themselves about £1 billion in the red.

The biggest problems credit card issuers face are:

• People who swap debts from one card to another that has an introductory deal of 0%; this costs companies about £600 million a year.
• With the national debt rising people are having troubles to meet their monthly payments.
• The Office of Fair Trading (OFT) is forcing companies to reduce the fines for late or missing payments and unauthorised borrowing to a £12 fee per offense from the original £20-£25.

Companies now need an extra £32 a year from each credit-card holder in the UK which means customers need to keep their eyes peeled for ploys for extra money companies may imply.

What to look out for….

Higher:

• Fees for cash withdrawals
• avoid this by never using credit cards to take out cash.
• Interest rates
• with the new 5% from the Bank of England, expect card’s APR to rise.
• Premiums for payment protection insurance (PPI)
• avoid PPIs altogether, in the long run it’s not worth it.
• Balance-transfer fees
• expect to pay up to 3% per transfer.
• Foreign transactions
• when overseas avoid this by paying with cards that don’t add up the foreign-currency fees.
  

Less:

• Cash back and reward programmes
• Interest-free periods

Implementing:

• Annual fees
• keep an eye on your statements to see if your company tries to sneak in an annual fee.
• Extraneous add-ons
• avoid unnecessary charges.

Homeowners should be on special watch of their funds with the new interest rate raised to 5% by the Bank of England. On average, this rate will raise the typical £120,000 mortgage to an extra £20 per month, adding up to an extra £240 pounds a year.

A survey released by HBOS this week’s past, showed that the average house price jumped by 1.7% in October resulting in the annual 8.7%, leaving the average house costing around £184,593.

Homeowners and borrowers are advised to become educated about how interest rates affect them. Start looking toward the future now, since the threat of yet another raise in rate lingers in the crisp fall air. Borrowers should hope for the best but expect the worst; factor in the increases of rates now and plan accordingly. Homeowners should consider their mortgage options to prevent unexpected proceedings. These precautions measures could lead to less stress and readiness for when news hits the press on whether rates will rise or not.

http://www.myvesta.org.uk

The BMA conducted a study of around 2,000 students about their expenses and acquired debt. From this study they conducted that the average debt for a medical student rose about £792 to £21,755 this past year. The study also showed that 13% of students had debts higher than £25,000 and more than 100 owed over £30,000.

As for loans taken out, about 60% attained an overdraft on student loans and 17% on bank loans. Let alone the credit card debt which grew to over £1,000 for over 60% of students.

The outlook for these students’ debts is grim while University’s can now charge up to £3,000 a year in fees single-handedly. The cost of schooling is creating unevenness in the social scheme for students; some students from poorer income families are obliged to take time away from training in the medical field because prices are so high.

The government does have a maintenance grant for students coming from families with or less than a £17,500 yearly income. These students will get £2,700 financial aid and a minimum of £300 taken out of their yearly fees. Partial grants are also offered for families with higher financial standings.

http://www.myvesta.org.uk

The Bank of England has put into effect the increase of interest rates to 5%. Raising rates by a quarter of a percentage sent the rates peaking at an all time high in five years.

The bank raised the rates with the threat of inflation hovering over their shoulders. In the midst of the numbers reported from the Insolvency Service showing the intensifying number of people with debt troubles it came as no surprise that the rates were bound to rise.

The rates will cause a calming effect on the housing market by raising mortgage costs but will in turn prevent the bullying of inflation. This suggests a negative effect for investors but beneficial for savers. It is said to shave off 0.3% of economic growth come next year.

Home owners will not be the only to suffer; borrowers of personal loans will take the hit as well. Borrowers’ repayments are likely to ascend with the new rates. Businesses alike will be financially tried, especially firms looking to invest.

The inflation rate is currently 0.4% over the intended 2% target and is expected to rise yet again to around 2.7% by January. This has many analysts talking about expecting to see another quarter of a percent rise in interest rates around the launch of 2007.

http://www.myvesta.org.uk

England & Wales:

The numbers are at an all time high for England and Wales with a 55% boost in insolvencies and bankruptcies mirrored against 2005’s third quarter (Q3) numbers. The numbers of people who have cases of bankruptcies are at 15,416, a 27% increase from Q3 in 2005. However, the numbers reflecting the number of citizens choosing an individual voluntary arrangement (IVA) are booming. In quarter three 12,228 people now have IVAs which is a 118% increase from last. On the horizon of 2007, IVA’s appear to take over as the leading form of personal insolvency. It is expected that by New Years, 2006’s numbers of insolvencies and bankruptcies are to reach 100,000. This being stated means that about 1 in 540 people are going to go bankrupt in England and Wales this year. Even though the numbers per quarter are steep they are growing more and more consistent to each other and resulting in only a 6% quarterly difference. However, even though personal insolvencies are sky-rocketing, the number of liquidations in companies looks to be diminishing. In quarter three alone there has been a 4.3% decrease. From 2005’s Q3 numbers until this recently past quarter only 0.7% of companies went into liquidation, which is about 1 in 143.

Northern Ireland:

Northern Ireland’s standards of bankruptcy and IVA’s mirror that of England and Wales’. Out of the 1.7 million people, only about 1 to 987 people became insolvent, with 241 bankruptcies and 184 IVAs.

Scotland:

On the other hand, Scotland’s standards are a bit different than the rest of the UK. Instead of bankruptcy they file for sequestrations and instead of IVAs: protected trust deeds. The Sequestrations remained steady throughout the year, only rising by 5% in quarter three with 1,528; while, filing for protected trust deeds dropped by 3% with 2,073 cases.

The Future of the UK:

Overall, about 1 in 530 of UK citizens has cases of insolvencies. Individuals are advised to stray away from untrustworthy adverts that show IVAs as the “easy way out”, because there is no “simple” way out of this tricky conundrum. Consumers are suggested to contact a financial counselling service that has the individual’s best interests in mind. This being said, the future of the UK’s debt scene looks to get worse before it will get better, especially after the rumored increase of rates rising to 5% by the Bank of England scheduled to occur at this weeks’ end.

http://www.myvesta.org.uk