FCA confirm that they have done nothing

Today I received the following email from the Financial Conduct Authority. It appears that following my report to them in December 2012 of wide-scale fraud they did……nothing. They have obviously been spending the time since my Freedom of Information Request working out a way of explaining why they have done nothing.

The Solicitors Regulation Authority have already adjudicated that the charges are unlawful contingency fees and the FCA were aware of that. The charges are also not allowed by solicitors rules regarding claiming costs you are not entitled to and they are forbidden by the Office of Fair Trading Guidelines on debt recovery. They are simply fraudulent.

Below the email is my response.

Dear Mr Wilson

We write further to our email of 25 March 2014, in which we advised that we needed more time to consider your request.  This was because we considered that some of the information we hold is exempt under section 31 (Law enforcement) of the Freedom of Information Act 2000 and that more time was needed to balance the public interest arguments for and against disclosure.

Having completed this exercise, we can confirm that, whilst we hold information on this matter, we do not hold specific information on any action taken by our predecessor, the Financial Services Authority, at that time.  To help understand why, it may be useful to provide you with some background context.

As you may know, on 1 April 2014, we took over responsibility for the regulation of consumer credit from the Office of Fair Trading (OFT).  This means that the OFT held responsibility for investigating your complaint against HFC Bank Limited (“HFC”), a subsidiary of HSBC, when you approached us in December 2012.

Prior to 2010, when HFC sent an account to solicitors to recover outstanding debts (e.g. on personal loans, credit and store cards), it added a charge to reflect the costs of the recovery.  HFC’s agreements with customers gave it the right to do this and the fee was added after the customer had defaulted on the loan/credit card payments.

Whilst we did not forward your complaint to the OFT at that time, we are aware that, in November 2010, following a review by the OFT of Industry debt collection practices, the OFT imposed Requirements on a number of firms, including HFC.  The Requirements on HFC were imposed under section 33A of the Consumer Credit Act 1974 and required HFC to change various aspects of its collection practices.  As a result, HFC removed all of these charges from its then existing book and has not added the charge to any new accounts.

Lastly, you may also be interested to know that HFC has applied to cancel its authorisation.  For further information, please see the Financial Services Register:  http://www.fsa.gov.uk/register/home.do

We trust this clarifies the matter.

Yours sincerely

Dear Sirs

Thank you for your email. To say I am surprised by the content is an understatement.

You state that HFC were entitled to add charges because their terms and conditions authorised it. Have you actually read the order made against them by the OFT? It tells them to stop adding the charges until they change the terms and condition in the agreements. This means there was no provision. In any event the terms stated they could charge “reasonable costs” – they charged 16.4% of the debt immediately on referral to solicitors, before any work had been done. So on a £10k debt they charged £1,640. In any event, only a court can determine if the contractual costs are payable. That is fraud.

It was not under the remit of the OFT to investigate fraud, it was the jurisdiction of the FSA and now you.

Your completely inadequate dealing of this matter will soon be widely known to the public.

Yours faithfully
Nicholas Wilson

[update – since receiving the above, someone else received exactly the same paragraph about the OFT order, from HSBC bank!]