HSBC Defaults - AAARRRGH!!

[Shadow2981]

Hey, I have been assisting a relative of mine get on top of his debt, following a spiral so bad, it led to severe (undiagnosed) depression and suicidal contemplation.

I have managed to get him back on track, and in complete control of his finances.

First, we negotiated a F&F settlement on a loan he had for many years, which was due to end in July of this year, but due to charges and interest, still had around £3000 outstanding. I negotiated this down to £600 F&F settlement. At the time the offer was made and accepted, there were NO defaults on his credit file.

We received the confirmation that payment had been received and the account had been closed on 15th March - and that payment had been accepted as FULL settlement (not partial).

On 21st March, we purchased his credit report - which showed February had been updated at the 6th late payment. We expected the next credit file purchase to have March simply marked as settled.

On 29th March, we obtained a new copy of his report - but this time, HSBC had REPLACED the February update with a Default, and the default/deliquent balance just shy of £3000.

This update had apparently been made on 21st March (must have been shortly after we bought his file that day). But this was done AFTER the account was confirmed settled and closed.

I telephoned HSBC's head office complaints, and advised them they had made a mistake - quoted numerous acts, regulations, laws etc.. to them. We assumed it would have been dealt with. Then a Final Response - including what they considered to be the Default Notice, but was nothing more than a Final Demand (it doesnt even come close to meeting the Default Notice guidelines).

In this response, they also stated that they noticed he has a bank account with them that is overdrawn, so they have now handed this over to Metropolitan and filed a default on this too.

Furious with this, I had no choice but to take a day off work with him in order to phone them again, as they would not discuss this with me until he had passed security checks.

So I did this, and I phoned them again, and explained that this response did not even come close to addressing even a fraction of the complaint, and the case re-opened - and all the new notes put on the system.

I also emailed in additional details to support the complaint - like extracts of acts and regs they had breached, guidelines for issuing Defaults and so on - quite a long email, and explained how they had not even sent the DN I had requested, but had actually sent a Final Demand - and all I got was a fob-off response saying "we have reviewed your complaint, and are in agreement that the Final Response we sent satisfied your complaint, and without repeating all of the original Final Response, we are sticking to what we said in it" kind of thing.

This letter however, had HSBC's Service Quality departments phone number on it, so I thought I would try and talk to them, in the hopes to clarify my complaint and hoped for someone who could understand my complaint.

All I was met with was "the bank doesnt want to discuss this any further, once we have issued a Final Response, and a follow-up, that means we will not look into further unless an independant party tell us we are wrong".

They practically begged me to take it to the FOS - I told them I probably wouldnt waste my time and if I took it further, it would probably be to court! They said whatever I decide, if they are ruled against, they will deal with it, otherwise, shut up and put up...

Some assitance please?? I need the best resolution in as litle time as possible... My cousin cannot afford his mortgage really, and under their hardship terms, WOULD consider reviewing his mortgage to a better deal - but NOT if there are defaults on his file.

Do we need to go straight to court? FSA, OFT, FOS, ICO??

PLEEEAAASSE!! I know it will take time, and can tolerate that, but dont want to waste 6 months with FOS if they are just likely to agree with the bank, and strengthen the bank's case in court...

Yes, the account was eligable for a default based on how it was run, BUT it wasn't defaulted at the time it was settled and closed! These must be eligable for removal...? Surely?

[mgfboy]

Re: HSBC Defaults - AAARRRGH!!

Sorry to say HSBC are a law unto themselves, take them to FOS but as some of us have found, FOS also seem to be in HSBC's pocket.

It might be worth talking to Paul ( the in house brief)

I hope you get it sort though.

[Shadow2981]

Re: HSBC Defaults - AAARRRGH!!

Yeah, I got the impression that the FOS were somehow going to be biased - as HSBC are really trying to encourage me to go there for an opinion!

And when I kept saying "I would rather sort this out much quicker, and much easier than doing that" - they kept asking why I was so reluctant to go to the FOS!! It all seemed a bit suss, as they should be trying to do what they can to stop me escalating it to them, but instead they are trying to push me that way!

