HSBC Professional Studies Loan

[howard-moore]

Back in 2004 I took out a Professional Studies Loan with HSBC. Since then I have completed my course, have qualified as a solicitor and am now practicing corporate law (sadly not finance law, as I would probably know the answer to this question!).

 

I have been making every payment necessary on my PSL until 23 July 2009 when I received a letter from HSBC entitled "THIS ARREARS NOTICE IS REQUIRED TO BE ISSUED UNDER THE CONSUMER CREDIT ACT 1974". This letter claimed that I was behind in my payments and that I should call the main HSBC number to "discuss my account". To put this into context, myself and my wife have around 8 current, savings and ISA accounts with HSBC, and I am the sole director of two companies that both bank also with HSBC - to put it simply, there was no reason why the account would be in the red if we had known about it.

 

I therefore called the number given in the letter and was told by a friendly chap in Delhi after about 1 hour that they could not help me and that I should go into the branch.

 

I therefore went to my branch the next morning and went through the account with one of their Customer Service Reps. He agreed that the account was not in default, and that the next payment had been scheduled for a few days later. He therefore called through to a couple of central departments whilst I was with him (it was gratifying in a way to see that people at the branch get the same treatment on the phones as us customers!) and eventually I spoke to someone in a central credit department. They first told me that the account WAS in default. I then pointed out that according to their computers it was not. He agreed. Went away for a while. Then said that he didn't know. Finally, he said that I should ignore the Arrears Notice letter.

 

I said that there was no way I would ignore a letter like this, and that I wanted a written confirmation that this was a mistake. I was then told that the only way to resolve the matter was to make a formal complaint. Whilst this is not something I like to do (especially when the bank look after so much of my and my wife's finances) I reluctantly agreed that they should initiate a complaint on my behalf. I was informed that I would get a written response within 2 weeks.

 

More than 2 weeks then passed, and I also had a 2 week holiday, which meant that I did not get a chance to get back to the branch until 9 August. At this meeting, I was told two rather interesting things:

 

1. That HSBC had taken a FINAL payment for the loan in July and that no payment had been made in August, meaning that around £1400 was outstanding.

 

2. That no complaint had been registered and nothing had been initiated in my name.

 

After asking to speak to the manager I was told by him that this was 'a really embarrassing situation', and particularly because it appears that I have been incurring a negative mark on my (otherwise flawless) credit rating because of the purported 'arrears'!!! To make matters worse, he tried to get a copy of the original loan agreement (after so many years of moving from one student house to another I could not locate mine) and he admitted that he could not get it. He then said that he would try and get a copy from the central document storage place, and gave me his personal email address and phone number and promised that I would hear back from him by Monday 14 September (i.e. yesterday).

 

Today is Tuesday 15 September and I have heard nothing. I have therefore writtent to him today and look forward to a response.

 

However, the questions I have for you are as follows:

 

1. What would happen here if they fail to find a copy of my Loan Agreement?

 

2. The loan was for 60 repayments, which have now all been paid, and if, as I suspect, the outstanding money is for interest charges, why have these not been factored into the repayment schedule?

 

3. Does this interest have to be factored into the schedule, and if yes, do I have a case to argue that the Agreement is unenforceable?

 

 

I have read up about other issues relating to the HSBC PSL on this forum, but sadly there doesn't appear to be any resolutions yet, so I hope someone will be able to help me here.

 

Many thanks,

Neil

 

(ps. sorry for long first post!!!)

[BankFodder]

first of all, this is just to point out that the reason why you are getting so much time and reasonable dialogue from the bank is that you are a professional person and articulate and they realise that you are to be reckoned with. Unfortunately most people who have the kind of difficulty with their bank are unable to access the bank in this way.

 

If they fail to find a copy of the loan agreement then it would be unenforceable. If the interest is not factored in then it is likely also that it would be unenforceable.

 

Do understand that simply having an unenforceable agreement does not mean that the bank will let go. It simply means that it is not enforceable at law. However it doesn't stop them chasing you for the debt or selling it on to the collection agencies who will also chase you for the debt. It doesn't stop them entering your name on the credit register and blighting your credit file for at least six years.

 

It is pretty clear on what you say that the bank is acting negligently towards you -- and also in breach of their contract with you because as I'm sure you are aware they have a duty to conduct your business in a professional and businesslike way.

 

This is your leverage against them.

 

I would be very careful to make detailed notes after each meeting or after any other episode which occurs. Even make notes during a meeting and make sure that you keep them well ordered and securely.

 

If your credit reputation has been injured as a result of their negligence then I think you have a very good basis for requiring that they repair the damage immediately. This does not mean that they can get away merely with a notice correction on your file -- but they must remove any entries. They should also disclose to you the identities of any third party to whom they have disclose the data or who has surged your credit file.

