Picture - Interest rates on secured loans

[The Phantom]

I will -both already in my Picture complaint folder for future reference and evidential purposes

Also mentioned it in my interview yesterday for the Moneybox programme, but not sure how much they will cut out / edit out

[The Phantom]

Reply from Picture received today

Their main line of argument is they are not working with the Bank of England rate really anyway but the LIBOR which is higher (they just increase their rates with the Bank of England, but really work with the LIBOR :-?, so use which ever suits them or what ?), also the rates in their leaflets are not correct () they were only correct as of mid of August (why date and post them in September when at that point they already knew of the rate hike ?) and we do not qualify for their typical rate anyhow. (No explanation who would and what criteria needs to be met)

 

Well, I checked our agreement and nowhere does it say the rate is based on the LIBOR and would be dependant on it. When we took out the loan we were lead to believe it was linked to the Bank of England.

I think I will ask them to show me where we agreed that it could be linked to anything other than the Bank of England base rate.

 

Needless to say they will get a nice letter back in the next couple of days

[payingonlyencouragesthem]

 

Well, I checked our agreement and nowhere does it say the rate is based on the LIBOR and would be dependant on it. When we took out the loan we were lead to believe it was linked to the Bank of England.

I think I will ask them to show me where we agreed that it could be linked to anything other than the Bank of England base rate.

 

Needless to say they will get a nice letter back in the next couple of days

 

What they say is true - they would borrow at a LIBOR linked rate and lend at a spread over that. If nobody will lend them money at a sensible rate then they have no choice but to pass that silly rate on to the customer or operate at a loss. Where they are going wrong is advertising bogus APR's and misleading people into thinking they have BOEBR linked interest rates - that's mis-selling. Also I expect they are cheating and using the LIBOR excuse to widen their lending margins.

[The Phantom]

They do, because albeit LIBOR is higher than the BoE it is currently less than 1% higher than the BoE base rate (fluctuating around 6.7% compared to 5.75% BoE)

They are charging us 10.34% ,( that is still 3.64% higher than LIBOR ), albeit advertising typical rates of 9.4% and 8.4%, depending on which leaflet you read and believe. Both these promo letters were sent and addressed to us personally, so if these rates are incorrect and we wouldn't qualify for them anyway, why send them to us ?

If they were generic round robins that have fallen out of a newspaper, OK, they could say for new customers only, but these were clearly personalised.

I will certainly see if I can pin them down a bit more.

[payingonlyencouragesthem]

Nicole they don't borrow at LIBOR - only the highest credit rated institutions can do this. If their credit rating is perceived by the market as going down the pan their borrowing costs in relation to LIBOR can rocket up even if LIBOR itself and the BoE base rate don't move. It's important to see how it works so you can ask the right questions and appear knowledgeable when you complain.

 

What they do when they lend to people like you is borrow the money for a short term (probably 3 months) and lend it to you for several years. Obviously they have to keep rolling over that 3 month loan every 3 months until your loan matures. In this situation their new 3 month rate is just stepping higher and higher because of the market's perception of their creditworthiness, not because of changes in BoE or LIBOR rates.

 

The question you need to ask is what was there funding spread over LIBOR

when you took the loan out and what is it now. If their borrowing spreads for example have only gone up 1.5% and they have increased your rate by 3% then they are cheating and misleading you. Do you follow what I am saying?

[The Phantom]

The question you need to ask is what was there funding spread over LIBOR

when you took the loan out and what is it now. If their borrowing spreads for example have only gone up 1.5% and they have increased your rate by 3% then they are cheating and misleading you. Do you follow what I am saying?

Do you think if asked they would answer honestly if they are indeed taking advantage ? But good point, I didn't know that. I will have to incorporate it:cool:

[payingonlyencouragesthem]

Do you think if asked they would answer honestly if they are indeed taking advantage ? But good point, I didn't know that. I will have to incorporate it:cool:

 

I suggest you ask and we will check their honesty and maybe get an extra round of ammunition if they lie:wink:. You need to find out the name of the entity that does their borrowing on the wholesale market, it might be the parent company or it might be someone else. Maybe you could find this information out and PM me. I was in wholesale banking for 17 years so I might be able to lend a bit more expertise here:wink:.

