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[MSE Wendy]

The Bank Charges Charter / Petition is now live.


Reply below to comment or discuss.

[scrimperdave]

I was ill, on benefits of about £100p.w., and made a small error of about £8 that took me overdrawn. Abbey National hit me with penalty charges of over £250 escalating from that error.

Before the charges were imposed Abbey was told these charges would push me into financial meltdown, and were given contact details of the NHS therapist who could verify I was a suicide risk.

They didn't bother to verify, and imposed the charges. I have an acknowledgement, but I still don't have an actual reply to that letter.

I was lucky enough to have a friend who thought I was worth the £300 needed to take me out of Abbey's clutches. I still owe him the money: I want to reclaim but can't handle the stress.

[NeilW]

I have a problem with the fixed charge element of the 'charter'. It still provides an incentive for banks to push for charges rather than to lend money. And that means that the banking system becomes set up to obtain these charges rather than set up to make the economy work.

Even with a £5 charge, somebody overdrawn for a couple of days by £10, will be paying an interest rate of 9125%.

It simply doesn't cost the banks that much to maintain their liquidity reserves. It is pure profiteering.

To me there are double standards at work here. There are complaints that door step money lenders charge exorbitant interest rates of 300+%, and yet there is a suggestion that standard banks can charge poor people (who are the ones that are overdrawn the most) 9000+%.

Frankly I'm disappointed. The scale of an unauthorised overdraft charge should be proportional to the amount overdrawn and the length of time overdrawn. And that is what an interest rate does.

All banks should be limited to charging consumers via an interest rate. It would aid transparency and comparison across the market.

NeilW

[MSE Martin]

Neil,

I appreciate your point. However we know from OFT rule on credit card charges it prefers a fixed number. Frankly as we've been run rough-shod; providing a simple solution of £5 compared to the current horrors of £35 has an elegance to it.

Remember this is a 'broad-church' document of three different groups. If we got everything in the charter I'd be whooping for joy; though of course at the edges people will differ.

Two drafts of the charter were here on the site for suggestions and discussions; but there comes a point when you just have to go for it.

Martin

[Dragonlady]

It is a shame that 'the Big Three' chose to overlook the smaller consumer groups when discussing this Charter. Legal Beagles and Consumer credit Support, have members who have been through the grinder with the banks and credit card companies and could have given some valuable input into this Charter.

Why give the banks an 'elegant' figure. it still gives them a license to print money at the expense of the most vulnerable in our society. Whistleblower exposed the cost of the administration of the so called penalty charges and it would be closer to the mark to be even more 'elegant' at £2.00. People forget that these companies also have access to bulk mail rates, so they are not paying the same price as you and I for first class stamp.

It reads like a Document of Appeasment.

I feel Walter Merrick needs to revisit his statment of 12 December 2006.

I am sorry but I do not agree with the Charter. It is far too simplistic and the ramificatins will have far reaching unwanted effects if notice is taken of it.

[Frugal Fred]

I think it's about time the TRUCK law was re-instaed. It is the law that allowed the working person to demand that his wages would be paid in cash.

it might not be wise for all but for some, it has to better.

Any thoughts??

[maccy d]

Hi,

I have been going through this process since February this year when I requested my bank statements. I have come up against a brick wall every step of the way, Abbey owes me over £2000 in charges but yet keep telling me that the charges were lawful and that they do not have to repay me. I am now at the point of taking them to court and have just written to the Banking Ombudsman in a last ditch attempt to get my money back when BAM! Bank Charges Test Case and everything gets put on hold. Abbey send me a letter referring me to the Ombudsman and the Banking Ombudsman says they cant help now due to this case...

What do I do now? do I go ahead and send the court letter to the bank and get put in the holding system? do I wait and see what the High Court has to say? or do I just give up?

[TANZARELLI]

Originally Posted by Dragonlady

It is a shame that 'the Big Three' chose to overlook the smaller consumer groups when discussing this Charter. Legal Beagles and Consumer credit Support, have members who have been through the grinder with the banks and credit card companies and could have given some valuable input into this Charter.

