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Jamie-Law
Jamie-Law, Solicitor
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Can a £100 credit limit be increased without a customer's

Customer Question

Can a £100 credit limit be increased without a customer's knowledge or consent. If a mail order firm sets a credit limit of £100 are they not breaching the agreement by encouraging customers to place further orders and knowing that when these goods are dispatched the balance will be substantially more than the £100 agreed. In this case the company did not send any statements or subject the account to any credit control. Moreover, the increased credit limit is partially due to a "Default Sum" being added to the account when a payment was 7 days late. I know that OFT rules allow a £12 charge to be levied to cover the cost of credit control within the firm including sending "late payment" letters warning that he account is in arrears and a £12 "maintenance" charge had been added to the balance. A recent DPA request revealed that no statements were sent showing increased credit balance and no late payment letters were dispatched to justify the £20 surcharge. In this case there was a dispute when the firm refused to accept return of faulty goods at their own cost. The dispute was never resolved and when the firm did not respond to the complaint no further orders were placed and after a further 2 months payments were withheld pending resolution of the complaint. The firm appeared to have written off the balance and closed the account. They made no further contact and sent no letters demanding payment or warning of possible enforcement action. They did not give Notice of Assignment when 3 years later they sold the grossly inflated "debt" to a third party who are seeking to enforce the alleged balance of £343. Is it not the case that the £100 credit limit is the maximum amount that can be enforced through this credit agreement. I know that this firm is regulated by the FCA and must follow the rules in their Member's Handbook but I have been unable to find a summary of this online. Is there an FCA rule regarding credit control and placing a duty on lenders not to exceed the credit limit agreed at the start of the contract? I can't access this Handbook without signing up for subscription.
Submitted: 1 month ago.
Category: Law
Expert:  Jamie-Law replied 1 month ago.

Hello my name is ***** ***** I will help you

Did they notify you before they did it?

Customer: replied 1 month ago.
HI Jamieam so glad you took this question - I didn't want to impose myself on you with my multiple questions. I can tell you that they defo did not notify an increased credit limit. In this case the daughter wanted to buy mail order because her working tax credits had been disrupted. Daughter and partner and child had moved in with Mother fleeing violence at their home from violent criminal and waiting to be rehoused. Mother agreed to re-open the account she had opened in 2006 for her Mother that was living with her at that time. She set a £100 limit when the account was re-activated in 2011. Mother was not notified when the credit limit was reached so never worried that she would ever be expected to cover a debt more than £100. But DPA records show that even after limit was reached they targeted daughter with "promotions" which prompted further orders but Mother and daughter still thought the balance owing was £100 or less
Your answer will generate more questions so please reply so I can rate this answer and raise further questions specifically to you.thanks Jaime
Expert:  Jamie-Law replied 1 month ago.

Is this to do with the Court case? If so, are you asking questions relating to your pleaded defence, ie the one relied on at Court?

Customer: replied 1 month ago.
but also for the complaint to Ombudsman. Just need to know if the FCA has a rule stating that lenders should exercise proper credit control and not let balance rise above the £100 credit limit that they themselves imposed when the account was opened. What is the point of setting this limit if they then encourage you to place more orders which takes the balance over the £100 agreed limit. DPA bundle contained no monthly statements and no letters warning that credit limit had been breached. Goods ordered on 7.1.2012 took the balance to £110 but after receiving £10 payment on 17th Jan they dispatched further order worth £34.97 on 18th and £19.98 on 30th January taking the balance to £159.25 according to their records. 2 more orders were dispatched in February and March taking the balance up to £216.41 including interest and Default charges £42.63. Had the company refunded £38.97 for faulty goods and not encouraged further orders the balance would have been £99.70 on 30.1.2012 and after payments of £75.16 the balance at 12.6.2012 would have been £36.53 but by failing to respond properly to complaint over faulty goods and making no further contact they just kept adding Default charges and interest of around £27 pcm till they sold the debt for £323.35 - the grossly inflated balance as at 27.9.2012. It appears they closed the account on that date - the anniversary of the account being opened - then sat on it till August 2015 when they sold it to Cabot. The DPA bundle shows that no communications were sent at all. No Late Payment letters, no Notice of Assignment, no letters warning the account was being referred to external agency for recovery. Surely this is blatant disregard for FCA rules? I just don't know which onescheers
Pauline
Expert:  Jamie-Law replied 1 month ago.

What is the value save for any charges and interest?

Customer: replied 1 month ago.
The debt was sold for £323.35 which included interest and Default charges of £194.93
Of this amount £166.33 is made up of int/charges added after 18th January 2012 when the credit limit was breached and balance stood at £135.49 inc £28.60 charges.
Despite January's payment not being made till 11th February they dispatched a further order on 30th January worth £19.98 taking the balance to £159.25 inc £32.38.
So even if the monthly interest and service charges were not considered as part of the credit balance the limit of £100 was still breached on 18th January 2016 and stayed in breach from that point on.
cheers
Pauline
Expert:  Jamie-Law replied 1 month ago.

