Lloyds charges making life hard

[forties]

Hi I am hoping to defend our business from further damage by Lloyds bank and want to know how best to proceed.

 

We opened our account in 2010 with a loan of £60,000 from an apparently supportive bank manager who promised to give us an overdraft when we opened. We met the repayments for 6 months whilst rebuilding before we even opened.

 

We needed a further loan of £25,000 to complete the refurb which we received on the understanding that we took out life insurance with Lloyds. We did so and received the loan which enabled us to complete the project.

 

Sadly 2 weeks before we opened the manager suddenly passed away. When we first met our new manager she appeared to take a very dim view of us and dismissed any notion of an overdraft on the grounds that we had not met our targets 2 weeks after opening. We had never been warned that our admittedly (with hindsight) over-optimistic business plan was a binding document.

 

Since the start of our relationship the new BM has been rude and unhelpful has repeatedly allowed payments to go out then called them back then charged us, probably at least £100 pcm and sometimes more. This has made it extremely difficult to manage the account as we are never sure what will come out next sometimes payment are made and recalled 3 times! We have shut down as many DDs as poss and use the account as little as possible.

 

We feel we have been unfairly treated as an overdraft would have prevented these charges, the business overall is not in much debt and is improving and has the potential to grow into a sustainable business currently employing 5 people.

 

Currently we owe £900 in charges and cannot use the account at all. We feel we were mis-sold the life insurance at £120 pcm which we paid for about 1 year and we are being unfairly treated and exploited to raise revenue through charges when an overdraft would resolve the situation.

 

any advice gratefully received.

Edited January 6, 2014 by slick132
entered paragraphs

[slick132]

Hi Forties and welcome to CAG

 

I've moved your post into your own thread and used paragraphs so your post is readable.

 

Here are 2 links that you should read :-

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?387431-Letter-before-Action-Removal-of-Charges-under-Hardship-criteria-BCOBs

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?387436-Letter-for-consideration-regarding-Hardship-or-Financial-Difficulty

 

Even though yours is a business a/c, because there is lending involved, The Lending Code should apply. Accordingly, if the bank fail to provide you with o/d facilities that enable payments to be made, surely this means you are in Financial Difficulty........

 

........ In which case, the bank should be offering you every assistance available including the reduction or stopping of interest and/or default charges.

 

Have you considered moving to another bank with a BM you could work with better. It is possible that the current BM could pull the rug at any time wrecking all your plans and leaving you with no business and no money.

 

[forties]

Hi Slick123 and everyone else.

Thanks for your reply and warm welcome.

I am unsure how to proceed re Hardship, does this apply to the business or the owners, we are a partnership, working other jobs to make ends meet and repay business related credit card debts. The business struggles on a day-to-day basis as takings fluctuate greatly week to week and seasonally.

I would welcome opinions on the following points:-

1,Does the original BMs verbal agreement to give us an overdraft upon opening carry any weight. We certainly would not have opened an account where we had no possibility of getting one.

2, Can we reclaim the life insurance we were mis-sold?

3, If so should we repay the charges with that money get the account active again before moving to another bank.

4, The state of our account reflects badly on the business and would, I assume , make it very difficult to open another account. How should we proceed?

 

I would be grateful for any advice, its great to find somewhere supportive after a tough 3 years.

[slick132]

Hi Forties,

 

If you had nothing in writing from the BM, the verbal agreement or any other discussions that were not in writing are likely to count for nothing.

 

If you were/are suffering Financial Difficulty, The Lending Code should apply equally to individuals or Micro Enterprises. If the bank knows you are struggling, they should be pro-active in trying to help as I said in my penultimate paragraph above. Your approach about this should be made in writing and you can ask them to stop adding default charges and interest. No guarantee that they will, but it's worth a shot.

 

Re the Life Insurance, who would benefit in the event of death of one of the business partners.

 

When you say WE, is this you and who else - ie a spouse or an unrelated business partner.

 

[Klandestine]

Given that the account doesn't have an overdraft facilities I''m not sure that the lending code does apply in this instance - unless you are actually having difficulty in paying your business c/c or your loan repayments.

[slick132]

If items are being returned unpaid, that suggests the a/c has been going into unauthorised o/d.

 

This is covered by The Lending Code.

 

[Klandestine]

If items are being returned unpaid, that suggests the a/c has been going into unauthorised o/d.

 

This is covered by The Lending Code.

 

 

I would have thought that it suggests the exact opposite.

If they are being returned unpaid then the bank isn't willing to let the payments take you into an unauthorised overdraft?

[forties]

Hi all, thanks for your replies.

We are a partnership of 3, myself my husband and a friend. I think the cover gave each individual enough to cover the loans from the bank.

Yes the account is and has been in unauthorised overdraft several times, I need to clarify if the Lending Code applies or not.

We did not want and could not really afford the insurance but it was made clear that we would not get the 2nd loan unless we signed up for it. Surely this is undue pressure to buy.

[slick132]

Hi Forties,

 

Re the insurance, was each individual's life covered for the full amount of the loans.

 

Personally, I'm not sure the imposition of life insurance was necessarily mis-selling in the same way as the PPI scenario. In your case, the bank (arranged by the original BM) felt obliged to cover itself in the event of death of a partner. You were given a clear choice - take the insurance or you don't get the loan. They didn't impose any accident or illness cover, which I think would have been far more questionable.

 

Was it undue pressure to buy ? I'm not convinced it is challengeable but I hope others may comment.

 

If there was a cycle of the a/c going in and out of o/d, then I think you have grounds to argue that the bank were obliged to assist the business by stopping or reducing default charges or interest. The Lending Code would be my starting point, followed the threat of direct court action using BCOBs. Don't threaten court action unless you are fully prepared to take it.