The Great MBNA/Virgin Interest Rate Escalator Trick

[Redletter]

Yep, put a warning for viewers to ensure they dont have mouthful of coffee at the time of reading

 

 

HAHAHA! Thanks!

 

Is it ok then doesn't jeopardise anything or leave me open to being sued??

[lexis200]

Nothing they can sue you for in that!!

[Redletter]

Good start, phatram - Mods/Helpers - anyone care to advise?

 

I'm happy to continue to recommend doing this by phone as it works, but some may wish to write in.

 

Hi MacBoy sorry for barging in but would you please comment on the letter below. I have tried the phonecalls and spoken to supervisors who just tell me i can SAR them if I want and give me the address to do so!......

 

FORMAL COMPLAINT

MBNA

Dear MBNA,

I have recently realised that my Virgin MBNA credit card is being charged at the extortionate rate of 34.9% APR, although on application it was 0% balance transfer and typical APR 15.9%. This had been effectively disguised through only the monthly rates being shown on my statements.

I have regular access to my credit reference files and I have according to them an ‘excellent’ credit score of 940 points out of 1000.

I have no adverse credit history, defaults or County Court Judgements.

I was given a credit limit of £3000 on this card.

I have paid by direct debit regularly and never defaulted on a payment.

I am aware of other customers of yours who do not have such a high interest rate applied to their accounts and I therefore believe them to be selective, punitive and unfairly applied to those who can least afford it. It is my opinion that I have been ripped off with the promise of a credit card at a competitive rate and then snared and tied down to an interest rate which is far from ‘typical’. I am aware that the rate is variable, but I believed the reason for this was with regard to fluctuations in the base rate. How you can justify charging interest of almost seventy times the base rate I find totally bewildering.

You are supposed to be an established professional company yet you seem to operate with total disregard for the welfare of your customers.

I am informed that I was ONCE late with a payment in September 2007.

However, if you were to check your records, upon realising that an error had been made I immediately paid a sum far exceeding the minimum due payment.

I have contacted your call centre staff on a number of occasions to express my concerns and request a goodwill interest reduction but have been quite abruptly dismissed, even invited to transfer the balance elsewhere if I wasn’t happy. Quite an impressive customer retention policy!

I wonder if you were to advertise your credit cards as “Typical APR 34.9% once we have snared our customers”, you would have any customers.

I remind you that the consumer credit act 2006 introduced the assessment of unfair conditions and/or business practices to determine if an unfair relationship exists between creditor and debtor.

Part 8 of the Enterprise Act 2002 can then be enforced if an unfair relationship exists.

Some examples of improper business practices are:

Using false or misleading statements in order to induce consumers to enter into a contract

Hiding important details about credit deals in the small print

Requiring consumers to sign credit agreements that are not easily legible and are difficult to understand

Failing to comply with the requirements of the Act or the regulations on advertising and agreements

Failing to perform contractual obligations to consumers or to give any or adequate redress when in breach of duty to consumers

Misrepresenting the form, nature, purpose or long-term implications of loan agreements.

In summary, I would ask that you provide a full explanation as to why the interest rate on this account has been escalated to such a high level and I ask that you decrease it to the rate advertised when I was considering my application for a credit card with you.

Should you be unable to offer a satisfactory resolution to this matter I shall be taking my complaint to the Financial Ombudsman and filing a report to the office of fair trading.

Regards

Redletter.

-------------------

 

Thanks

[Redletter]

Does anyone know an e-mail address I could use instead of snail mail?

[angel_1]

hiya all, pls take a look at this thread time to stand up people

 

laters angel x

 

http://www.consumeractiongroup.co.uk/forum/mbna/204839-band-together-against-them.html

[Redletter]

Just found this on MBNA Virgin website! HAHAHA! Load of b/s!

 

Principles on risked based re-pricing & helping customers in financial difficulty (effective 1 January 2009)

 

Over the past couple of weeks, our credit card partner MBNA, has been working with the Government and our industry groups on two initiatives:

1. To provide further help for customers who are in financial difficulty, and;
   
2. To put in place some principles - that all credit card companies agree to - about how we make changes to the standard interest rates on customers' accounts, known as “risk-based re-pricing”
   

The Government and the credit card industry have jointly announced the outcome of our discussions. Virgin Money and MBNA fully support this outcome which we believe benefits our customers and our industry.