 

I think that you have a very good basis of complaint here and I would insist on a decent level of compensation. You are a legal professional. It is completely unacceptable that you should have to endure this kind of treatment and also damage your reputation. I would be suggesting a figure in the region £3000 -- £5000 plus a written admission and apology and make it clear to them that you will be starting an action for breach of the data protection act if this is not all forthcoming within seven days. They don't need any longer than this. They will try to fob you off and say that they don't have to deal with your complaints before eight weeks. This is just some cosy little agreement they have with the FSA. Enclose your own time limits on them. Bring the data protection act action against them. It is a part eight claim and it will be good practice for you.

 

I'm sorry to say the I'm pleased that practising members of the legal profession come up against this kind of thing. It will help to put you in touch with the hoi polloi!

 

Please keep us informed. It is very interesting

[howard-moore]

Thanks very much for your very helpful reply.

 

As a matter of course I have been keeping careful notes of each meeting (must be the training!) and I can confirm that at the last meeting it was the bank that informed me that my credit rating would be taking a hit, and that they would do everything to ensure that any entries would be immediately removed.

 

Whilst in the bank they very much gave the impression that it was 'us' (i.e. myself and the branch staff) against 'them' (i.e. the central departments), and they were full of promises that they would be doing everything they could to assist. Presumeably this is a policy of theirs to ensure that people do not get too upset at branch staff, but all it said to me was that they are poorly organised and have little control of their own affairs (it was them who arranged the loan in the first place!!!).

 

Two things you have said particularly interest me:

 

1. The issue of interest not being 'factored in'. What I am concerned about is that they will simply demand payment of the interest in full as a 'final payment' on the loan (though they have singularly failed to do anything of the sort so far). My understanding is that interest should be included as part of the staged payments of the loan, but I defer to someone's greater knowledge on these points.

 

2. Compensation - at present I have received an arrears letter, they have failed to deal with a complaint, and they have been slow in following up my 'complaint about lack of action on a complaint'. They have also been unable to resolve the matter... yet. However, are you suggesting that £3-5k is an appropriate figure for such poor service (considering in particular that my reputation could not have been damaged considering that noone other than myself, my wife and the HSBC staff are aware of the issue)? I am unaware of the level of compensation payments by banks and would be interested to learn of payments in similar situations.

 

 

Finally, I acknowledge your comment re. this sort of thing happening to solicitors, but when it comes to credit agreements and the like I know as much as the next man. My job is to buy and sell companies and I leave all financial matters to accountants or tax specialists. Further, I deal with what you call 'hoi polloi' every day, except that I call them valued clients!

 

Cheers again for the help. I am heading down to the bank today on an unrelated business matter and I will let you know how it goes!

[BankFodder]

don't accept any verbal undertakings that negative entries will be removed. You want to see in writing and then you want it done. You need to make sure that the removal of negative entry is part of the entire package of apology and compensation.

 

The level of compensation I have suggested is in respect of the damage to your credit file and your reputation. Although the figure the I have suggested would include an element related to their poor service, the bulk of the figure would reflect their reckless use of the credit register and the damage your reputation and the troubled which you are having to go through to clean up the file.

 

You are asking about the typical level of bank compensation payments. Rational decisions as to quantum don't seem to apply to banks. They throw money around in any old way. They don't particularly have to reconcile the money they pay out to some kind of business model. They don't have the notion of a "tariff" in mind.

 

It really all comes down to how far you can scare them. They have to believe that you really will bring an action in the County Court under the data protection act. They will be very impressed by the fact that you are a lawyer and it you are potentially going to be an important personal and business client for them. You may not know that just last year a Scottish court ordered £116,000 to a claimant in respect of inaccurate data entered onto the credit register by a bank. Although there was actual damage here in terms of loss of opportunity on the market, depreciation of a home etc, I think that if you make it very clear to them in a convincing way that their behaviour has potentially damaged your personal -- and very importantly your professional reputation as somebody who practices law within the financial and corporate sector and that therefore the consequences of the banks negligent conduct of your accounting business is far more serious for you than most other of their customers -- then I think that they will see your compensation figure as not unreasonable.

Basically they will want to get you out the door and put an end to it. The money which they pay you will simply come out of one of their suspension accounts which are littered all over the place.

 

Don't look to them to resolve your complaint quickly or within their targets. You have to take control of it and you have to lay down your own targets for them. Make it clear that you're not interested in their own industry targets and that they have nothing to do with you. lay down your deadlines and stick to them. You could even draft a part eight claim form -- take it into your bank and leave it with the bank manager and tell him that in seven days you will file it with the court.