Paul? In-house brief where sorry? Here, HSBC, FOS..? Thanks

[MrsD]

Re: HSBC Defaults - AAARRRGH!!

Essentially your cousin had defaulted on his account, so they were entitled to default him. The issue is can they default him after he's paid it off? and that I'm not sure about. it does seem to be petty and nasty (but we're talking about banks here) Was the F&F accepted as a partial or full settlement and what is it showing on his credit report? one thing to learn here is never ever phone them, everything in writing always. if you phone you've absolutely no proof of anything that's said.

[Shadow2981]

Re: HSBC Defaults - AAARRRGH!!

Hi, the payment was accepted as FULL settlement... the letter of confirmation we have states the payment received and accepted as full settlement, and the account has been closed.. I have all of the important phone conversations recorded (and at the end I usually ask them to confirm their full names) and despite making these offers on the phone, we never agreed to pay anything unless it was accepted in writing, which they sent, got receipt for payment (paid in at HSBC over the counter) - and so on...

Today, his report shows "Default Satisfied" - but when they originally Defaulted him, it showed the full £3k outstanding, the account as still open, and nothing about the settlement - BUT what they did was replace February's marker from a "6" (as in 6 months late) to a "D" - and added the default data - but this update was done in March, and SHOULD have been the March update, which should have shown the account as settled...

[MrsD]

Re: HSBC Defaults - AAARRRGH!!

It sometimes takes a while for the CRAs to be up-to-date

so could this loan have been defaulted before and fallen off?

When was the original loan taken out?
When did he first fall into default?

[SXGuy]

Re: HSBC Defaults - AAARRRGH!!

this is the way i see it.

firstly if you had defaulted before the final settlement, you should have atleast had a proper default notice giving you the chance to remedy any arrears within 14 days of the letter arriving.

it should also state certain paragraphs of the act, and should be clearly marked default notice served under section 87(1) etc.

If none of this happend, then you did not get a chance to remedy the arrears, they can not default you.

I would def speak to Paul about this, because it could be enough to get the default removed?

[Shadow2981]

Re: HSBC Defaults - AAARRRGH!!

I have been fighting with them SXGuy to remove the default - but they sent a Final Response which did not touch on any of the point I had raised, other than saying "As you failed to comply with our Final Demand, we issued a Default" - this "Final Demand" was sent in September, basically gave 18 days from the date of the letter to pay the FULL balance off.

This "Final Demand" far from qualifies as a DN, it does not have probably 80% of the information it is supposed to have.

When I tried to re-raise the complaint, explaining how this response did not actually address anything - they sent another letter, again as a Final Response, stating that they have reviewed the case and do not want to repeat all of the points made in the previous response, but that they believe the original response addressed all of the issues raised.

I emailed them also, a full and thorough explanation as to how they breached numerous acts and regulations - and even quoted court rulings to them - and when I phoned, I was advised that the email had not been scanned onto the system quick enough to have been considered in this follow-up, so I rang them again, asking them to consider the points made in the email, and then they insisted that the email had been taken into account.

The other issue here is that there was ruling stating that Defaults served solely or predominantly on charges and interest are unlawful... BOTH of the defaults served are mostly made up of charges and interest!

The loan was taken out in 2004 and was for £15k.

Approx. £22k - £24k has been repaid - and still £3k outstanding, despite the fact that had all payments been made up to date it would have ended this Summer.

It was this point that actually got them to agree to such a small settlement... I pointed out that they were at no financial loss presently, and had still made a healthy amount of profit from it overall.

And this is how the default went - no notice ever sent...

Account passed on to Metropolitan (HSBC's in-house DCA) around 3rd February 2012. No termination notice sent.

Settlement agreed with Metropolitan, but they had to take it away and present the offer to HSBC - and took two weeks to accept it.

Letter of confirmation of acceptance received, and settlement paid in full, within the agreed timescale.

Letter dated 15th March stating that the account had been closed and settled in full following receipt of agreed payment.

Got credit report snapshot on 21st March, which showed February had been updated as the 6th late payment.

Got another credit report on 29th March, and it showed that on 21st March, the account had been updated - but not the account showed a Default, but they had dated this to about 2 weeks before rang and negotiated settlement, and replaced February's late payment marker with a "D" - and they have fiddled dates... as you can see in the 3 screenshots of credit reports!