Further help for customers in financial difficulty

Where a “not-for-profit” debt advice agency, e.g. Citizen's Advice Bureau, The Consumer Credit Counselling Service (CCCS), has formally notified us that a customer is in serious discussion with that agency on a draft debt repayment plan, we will suspend collections activity whilst these discussions continue, as long as they are concluded within 30 days. Also, if progress has been made, we can extend this for a further 30 days.

Above all, we’d always say that if you are experiencing difficulties then the best thing to do is to talk to us because, if you don’t, then we can’t help.

Principles on risk-based re-pricing

The industry has developed these principles to cover the circumstances, alternative options, frequency and transparency of an interest rate increase. MBNA will apply them from 1 January 2009.

1. Where we increase a customer's interest rate, we will provide him/her with options. These will always include the option to close the account and repay the remaining balance at the existing rate of interest, within a reasonable period, having regard to the existing level of minimum payments and the customer's financial situation. Where we offer alternative lending products, we may also provide the option to transfer the balance to such a product at the existing (or lower) interest rate.
   
2. We will not increase interest rates in the following circumstances: •Where a customer has failed to make the minimum contractual payment requested on the last two or more consecutive monthly statements; or•Where an agreed repayment plan is in place in respect of the account; or•Where we have been formally notified by a not-for-profit debt advice agency that the customer is in serious discussion with it.
   
3. Provided a customer manages his/her account in accordance with the product's terms and conditions we will not: •Increase interest rates within the first twelve months of a customer having a credit/store card;•Increase interest rates more often than six monthly beyond this period.
   
4. We will always give a customer at least 30 days notice of an increase in interest rates, so that the customer can make other arrangements, should they so wish.
   
5. If the customer asks, we will ensure that our staff are able to provide the customer with an explanation as to why an interest rate may have been increased.
   

THESE PRINCIPLES WILL COME INTO EFFECT ON 1 JANUARY 2009 AND WILL APPLY TO ANY INTEREST CHANGE NOTIFICATIONS AFTER THIS DATE

A factsheet on risked based pricing is available from APACS (UK Payments Association), our industry trade body, visit www.choosingandusing.com

[banker_rhymes_with]

5. If the customer asks, we will ensure that our staff are able to provide the customer with an explanation as to why an interest rate may have been increased.

Excellent, so MBNA have decided to tutor all of their Call Centre Monkeys to tell us all about Securitisation then!

 

Perhaps the first call may go something like this:

 

CAGGER: [switches on Recorder] Hello MBNA, why have you ramped my Interest Rate into Orbit then?

 

MBNA: Let me explain: we had to do this, you see, because we were a bit short this Month.

 

CAGGER: That makes two of us. Explain why?

 

MBNA: We have bills to pay, you know, great big humongous ones. Our phones never stop ringing, beastly Bond Holders keep demanding the Interest we promised them.

 

CAGGER: I meant explain why this is my problem.

 

MBNA: Let me explain: in the trade, we call this Securitisation. It's all a bit complex and you wouldn't understand.

 

CAGGER: Try me.

 

MBNA: OK, let me explain: once we've hooked you up for one of our nasty Cards, before you can say Jack Robinson, our beancounters extrapolate what we think we can screw out of you over, say, 5 years, then we add a bit on top to make it look really juicy. The aim is to invent a large enough figure to look really tempting when trying to convince Investors to buy in to your Debt.

 

CAGGER: Tell me more.

 

MBNA: Righty ho, here goes: once we've dreamt up a nice fat invisible future Debt figure, we flog this off to a little Company we have, one with no Offices or Staff, called in the Trade an SPV.

 

CAGGER: Wasn't that a big Truck in Captain Scarlet?

 

MBNA: Eh? Ah, I see what you are getting at. No, SPV does not stand for Special Pursuit Vehicle! It stands for Special Purpose Vehicle.

 

CAGGER: So there's a difference then?

 

MBNA: Oh yes. Our SPV then slices and dices your projected future Debt up into lots of little chunks called Bonds, and then flogs them off to Investors. The more little Bonds there are, the harder it is for any of the Bond Holders to give us a really hard time you see. Each one only gets a little piece of your ass, not the whole thing.

 

CAGGER: But what do they get then? I don't suppose these Bond Holders buy these invisble Debt Bonds just for fun.

 

MBNA: No, of course not. We agree to pay them Interest. Now, here's the really clever bit, we Pay them less than you Pay us! But, in return for this red hot deal, collectively, they give us a great big wedge of Cash up front...and you haven't even spent anything yet! We plop that into a high interest account and use that to cover anything that you do happen to squander your Credit Limit on. At that stage, we haven't had to use a penny of our own Wonga.

