Swift ADvances & an Unregulated Agreement...Help!

[zincoxide]

This is on behalf of a very good friend of mine who has only just come clean about his finances.

This is for a loan based in Scotland.

He got into some financial difficulties and went to Ocean Finance who referred him to a company called 'Swift Advances'. With this, they have an unregulated credit agreement for a secured loan at a value of £55000.

A monthly variable rate of 1.17% which, is the same as a mortgage rate of 13.98%.

It was set up that they would make 144 variable monthly payments until the debt is cleared (strangely this variable rate has never come down!). He also had to pay a 'Title Insurance Premium' of £150 which he doesn't know what that was for.

This will all signed and agreed on 18th Oct 2004.

Back in May 2007, they asked for an early repayment quote and were told it would be £62000 despite them having already paid in excess of £28000 towards the original loan. He disputed this under the terms of the 1974 CCA but was told this did not cover his agreement as he signed to an unregulated agreement (he was told this on 14th May 2007)

Back on 31st May 2009 they received a reply from Swift Advances saying that their charges do not constitute a penalty under common law and they believe they satisfy the test of fairness under the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCRs")

The arrears charge is £23 Admin Fees of £33, fees for using a Scottish Solicitor.

Up until 31st May 2007 (The most recent statement) they have paid

Arrears letters & Calls £253

7 bounced payment charges £231

Information to & from prior mortgagee £117

Other letter charges £ 12

Default Charge on 09/12/04 £990

Default Charge on 09/05/06 £110

Post default collection costs £1635

Litigation fees £1222.04

Scottish solicitors fees £384.08

So in total so far it's at £4954.12 and he's told me that has practically tripled in the past 2 years.

I now believe that the FSA or OFT decided that all agreements, even those before 2006 are subject to the unfair contract terms & conditions, even if it is an unregulated agreement?

Is that the case and if so, how do you suggest my friend to proceed?

I'm happy to help and do his PPI and Charges claims from other accounts but am not sure how to approach this one.

I will however still write to them and ask for a signed copy of the CCA and pay the £10 DPA for a full statement since the account started on Oct 04. But since there is a 'legal charge' on the property and it's unregulated - just how do I approach it and as for the APR, surely there must be some way of bringing that down or challenging the amount they have paid to get a much lower settlement figure?

They have never been given a copy of the fees and charges for the account - I want to claim back as much as possible for this friend, even though it's a secured loan, would it matter if they couldn't provide a CCA or are our hands tied?

[IdaInFife]

you would claim the charges and ppi etc just the same

 

ida x

[rickyd]

A monthly variable rate of 1.17% which, is the same as a mortgage rate of 13.98%. Blimey, that's some mortgage rate, it looks more like a credit card rate to me.

 

Re outstanding balance - Ocean have a wonderful system of collecting interest not yet due if you decide to shorten the term of your loan. It's all there in the agreement, which covers the lender for a multitude of variations. There's also a line about the minimum level of interest if the base rate falls. Honestly, if we took the time to read every line before signing up they wouldn't have many customers, but then again we sometimes need the funds so badly we overlook these conditions.

 

It does mean that the balance doesn't go down half as fast as we might have thought and I doubt there's a more one-sided agreement anywhere, although I may be wrong.

 

I've often thought that Ocean should come under scrutiny for their unfair credit terms as their agreements are particularly restrictive and contain many onerous conditions. I'm sure they're not the only ones, but they are spectacularly bad.

 

I had a quick squint at Ocean's website and spotted tiny wee note that said they would add a fee on completion (drawdown) of the loan up to 12.5% - that's a massive fee!! Before the stopped charging them, even RBS (hardly paragons of virtue themselves) used to levy a fee of 0.5% to 1.0% for secured loans.

 

Its interesting to note that Ocean's website still lists them as members of the Finance Industry Standards Association, even though FISA closed down on 19 April 2009! Ignoring this simple fact, I continued into their code of discipline and uncovered some interesting , if slightly amusing facts.

 

18 Members and their Intermediaries must be able to demonstrate that any consolidation of existing credit, either secured or unsecured, was in the consumer's interest or was in response to the consumer's specific request. Members and/or their Intermediaries must not encourage the consumer to take out a loan which is higher than requested unless it is demonstrably in the consumer's best interest particularly where such an increase may remove the protection of “regulated loan” status. I wonder how often they follow that rule?

I particularly like this one:-

28 Members and their Intermediaries must provide prospective consumers with, both verbally and in writing, full and comprehensive details of all fees or costs to be paid by them (the consumers) prior to any commitment being entered into, to include all or any payments to any supporting or third party Intermediary engaged in the transaction. All fees must be reflected within the APR. The APR must be correctly calculated in accordance with the Consumer Credit (Total Charge for Credit) Regulations 1980 (as amended).

 

The part that is most interesting however is this:-

 

Regulation of Secured Lending

 

Loans

Secured (second charge loans) are regulated under the Consumer Credit Act 1974. First charge mortgages on dwellings are regulated by the Financial Services Authority (FSA).

 

As the mortgage company has the first legal charge, for this loan to be secured it must logically be done by a second charge and therefore cannot be a Regulated Mortgage Contract which would be specifically excluded from the CCA.