Just to clarify there was no notice it was increased? When was this?

Customer: replied 1 month ago.
No notice was ever sentAcc opened/1st Order £89.97 17.09.2011
First monthly payment due on 17.10.2011
First £20 Default sum added 27.10.2011
First +second payment made 12.11.2011 - £20
Second Order £22.97 placed 29.11.2011
Third payment made on 20.12.2011 - £10Third Order £18.98 placed 7.01.2012 - Acc balance £110.52 inc £28.60 charges
Fourth payment £10 made 17.01.2012 - Acc balance £100.52 but would have been 61.55 if they had accepted return of faulty goods as promised. This promise to credit the account led to a further order :Fourth Order £34.97 placed 18.01.2012 - Acc balance £135.49 inc £28.60 charges
Fifth Order £19.98 placed on 30.1.2012 - Acc balance £159.25 inc £32.38 charges
Fifth payment £10 made on 11.02.12 - Acc balance £149.15
Sixth Order £39.96 placed 25.02.12 - Acc balance £194.06 inc charges £37.23
Sixth Payment £20 made 13.03.12 - Acc balance £174.06
Seventh Order £36.95 placed 26.03.12 - Acc balance £216.41 inc £42.63 chargesseventh payment due 12.04.2012 was missed because of dispute over faulty goods worth £38.97
Default sum £20 added 12.04.12
Service charge £6.51 added 12.04.12 - acc bal £242.928th payment due 12.05.12 - missed - still in dispute over balance
Default sum £20 10.05.12 added 2 days before missed payment was due
Service charge £7.70 added 10.05.02 - acc balance £270.62 inc £96.84 charges7th + 8th payment £46.16 made 22.05.02 - acc balance £225.46
By 27.09.2012 this balance had risen to £323.35 inc charges of £194.93The DPA bundle includes a glossary of terms indicating they do have credit control methods but none of the following appear on this account
"HELD ORDER" - order held for credit control purposes
"LET" - letter sent to customer (arrears)
"RVW" - review (I assume this occurs before credit limit is increased)
"PROMISE" - Revised payment plan - presumably for customers who are struggling to payNot only were none of these actions taken over the £100 limit being exceeded but the 3rd, 4th,5th and 6th orders were placed as a direct result of a targeted promotions campaign encouraging further orders to be placed :6.1.2012 promotion by phone
18.1.2012 promotion by mail
30.1.2012 promotion by mail
26.3.2012 promotion by mailAnd from my table above you can see that the £100 limit was breached after 3rd Order was dispatched when the balance was £110.52.Credit control went out of the window at this point whereas an account with a Default Charge made on 27.10.2011, ten days after the very first payment was due should have been flagged up for Credit Control.Even if the interest "service charges" and Default sum were not added to the credit balance the limit was still exceeded very early on because the promise of accepting return of £38.97 elicited further orders.I think we can convince the Ombudsman that there has been maladministration of this credit agreement but it is the Judge we have to convince at the hearing on 24th October. That's why I need to know the rules for Credit Control set down by FCA in their Members' Handbook so that we can show the Judge that terms of this credit agreement were breached when Studio did not follow Rule No ? and ensure that the £100 credit limit was not exceeded without prior Notice or amended credit agreement.Thanks for your efforts Jamie - gonna owe you a big bonus again.cheers
Pauline
Expert:  Jamie-Law replied 1 month ago.

Default notice or notice of assignment sent?

Customer: replied 1 month ago.
No to both - none was received and certainly no copies of these documents were produced in the DPA bundle.
I know there are FCA rules governing credit control and assignment or novation of credit agreement and I just need to quote these rules in our Defence. I can't afford to go into court next week with vague accusations of maladministration etc. I need to quote either Section blah blah of CCA was contravened and/or FCA rules state blah blah re credit control.I hope to persuade the other side, and the Judge, that this grossly inflated debt cannot be enforced because of these contraventions.thanks again for your help
Expert:  Jamie-Law replied 1 month ago.

ok then yes potentially they are in breach. They can raise the credit limit, but should give the customer an opportunity to decline.

There should be a default notice and notice of assignment. If not then the charges are not valid.

Further, they can only ever charge £12 per default as anything more can be challenged.

Can I clairfy anything for you about this today please?