 

CAGGER: Amazing, and you thought of that all by yourselves?

 

MBNA: Sort of. It's Industry Standard actually. Every banker we know is banging away at this. Anyway, it gets better. We fix the Interest Rate we Pay them, but we add a little gotcha into their Bond Terms to say anything we can get above that is all ours to keep. Every last bit! We call it an Interest Rate Strip...or something like that. Whatever we call it, it confuses the hell out of the Bond Holders anyway.

 

CAGGER: It certainly confuses me. So, let me get this straight, I'm not really paying you, I'm paying the Bond Holders?

 

MBNA: Sort of. This is where it gets even cleverer. We just collect the Payments from you, having sold your Debt to our SPV. Your money shoots through our accounts faster than grit through a Duck. All we need do is grab our agreed cut as it shoots past, plus anything else we can engineer on top.

 

CAGGER: On top? What...like Charges, such as over-limit fees, late fees, things like that?

 

MBNA: Yes, you've got it. Easy when you can see how it's done. We start off paying the Bond Holders Interest and, to be honest, it's hardly worth getting out of bed for at that point. It's hard work at that stage, as we can barely cover the HP payments on the Bentleys with that paltry margin. So, we pump up the bit we can make on top. Whoosh, up goes your Interest Rates and, when you struggle and fall behind as we expect, we can then add Charges. Then use those charges as an excuse to pump up your Rates still more. It's really very, very clever. Nothing up front, and loads of money comes straight at us. It works like clockwork once we get you over 20% Interest!

 

CAGGER: So what happens if I struggle to Pay?

 

MBNA: Oh, easy, we just Ramp Up your Interest Rates even more, and then whack on a load more Charges. We know you won't last long at that point, so we may as well shaft you for all we can get, while we can get it. Be a shame not to.

 

CAGGER: But, if I stop paying, won't the Bond Holders get a bit cross?

 

MBNA: Quite possibly. But we don't really care.

 

CAGGER: Why not?

 

MBNA: Because that's their problem. When we sold them the Bonds, er, I mean when our SPV sold them the Bonds, we made, er, I mean our SPV made, a big fuss about a thing called Bankruptcy Remote.

 

CAGGER: What does that mean when it's at home?

 

MBNA: It's really neat. The Bond Holders think they are safe, because we, er, I mean our SPV, tells them that the deal is poop proof both ways. If we go bust, then our Creditors can't go chasing them for money. But, what it really means is the idiot Bond Holders can't go chasing us for money when you go Bust! Ha, ha! Cracking stuff is it not!

 

CAGGER: Hold on. I thought you owned my Debt? Didn't I see something that mentioned The Consumer Credit Act 1974, perhaps suggesting this thing is Regulated in some way?

 

MBNA: We don't worry about that! We're a Telephone Bank and governed by American Law.

 

CAGGER: Really? But don't you need to own a Debt to take me to Court in the UK?

 

MBNA: I can see what you are getting at, but we've thought of that already. A bloke in our Legal Department met a chap in the pub who said that we can use an old Act from 1925, something to do with property. Anyway, that allows us to split your Debt into two bits.

 

CAGGER: Hold on, just how many Debts do I have?

 

MBNA: Just the one, but we pretend to split it into two bits, one called Equitable Rights, and another called Legal Rights. We sell the whole lot to the SPV, but pretend that we only sell the Equitable Rights to the Bond Holders, and pretend to keep the Legal Rights in case we need to grab your Home in Court when you can't pay all of the Debt we have engineered.

 

CAGGER: Don't the Bond Holders see through that one?

 

MBNA: Nope. We've thought of that too! We do sell them the whole of your Debt.

 

CAGGER: The whole of my future Debt you mean?

 

MBNA: Whatever. We sell it all to them anyway, lock stock and barrel, otherwise the Bond Holders would never Buy. So, our SPV knocks up some secret papers that allows them to claim full ownership of your Debt, no matter what happens to us. They just need to pull this out of their bottom drawer, and your Debt is officially all theirs, no need for us to do anything! They are not that stupid! They won't part with a cent unless they are Buying the whole shebang.

 

CAGGER: Not Stupid? What, unlike me you mean. So, bearing in mind how stupid I am, please explain how you pretend the legal side of my Debt is still yours, when it's not really?

 

MBNA: Dead easy! We use that 1925 Law of Property Act thing I mentioned, which says, I think, that provided we don't tell you we've Sold your Debt, we get to pretend we have the Right to haul your ass into Court!