[The Phantom]

Good thing someone is keeping an eye on what I am doing here

 

How do I find out who the parent company is ? Err..

[payingonlyencouragesthem]

Good thing someone is keeping an eye on what I am doing here

 

How do I find out who the parent company is ? Err..

 

Just ask them naively and innocently:-). I would anonymously ring their sales team and tell them you are contemplating taking out a secured loan but want to know quite a bit about the company first, given the current turmoil in the financial markets. Tell them you are particularly keen on PPI - that should get them going:grin:.

[The Phantom]

OK, we'll see what we can find out

I'll put my Private investigator hat on

[The Phantom]

P.O.E.T, not sure if this is what you are looking for

Apparently Picture is a stand-alone finance company, backed by the Apax Partners Group as investors who helped them start up in October 2004.

Apax is their equity partner.

So there doesn't appear to be a parent company as such

[payingonlyencouragesthem]

That means it probably just has bank lines and no access to the wholesale market. I think the only thing to do is to complain to the FOS on the grounds that the rate hike is excessive and opportunistic. They will then be forced to prove otherwise. They are still advertising a typical rate of 8.4% on their website I notice.

[The Phantom]

Yes, they advertise all sorts of typical APRs, one leaflet says 8.4%, another 9.4% and thir website agrees with 8.4%

Their customers pay 10.34% and Picture is laughing.

[corny90]

I have a loan with Pargon and they have put this up everymonth for the last 4 months yesterday I received a letter stating that due to a rise in the interest rate the payment from next month was rising. No interest rate on the letter just a new payment of £40 per month more. Is this legal?

[The Phantom]

Did the BoE put them up lately ? I thought they were kept on hold.

But most of these sub prime lenders go by what is called the LIBOR, that's how Picture keeps excusing it.

I am hence in a struggle with them, because when we took out the loan, we were simply told the rate was variable and could go up and down with the BoE rates.

At no time did anybody mention a LIBOR rate and it is also not in our agreement with Picture.

Picture has just referred our complaint back to the broker who initially arranged this loan

Not sure why, maybe they think the broker should have told us about the LIBOR rate, but that doesn't change the fact that it is not part of our agreement with Picture

I think the first thing you need to do is complain to your lender and ask them to justify their increases and what they are actually based on

Just like POET has posted in this thread, ask the right questions and then see if they make a mistake

Also check out your agreement to see what it actually states in there with regards to the interest rate

[The GodMother]

Phantom the BoE held the interest rate last month for this month so there should be no letters about the interest rate rise. next months interest rate has not been decided yet. as far as i know.

[2Grumpy]

Have you seen the adverts about the big juicy worm interest rate to get savers hooked?

 

Sounds like it's common practice to screw over existing customers.

 

Presumably these low rates aren't shown as introductory low rates for an initial period, just Picture being """""""s

 

Grumpy

[The Phantom]

Phantom the BoE held the interest rate last month for this month so there should be no letters about the interest rate rise. next months interest rate has not been decided yet. as far as i know.

 

That's what I thought

But we got letters from Picture in the past stating they would put up the rate anyway, not in line with the BoE but because they wanted to (LIBOR rate ...)

And I think that's what happened to the poster above, as well

I think they are using the credit crunch as an excuse to line their pockets at the expense of people who can least afford it

[corny90]

I wrote to Paragon and received a one line reply stating "The previous interest rate increases were influenzed by increases in the Bank of England's base rate, on this occassion it is due to an increase in the cost of borrowing"

Under neath there is a bold statement saying the usual your home may be at risk etc.

