Plea for banks to write off £12m paid by HIP trainees

Monday 7th June 2010

In the HIPs scandal that will not go away, Barclays and HSBC have been asked to refund up to £12m paid by victims of the defunct HIPs company, Property Professionals +.

The highly controversial firm, whose operations were better known as Home Inspector Training and HIP HIP Hooray, is thought to have had as many as 8,000 trainees still on its books when it went into administration on February 3.

Barclays is said to have had a trading arrangement with Property Professional + by which finance packages were sold to trainees. HSBC had an arrangement with the company to take payment by credit or debit card.

Now Joseph Pestell, of the Institute of Home Inspection, has written to the directors of both banks.
 
He says that when the company went into administration, there were some 2,400 trainees still training. Most had paid by either a finance agreement or credit card. They are now making claims under the Consumer Credit Act, which makes the provider of finance jointly liable for supply of the service paid for.

Many others had not completed their training. Pestell says in his letter: “It is entirely possible that many more trainees may have a claim against your banks, perhaps as many as 8,000.”

After the company failed, arrangements were made for replacement training to be provided by another provider.

However, Pestell alleges that there are ‘grave doubts’ about how adequate this arrangement can be, claiming that so far, this provider has been in touch with less than half of the 2,400 trainees. 

In his letter, Pestell says: “At this rate, it will take many more months to organise replacement training. Does this not render the banks potentially liable to compensate this breach of contract in respect of loss of earnings as well as of the service itself? It seems to me that the banks have every interest in resolving this matter more expeditiously than they have so far shown any willingness to do.

“Similar cases have arisen in respect of other training companies (driving instructors, IT) that have failed. In almost all cases, the Financial Ombudsman has ruled in favour of the customer, and it is hard to see why the banks wish to incur the considerable administrative costs of defending thousands of such actions when these are clearly going to be found for the trainees.”

Pestell says that even if breach of contract is mitigated by offering replacement training, it is no defence against mis-selling. He said advertisements to recruit trainees made false claims, including that the training was ‘government backed’, that recruits were led to believe they would earn large sums of money, and that there was a shortage of Home Inspectors and Domestic Energy Assessors.

He adds that candidates were interviewed not by teaching staff but by sales teams. Usually, two people were interviewed at a time, making it hard for them to ask questions about finances.

“For this reason, I believe that the basic requirements laid down for the regulation of loan agreements were breached and that irresponsible lending, as defined by the OFT guidelines, took place,” says Pestell.

Pestell also claims in his letter – whose contents he has made public to EAT – that interviewers promised candidates work with HIP HIP Hooray. But, he says, this was a ‘charade’.

Pestell asks the banks to write off an estimated £6m each: “Not a small sum, certainly, but a tiny fraction of the profit figures that you have announced recently – a sum therefore which you could well afford to forego.

“Compare that with the situation of the many vulnerable people caught up in the PP+ fiasco, most of them unemployed, some of them ex-servicemen and others who have served their country. They are facing serious debt, bankruptcy, the loss of their homes and strain on their domestic relationships. These people need rapid resolution of this matter. Justice delayed is justice denied.

“To quote one of my recent correspondents: ‘We thought that they must be OK as backed by Barclays.’ The banks do have some element of complicity in what has happened to these people, as does Government and its agencies. I do believe that the Financial Ombudsman will find in favour of all these trainees, but how much better would it be for the banks to voluntarily take the necessary steps to cancel these loans and credit card transactions.

Allen Jackson owned the company. He is pictured here with David Cameron, then leader of the opposition, on an official visit to one of Jackson’s training centres for plumbers.