 

CAGGER: So, if you do tell me, as you have just done, that my Debt no longer belongs to you, then this is the actual confirmation of sale. In the Trade, I think you call that Absolute Assignment.

 

MBNA: Yes, you've got it in one! Once I tell you we've sold your Debt, we are stuffed, as we lose the Right to take Court Action against you!

 

CAGGER: Excellent. Next question: does the SPV or Bond Holder have a Consumer Credit Licence by any chance.

 

MBNA: No, of course not! Why do you ask?

 

CAGGER: Just idle curiosity. But, many thanks for confirming you no longer own the Debt.

 

MBNA: Oh...cock, did I say that!

 

CAGGER: You certainly did. Have a nice day [clunk, ends Call, switches off Recorder].

Cheers,

BRW

Edited November 26, 2009 by banker_rhymes_with
Typo

[elsinore]

Hi BRW.

 

CAGGER: [switches on Recorder] Hello MBNA, why have you ramped my Interest Rate into Orbit then?

 

Please tell me that you'll send that to John McFall at the Treasury Committee. Not only is it very funny, it gets right to the heart of the problem in a way that anyone (especially an MP) can understand.

 

Els

[lexis200]

That's the only explanation so far I've even vaguely understood about all of that BRW - thanks:)

 

ps - love their last line:D

[banker_rhymes_with]

Hello Els!

 

Please tell me that you'll send that to John McFall at the Treasury Committee. Not only is it very funny, it gets right to the heart of the problem in a way that anyone (especially an MP) can understand.

There may be a way!

 

Cheers,

BRW

Edited June 25, 2009 by banker_rhymes_with
Space needed!

[citizenB]

Priceless, BRW.

[andrew1]

You never fail to amuse through the minefields of Credit BRW, well done. Never been at a loss for a few words myself, but that caps anything I could have done - brilliant.

 

Oh, can you tell me who it is MBNA securitise through - ie, the name of the company? Would it be possible that they securitise through Bank of America who are their parent or associated company which means when they do securitise it may well be Legal title rather than Equitable? mmm interesting. PM me the answer if you prefer..

[Rhia]

MBNA assign offshore via a Jersey account. If you really want to know go and dig around their corporate website (yes I think it may be the Bank of America website). It's also got something to do with Deutsche Bank. Think I found it by googling the words MBNA Europe and securitisation and bingo! Up it popped.

 

Don't forget Andrew1 when MBNA assigned my little bit of paperwork (after shooting interest rates through the roof) to Cabot, it was done via MBNA in Dublin - yep offshore again.

 

MBNA already has "previous" on VAT avoidance and securitisation having gone head to head with HM Govt on the issue (and lost)

Edited June 25, 2009 by Rhia

[banker_rhymes_with]

Hello Andrew1!

 

Oh, can you tell me who it is MBNA securitise through

When it comes to the MBNA, Rhia has covered about what I now know, so far! But, we all need to know more! So, get hunting Folks, and see what we can all find.

 

Please do save anything useful that you do find, do not just Bookmark it. That's because if it's of any use, sure as eggs is eggs, it won't be there the next time you go to look at it.

 

The Debt Industry is on a Global Find and Delete Mission at the moment, hunting out any tasty mention of Securitisation in case it falls into the wrong hands...like CAG's for a start!

 

It's a bit like that Film with Harrison Ford (Dr Ryan), Clear and Present Danger I think it's called. The part I have in mind is when he's in one Room at the Pentagon sat in front of his PC, and his foe is in another Room sat at his own PC, with Dr Ryan trying to Print Out incriminating evidence faster than the other bloke can delete it!

 

That's the same here, CAGGERS are busy Printing it out and Saving it, at the same time as the Debt Industry are furiously deleting it. We must find it before they get a chance to delete it and pretend it never existed.

 

Cheers,

BRW

[Gazza112]

Subbing with great Interest, great work BRW.

 

Gaz

[ScarletPimpernel]

Presumably, if one were able to discuss the same matter with another American card issuer, they would express themselves in the same way as MBNA?

[banker_rhymes_with]

Hello SP!

 

Presumably, if one were able to discuss the same matter with another American card issuer, they would express themselves in the same way as MBNA?

I suspect they would flout the Law in the same way, and flounder at the unfairness of it all, just because they went and Securitised from their Property in the USA instead of the one in UK. A rather silly Act they may wish to regret. Anyway, it's way past my bed time. If you take 408 from the time now (23:33) you get 19:25, that's when I shoud've gone to bed!

 

Sleepy time.

 

Cheers,

BRW