[Shadow2981]

Re: HSBC Defaults - AAARRRGH!!

Also, if you look at the "Terms" in the first screenshot - it says "26 months @ £273 monthly" - this is obviously not the case - it was for something like 90-96 months!! This wasn't an arrangement to pay or anything that could have ammended the terms...

[alangee]

Re: HSBC Defaults - AAARRRGH!!

firstly if you had defaulted before the final settlement, you should have atleast had a proper default notice giving you the chance to remedy any arrears within 14 days of the letter arriving.

it should also state certain paragraphs of the act, and should be clearly marked default notice served under section 87(1) etc.

If none of this happend, then you did not get a chance to remedy the arrears, they can not default you.

I would def speak to Paul about this, because it could be enough to get the default removed?

Do not mix up a Default Notice and a defaulted credit report. They are two separate things.

A Default Notice gives the creditor the right to take the next step - enforcement of the debt. This is not the case with Shadows cousin, as the debt had been paid.

However, a default on your credit report can be entered at anytime after three months of non payments. I believe that ICO suggest that it should happen between three and six months.

Shadow

Is it possible that your cousin had passed the six month period prior to the agreement being made between him and HSBC? If so, that may be the reason that the default marker was entered. It takes up to 28 days for the record to be updated, so it is possible that the update was in motion before your cousin settled.

This is just my opinion, and Paul will give you the correct advice, but I do not think that going through the court will get you any satisfaction. Strictly speaking the HSBC account was defaulted by your cousin.

Alan

[Shadow2981]

Re: HSBC Defaults - AAARRRGH!!

According to HSBC - that is the case - but I am not convinced - and the fact that they sent an update to CRA for February prior to the settlement, but then, following settlement - updated that SAME marker from a late payment into a default - and altered the payment history somewhat (you can see the differences in the first two thumbnails), and then following the complaint, issued another one against an account that is £90 overdrawn says to me they are just being petty.

I was under the impression that in order to file a Default with CRA's - they had to issue a Default Notice and give 14 days to rectify the matter - advising that failure to remedy the breach would result in a Default marker being put on.. Have I mis-understood?

I am going to send a SAR to them anyway to see exactly how the account has been managed as all I have to go by is what they say on CRA's at the moment... which changes!

[alangee]

Re: HSBC Defaults - AAARRRGH!!

Shadow

A Default Notice (s87) allows the creditor to take the next step, which is enforcement of the debt.

A default marker on your credit report is to denote a breakdown between the creditor and the debtor.

These separate incidences normally happen at the same time, so I think that the confusion arises because a threat to enter a default marker on your credit report is usually included in a Default Notice. However, they can be sent in separately.

You could have a default marker on your credit report some time before a Default Notice is sent.

Alan

[Shadow2981]

Re: HSBC Defaults - AAARRRGH!!

Right, that makes sense! Thank you... Unfortunately that also makes this case seem a lot weaker :/ as I would now have to prove it was put malicious intent on HSBC's part! Bugger!

A SAR which requests all data provided to third parties should include dates of when they ISSUED the updates though shouldnt it?

If the default was filed with CRA's AFTER the acceptance of offer then surely we have something go by?

[alangee]

Re: HSBC Defaults - AAARRRGH!!

I am not sure on this, but I do not think you will get any joy through an SAR as to the detail of what is sent to a CRA by the creditor. Maybe it would be better attacking it from the opposite angle, and try to find out from the CRA when and what the updates were from HSBC.

Try making a complaint to the CRA, and follow it up with any questions as to dates of updates etc.

Just a thought.

Alan

[Shadow2981]

Re: HSBC Defaults - AAARRRGH!!

That was my intention - to be going on whilst waiting on the SAR. If HSBC didnt respond to CRA complaints within 28 days, then the accounts would be removed from files until they did - which if this occurred would be satisfactory anyway.

But sure this statement in the SAR I have put together from various sources means they are compelled to provide this information?

If you have disclosed any information to a third party (with or without my express permission), will you please include details of this in your reply, along with notes of any legal action passed or pending (to include a true copy of default notices, court orders and the like).