Why give the banks an 'elegant' figure. it still gives them a license to print money at the expense of the most vulnerable in our society. Whistleblower exposed the cost of the administration of the so called penalty charges and it would be closer to the mark to be even more 'elegant' at £2.00. People forget that these companies also have access to bulk mail rates, so they are not paying the same price as you and I for first class stamp.

It reads like a Document of Appeasment.

I feel Walter Merrick needs to revisit his statment of 12 December 2006.

I am sorry but I do not agree with the Charter. It is far too simplistic and the ramificatins will have far reaching unwanted effects if notice is taken of it.

I have to agree with Dragonlady,

If we are saying that an unlawful penalty charge is something that banks can not profit from then in the other breath we are saying that we agree with £5 which clearly is still allowing the banks to make possibly 100%+ profit from us then we are IMHO giving them an easy option. Also they will be laughing in our face.

On this point I cant accept the charter as it stands.

Tanz

Member of CAG, Penalty Charges, Consumer Creidt Support, Legal Beagles, and PAG.

[midge61]

I too have to agree. I feel you are simply saying to the banks ok we give up by saying that you agree to £5 as fair.
They will then steadily increase the amount and we will be back to square one.
I feel the issue at the moment is to get the waiver lifted as the only ones to benefit from this is the banks. We need to fight together to get it removed or for the banks to be told to stop taking charges untill the case is resolved. An amesty for both sides. 1 year of no charges and whilst this may shave a bit of the banks profits it will at least give the harder hit customers a chance to pull their finances back together.

Midge

Member of CAG, Consumer Credit Support, Legal Beagles and MSE

[TANZARELLI]

exaclty midge,

We can all remember when banks were charging £5 and now some are charging £39, get real banks, 50p is more than fair not £5.

[TANZARELLI]

My other point to raise is something I have raised elswhere and that is if we agree to the 6 years being refunded without making the point that pre limitation claims are also viable because they have been deliberatly concealing the nature of their charging regime for x amount of years, they will just look at all these claims and say well the consumer charter states nothing about pre limitation act claims.

We should be working on proving this aspect and including the point that we expect all claims to be paid since account opening and all charges are to be refunded as they are unlawful penalties, now as they were then, which we can also back up with case law which includes pre limitation case law.

Hit them hard not softly is what I say.

Tanz

[Newbold]

Not a popular view here of course, but all this is achieving is a structure which will involve EVERYONE being charged by the banks for operating current accounts - just as it used to be a few years ago. The banks will make their profits somewhere (some people seem to think they're going to operate as charities) and if they can't make them by charging people who choose to overdraw without authority they'll make them from the vast majority of people who operate their accounts within agreed limits and currently pay no charges.

If you choose to overdraw without the bank's agreement you're effectively stealing their money. Why shouldn't they charge you for it? You have a choice. You know the rules, you know the charges - just don't overdraw.

I'm just waiting for the whingeing to start once the banks start charging everyone £5 per month just to operate the account. First Direct have started already and the rest will follow. Thanks, Martin - this is going to make you very unpopular in the long run.

[TANZARELLI]

Originally Posted by Newbold

Not a popular view here of course, but all this is achieving is a structure which will involve EVERYONE being charged by the banks for operating current accounts - just as it used to be a few years ago. The banks will make their profits somewhere (some people seem to think they're going to operate as charities) and if they can't make them by charging people who choose to overdraw without authority they'll make them from the vast majority of people who operate their accounts within agreed limits and currently pay no charges.

If you choose to overdraw without the bank's agreement you're effectively stealing their money. Why shouldn't they charge you for it? You have a choice. You know the rules, you know the charges - just don't overdraw. Sorry but I disagree with this comment, especially if the banks know when regular things happen such as your wages are going into your account (as they do on the same day every month) and the day before they return a payment, because you are short of a couple of pounds. This is purely unreasonable and is designed to allow them to make a profit. Another example which is the opposite of this is when they take out their charges and this takes you overdrawn, causing more charges to be incurred. If they can take you overdrawn for the purposes of their charges then they should have some flexibility to do it prior to a payday which happens every month.