Any one any ideas what I can do. I also have just stupidly discoverd that the insurance portection I thought I had for the life of the loan is only for 5 years. Is it worth contcting them to claim miss selling of PPI

[The Phantom]

I wrote to Paragon and received a one line reply stating "The previous interest rate increases were influenzed by increases in the Bank of England's base rate, on this occassion it is due to an increase in the cost of borrowing"

How stupid is that. BoE base rate increase IS the increase to the cost of borrowing. What else would that be ? What they mean is THEIR cost of borrowing due to the LIBOR rate and the credit crunch

Have you checked your agreement and verified what it says in there with regards to interest rate and increases ? What is the agreement between you and Paragon ?

 

Any one any ideas what I can do. I also have just stupidly discoverd that the insurance portection I thought I had for the life of the loan is only for 5 years. Is it worth contcting them to claim miss selling of PPI

That's the same with Picture. Did they tell you at the time it was only for five years ? Was that made clear ?

But if you have reason to believe it was mis-sold then by all means make a claim

They are getting these claims so thick and fast, in their confusion I got one of their standard letters regarding mis-sold PPI from Picture when I didn't even complain about it, but about the interest rate

When I queries it, I got an apology, the cleark sent the wrong form out....

[corny90]

The agreement doesnt mention LIBOR rate at all.

 

I was led to beleive that the insurancewas for the entire life of the loan not 5 years as I would never have taken it out otherwise. The only reason I now know is because after reading posts on this site I rang and asked them to confirm the insurance was for the life of the loan, which they obviously didnt and advised it was only for 5 years.

[The Phantom]

The agreement doesnt mention LIBOR rate at all.

Neither does mine.

Write back to them and tell them the BoE base rate increases ARE the increased costs of borrowing you therefore do not accept any further increases unrelated to the BoE base rate as these are not part of your agreement with Paragon and see what they say to that

 

I was led to beleive that the insurancewas for the entire life of the loan not 5 years as I would never have taken it out otherwise. The only reason I now know is because after reading posts on this site I rang and asked them to confirm the insurance was for the life of the loan, which they obviously didnt and advised it was only for 5 years.

Ideal - make a claim

[The Phantom]

Picture passed my complaint to the broker who initially arranged the loan for us and said it is their fault we weren't advised of this LIBOR thing

The broker has now replied and said they never knew anything about the interest rate being linked to anything other than the BoE rate and it is up to Picture to tell us all these details or to put it into their contracts

Talk of passing the buck or what :o

Wrote back to Picture and basically told them what the broker said and we feel we were mislead and would never have taken out the loan if we had known the interest rate is not linked to the BoE rate but something else and asked when we can expect our rate to be adjusted down, also in highlight of the BoE latest rate decrease which hasn't been passed on yet (Picture immediately passed on every BoE rate hike last year )

They wrote back now telling us to s*d off, they don't have to tell us what the interest rate is linked to and it is not linked to the BoE that's why they haven't passed the latest decrease on either...

So how can they increase in line with the BoE every time last year and when the BoE decreases their rate say it is not linked to that so they won't pass it on.

They are getting a bit out of order

I was hoping this was their final reply and I could take it to the Ombudsman now, but apparently I can't

In their letter they said I have to write to their own (Picture) complaints department first with new evidence and after that to something called the FLA (Finance and Leasing Association) before the Ombudsman would even look at my complaint.

Is that correct and does anybody know the FLA ?

[Conniff]

Phantom - doesn't your agreement say it is variable at so many percent above bank rate?

[The Phantom]

No, it doesn't, there is no reference to it in our agreement

When we took out the loan the broker told us it was a variable rate and could go up and down with the BoE

Always when the BoE put up the rate Picture did too, so we never thought much about it, until the point in August when the BoE for a change did not increase the rate but Picture did on their own account, increasing our rate to just under 11%.

When we queried it they said it is because our rate is linked to the LIBOR and not the BoE rate.

But there is no reference to it in our agreement and the broker wrote to us telling us they were not aware of it either, but still feel they did not mis-lead us as they didn't know either and it would have been Picture's responsibility to tell us or make it clear in their paperwork which they did not do.