Customer: replied 1 month ago.
Can you tell me which Sections of the CCA they have contravened?
Its not enough for us to say they should have done this and shouldn't have done that. That would be okay for the Ombudsman but not for the court hearing. We got a horrible judge at the last hearing. It was supposed to be a hearing of our Application to set judgment aside till Plaintiff gave us enough info to be able to enter a defence out of time but other side hijacked it. The Friday before the hearing they offered to adjourn the case if we would enter a defence within 28 days. We wrote back saying our DPA application could take 40 days and so we couldn't comply. They turned up and asked the Judge to adjourn our hearing for 3 months and he complied - fair enough. But then they asked for £400 costs which the Judge reserved! When we tried to point out that if they had offered us 3 months to file a defence instead of 28 days we would have agreed and this hearing could have been vacated so their costs should be denied. He got really nasty and said I am reserving costs unless you want me to make an Order but I promise you won't like it. He also refused to let me speak on behalf of my sister even though she has mental health problems and she told him she couldn't cope with confrontations or having to think on her feet. He was a thoroughly nasty deputy district judge who bullied my sister and she is sick with worry that we will get him again for the next hearing. I was saving this for another question - how to demand her right to be represented by me cos she can't afford a solicitor and this kind of case does not qualify for legal aid. At the end of this you can invite me to ask that question.Jaimie there's no way I am going back in that court unless I am armed to the teeth. Clearly I should have filed some Request to act for my sister when I applied to get the Judgment set aside ( a new question) and by not being able to speak for her I ended up letting her down.I need to frame a proper Defence quoting the relevant law and that's why I turned to you.cheers
Pauline
Expert:  Jamie-Law replied 1 month ago.

Off the top of my head no I can't tell you.

But it would be in the OFT guidance.

You have already submitted a defence as I understand it, so you can't change it now unless you seek permission of the court. Then you would also be liable for C costs because they may want to file a reply.

But the guidance is from OFT from memory.

Can I clarify anything?

Customer: replied 1 month ago.
No we didn't submit a defence yet. We couldn't submit a Defence because we never got the Particulars of Claim so we could enter a Defence in the permitted time.We knew nothing about this debt till we got CCJ in April this year which was granted because WE DIDN'T FILE A DEFENCE TO THE CLAIM. We didn't file a defence because the claim was never received. I don't know how you could arrive at this from the info I supplied. I deliberately put off other lawyers so I didn't have to keep explaining this and chose you.
You appear
I feel like I have made a big mistake reinstating my Justanswer subscription specifically to deal with this problem and asking for advice on this rather than just paying a solicitor to look into it which I can't really afford.But your last response has left me reeling - it's based on inaccurate info and I was expecting more from you.recind all the good reviews I have left for you and let Justanswer know that you have failed to help me and have wasted my time over these past few weeks because it is now obvious to me that I need to engage a solicitor that is more expert in Consumer Credit Act law than you.Why did you take this case on when 2 other lawyers declined if it was not to help me?You have not helped me at all and I don't know anything more now than when I posted the question.There's no shame to this - 2 ther lawyers dumped this case before you took it up but with the end result I wish you had rejected it too and I would have known that I have to pay for a solicitor to appear for my sister at the next hearing.The fact is I am going to have to employ a solicitor who knows his way around the Consumer Credit Act just because the expert who accepted my Question about the CCA is not familiar with the FCA handbook rules and cannot tell me which parts of the Consumer Credit Act has been breached in this caseNorthampton CC file and mail the claim on behalf of plaintiff but don't use registered mail. Papers were never received till it was too late and CCJ already granted for the grossly inflated debt plus legal costs. This was made clear right at the start of this question.I went online to Justanswas quite specific that I would need expert in Consumer Law when I first posed the question. To be fair to you, 2 other lawyers declined to answer and then came you.But unless this chosen expert can quote me the rules of FCA that have been breached or the Sections of the CCA that have been breached it has been a complete waste of time.I started this last question making it clear that I could not access the Member's Handbook of the FCA which clearly sets out the rules for Credit Control etc and I needed a solicitor who has access to this handbook and its rules and could tell me exactly what Sections of the Credit Consumer Act this company has contravened whilst conducting this credit account.I appreciate you have spent a lot of time helping me and this was reflected in the £20 bonus I paid you for your previous advice.But the fact is I am seven days away from this hearing and ultimately you have not helped me at all. Apparently you are no more aware of the regulations and rules that Studio have breached than I am and all that has been achieved by using Justanswer is to delay me consulting with experts which I will now have to pay for the legal advice I need for my sister.Way to go JaimieWhy on earth would you take this Question when you can't offer expert advice. I regret giving you that bonus cos nothing you have done has made it easier to defend this action and moreover I have wasted precious time asking you to specify exactly what Sections have been contravened when you clearly don't knowYou have not helped me at all and all you have done is waste precious time that I could have spent on a different website where their experts might be able to actually specify which FCA regulations have been contravened or which laws they have brokenyou have really let me down and so I am going to give you a really bad review which is the most I can do to punish you for wasting all these precious days consulting you for expert advice when its obvious you don't know exactly what Sections of the CCA they have contravenedFrom your latest response it appears you have got bored with my question and don't want to help my special needs sister
but I have to tell you how angry I am that you have wasted precious time and now the hearing is upon us and I don't have any expert legal advice to rely on for the forthcoming hearing. Like a fool I thought I could rely on this website for legal adviceWell it's now clear to me that my subscription to Justanswer has worked to my detriment - I have spent weeks trying to get the right expert advice and now the hearing is less than 7 days away and you lot haven't helped me at all.Your final answer proves that you have lost interest and unless you come back to me within the next 12 hours I am going to leave you a terrible review about
Expert:  Jamie-Law replied 1 month ago.

I opt out then, good luck and have a great weekend.

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