 

Don't take any nonsense from the bank -- and one thing you don't need to worry about is that in your position they will simply be pleased to keep you as a customer, they won't hold it against you -- and they will look after you far better in the future.

 

Isn't it a shame that we have to deal with these people in this way?

 

Of course if you have no intention of taking these kind of action is in reality -- then don't bother. You will only undermine your credibility

[howard-moore]

Thought you may want an update...

 

When I arrived at the bank at 1:30pm I asked to speak to the Business Manager (who was the chap dealing with the issue) and was told to take a seat. He arrived around 5 minutes later holding a print-out of the email that I had sent him that morning, and apologised that he had not yet sent me a reply (though it had been sent some hours beforehand, and he had clearly read the printout some time ago, as there was manuscript writing on it).

 

He told me that he had so far 'drawn a blank' in locating the Loan Agreement, and that he would now be asking for the original paper files from the office that dealt with it (from memory it was actually the same branch, but they have since moved premises). He said that he would give me an update this afternoon on how long I might be expected to wait to see the original loan agreement. When I pushed him on how long it was likely to take, he could not give an answer, so I decided to throw in that my understanding was that Banks had to provide a copy within 12 days of me making a formal request, and were we in a position where I needed to make a formal request. He said that he would confirm with a colleague as to whether this was worth doing, but incredibly said that it could be that 'the loan agreement has been filed in someone else's personal file'.

 

To make matters somewhat worse, he asked me what I would like to do with the outstanding £1400-odd left on the account. I replied that since I had complied with HSBC's payment schedule, it would be rather presumptious of me to start making secondary arrangements to pay this amount when they could not even locate a copy of the original loan agreement with the primary arrangements.

 

Next he said that it was his understanding that the PSL had a provision for payment at a set rate of interest, and considering rates were lower now, it should be that I was 'owed' money once the payment schedule had been complete. I have no idea quite what he is referring to here, but frankly it does not make much sense to me!

 

Finally, he asked for final clarification as to what I was expecting from him. I answered that I expected written confirmation that HSBC would remove in their entirety any negative credit history; that they would find out why I was sent an Arrears Notice, and finally why my official complaint was not even initiated. On this last point I was told that it was their belief my complaint was for a DIFFERENT loan. When I pointed out that I have no DIFFERENT loans with HSBC, he admitted that this didn't seem that likely.

 

All-in-all, it was a thoroughly disappointing meeting. Firstly I had to trapse through the pouring rain to get hold of the guy because he had not responsed to my email (which was the third such time I have had to walk down to the branch - missing out on important billing time). Secondly, they had not actually furthered the matter at all. Thirdly, the young fool on the door asked me on the way out whether 'there was anything else they could help me with'.

 

Thankfully I just about held it in!!!!!

[howard-moore]

I could really use some advice from someone on this matter now:

 

I got a call on Friday from the chap dealing with this at HSBC telling me that he had not yet been able to locate my Loan Agreement, but that he had found a template for the Agreement that I would have signed around that time. He said that during the course of the loan the amount I paid back would have been amended by the Bank (on agreement with me) depending on the rate of interest (it incurred 1% above base). HSBC never contacted me for the entire period of the loan to reset the payment schedule, resulting in £1,400-odd outstanding when the final payment was made.

 

They have now asked me to restart payments on the same terms as before until they locate my Loan Agreement and find out what has gone wrong here. I did ask why they have not removed any negative marks against my credit history, and was told that to restart payments was the only way to remove the negative marks.

 

Now, there was no way that I was going to restart payments when their own sceheulde said that I was not meant to. Further, they have no paperwork of any sort to say when or how I should be paying this amount to them, and frankly I don't trust the advice that I was getting from them.

 

I did ask whether now was the time for me to make a formal request for my CCA, but all I got was that he would 'ask (his) direct line manager' and get back to me. Thus far, nothing has come back to me. I am particularly peeved as I asked him to put all that he had said to me in writing by today, and so far I have not received a single thing through. All the time I have a negative mark against my otherwise impeccable credit history, which is embarrassing to say the least considering I actually advise people on corporate affairs etc.

 

Any advice on what you recommend as the next steps would be very gratefully received.

 

Rgds,

Neil

[howard-moore]

Sorry to bump this thread, but would really like some experienced advice as to the next steps to take.

 

I finally wrote to HSBC on Tuesday 22 September setting out (over 4 pages) the issues that I had faced and formally requesting a copy of my Loan Agreement. Considering that this matter had been going on since 18 July and that a negative mark has been added to my credit history, I gave them 7 days to respond. There has, of course, been no response.

 

I would really like some advice as to what I should do next.