 

So despite Ocean knowing the rules Swift Advances don't agree. They must be either "mistaken" ,incompetent or are liars.

 

I say go for it and the best of good luck to you!

Edited July 29, 2009 by rickyd

[landy_alert]

Hi zincoxide:)

 

I can sympathise with your friend as we had a mortgage with Swift Advances from 2006 to 2007 (in England though) and our interest rate went up from 14.52 to 15.77% during that time.

 

When we sold our house and redeemed the mortgage we found they had applied over £3000 worth of charges and although we had repaid £12,000, our redemption figure was still £12,000 more than we had borrowed.

 

We are currently in the process of trying to claim the charges back - as well as PPI - but Swift are a notoriously hard nut to crack:eek:

 

Well done for helping your friend - I wish you luck and will pop back to see if I can help at all.

 

Regards,

 

Landy x

[zincoxide]

Well, I've fired off a letter about the charges and have received a response saying they will investigate and write back to us by 24th September. As for the whole agreement, I've gotten my friend to head to CAB and ask to be put in touch with their pro-bono barristers as I don't believe it is legally enforceable.

 

In the meantime, I'm getting a copy of the charging order from the land registry and all other paperwork to check for inconsistencies. So far, all I have is the loan agreement form and a copy of my friends credit record showing substantial differences - if anyone can point me in other directions, please comment and let me know!

 

Having also done some further investigation into the company and it's directors, they have been very clever with most loans, upto 2006 they were registered with the FSA but you couldn't complain if the agreement was over £25k, then after losing their licence, they became members of the FLA to continue lending, however, you can only complain to the FLA about loans taken out since 2006. The financial ombudsman is taking no interest in individual cases - I am however trying to find out more as I believe there is a great deal of criminality in this organisation.

 

So, I'm now looking for two things, how to get my friends money back and prove the agreement was never legal AND some evidence to try to prosecute directors for money lending etc.

[rickyd]

I've been giving this some thought and wondered how I would proceed based on the evidence to hand. I eventually came up with a two-pronged attack. One part, on the basis of unenforceable charges due to a non-compliant agreement and the other on the basis of them not being permitted to enter into this type of lernding in the first place.

 

I concluded that if they weren't legaly competent to make the agreement, I couldn't be legally liable for extra costs attached to any misdemeanours or defaults under said agreement.

 

I think it all comes down to them not being legally entitled to conduct lending business in the first place, which seems i serious doubt. Given these shaky foundations, I doubt very much that the directors will want to see the inside of a court room and that a formal investigation by the FSA is the last thing they'd enjoy.

 

I don't know if it is a criminal offence to offer loans without an appropriate licence, but if it isn't it begs the question of why so many large firms go to the trouble of acquiring them if others feel they don't need to?

 

I would love this to imply that the whole loan is bogus and therefore the capital doesn't need to be repaid, but I'm not that optimisitic. I do wholeheartedly believe though, that some (a large part) of the interest should be commuted and that all ofthe charges be ignored completely as since the company wasn't licenced to offer the contract, it's terms logically cannot be enforced.

[landy_alert]

Hi zincoxide and rickyd:)

 

Glad to see you are still keeping up the fight against Swift!

 

After our initial approach they sent us a whole raft of reasons why they felt their charges were not unfair, but enclosed a cheque for £139 as a gesture of goodwill - this was against a charges reclaim of over £3000 (over £5k with contactual interest).

 

We politely declined their cheque and returned it to them along with a further letter disputing their allegations that their regime of charges was perfectly above board.

 

We have heard nothing since then.

 

I contacted the FOS who confirmed that they couldn't investigate because our agreement pre-dated their jurisdiction on Consumer Credit, although they have accepted our complaint about the mis-sold PPI on the mortgage.

 

There is a thread I've subscribed to where someone (Pinky69) is looking into the possibility of unregulated agreements secured on property that have mis-sold PPI applied being unenforceable. That could be an avenue to pursue - although I'm not sure how to investigate that.

 

I would be interested to hear how you guys intend to proceed - I have come up against a brick wall and although there is the FLA, I have a feeling they won't be much use.

 

Keep up the fight!

 

Regards,

 

Landy x

[frettful38]

So who do you complain to about an unregulated agreement. I want to complain against Blemain as my loan is over £35k and they are not regulated by FOS so who is?

 

Any help would be great, thanks

[rickyd]

At first glance this seems to fall down a big crack between the old and new legislation.

 

Given the history of financial services in Britain my guess is that there will have been an overlap just as there was when the FSA took over from IMRO and LAUTRO. I haven't yet been able to discover who was responsible for this kind of business at the relevant date but I'll keep digging.

[rickyd]

According to FISA's website, "any firm selling insurance, including that with a secured loan, must be registered with the FSA" which suggests that the FSA would be their regulator.

 

Confusingly the white paper on proposed regulation of secured lending states that currently first charge lending (mortgages) is regulated by the FSA whilst second charges and unsecured lending is the responsibility of the Office of Fair Trading under the CCA.

 

It might also be worth contacting your local MP. At this time they might be keen to help you and deflect attention from the expenses scandal many are embroiled in.

 

landy alert also mentioned the possibility of unenforceable agreements, so its a good idea to go through yours in detail - you never know what you might find!