I'm just waiting for the whingeing to start once the banks start charging everyone £5 per month just to operate the account. I don't have a problem with this as they are providing me with a service which I am happy to pay for and I think others should to. What I don't agree with is them using the fact that some people (often on benefits) who have a lot of outgoings and sometimes for whatever reason don't have sufficient funds in their account get fleeced buy the banks getting them into more and more debt.

First Direct have started already and the rest will follow. Good bring it on I say a monthly charge is fine by me, however last month I had the last bit of my wage £280 taken out of my account in charges causing me to then be overdrawn by £5.80 which will incur more charges and you cant tell me that this £280 would ever be the amount a bank would charge me for operating an account. Lets get real here.

Thanks, Martin - this is going to make you very unpopular in the long run.

P.S you don't work for a bank do you?

[MSE Martin]

A couple of answers:

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It is a shame that 'the Big Three' chose to overlook the smaller consumer groups when discussing this Charter. Legal Beagles and Consumer credit Support, have members who have been through the grinder with the banks and credit card companies and could have given some valuable input into this Charter.

I'll be honest with you i've not heard of legal beagles or consumer credit support. If they'd like to join in - they'd be more than welcome. This has been up on the site here in various guises asking for consultation for nearly two weeks. Sadly no one from those organisations contacted me to offer their support and help. The aim is to provide an inclusive body of campaigning groups (though not with claims handlers). And they'd be welcome.

As there are a number of posts above from people with them in their sign-off; I can only presume there's been some lobbying posts on those sites. Sadly no one thought to get in touch earlier or we could've sorted it.

On the £5 issue

The phrasing of this is quite deliberate. The £5 estimate is done because when analysed a £2.50 to £4.50 costing was given. £5 is a round simple number; remember on credit card the OFT said £12 - which we all believe is too high.

This certainly isn't a document of appeasement; its the opposite. Yet we can't do this without remembering at the moment the FSA,OFT and Banks have the agenda; we need to bring it back and a deliberately simple document that people can rally behind is very important.

I'm saddened those above who support reclaiming don't feel they can support the charter based on a technicality. As much consultation as possible was done for it and we've done our best to get a charter than covers the main points without seeming unreasonable. I would ask you to look again at the bigger picture.

The 'You'll be unpopular for this in the long run' point

I didn't do this for popularity. I did it because I believe the banks are breaking the law and I've been persuaded of the enormous damage the penalty charges structure does to many people with vulnerable finances.

Yet on the premise of "the end of free banking." I've heard this for a year, the only change has been 'first direct' who introduced a fee based on certain conditions. This wasn't done because of bank charges reclaiming; it was done to bring First Direct a more affluent customer (hence the income threshold) and to get rid of all its dormant accounts caused by it running lots of "sign up and get £25" promotions.

No other banks has introduced fees and any thank do would find they lost huge numbers of customers. The bank account market is ultra competition - just look at the top accounts offering £100 cash if you sign up.

Even if every clause in the charter was enacted; the cost for the banks would be £10 billion (sadly its unlikely to be this); while it sounds right for mere mortals, this is only a quarter of one years collective profits (profits not turnover!). It can be afforded!

Martin

[TANZARELLI]

Martin could I ask what your thoughts are on the limitation issue?

[Newbold]

Originally Posted by MSE Martin

A couple of answers:

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The 'You'll be unpopular for this in the long run' point

I didn't do this for popularity. I did it because I believe the banks are breaking the law and I've been persuaded of the enormous damage the penalty charges structure does to many people with vulnerable finances.

Yet on the premise of "the end of free banking." I've heard this for a year, the only change has been 'first direct' who introduced a fee based on certain conditions. This wasn't done because of bank charges reclaiming; it was done to bring First Direct a more affluent customer (hence the income threshold) and to get rid of all its dormant accounts caused by it running lots of "sign up and get £25" promotions.

No other banks has introduced fees and any thank do would find they lost huge numbers of customers. The bank account market is ultra competition - just look at the top accounts offering £100 cash if you sign up.

Even if every clause in the charter was enacted; the cost for the banks would be £10 billion (sadly its unlikely to be this); while it sounds right for mere mortals, this is only a quarter of one years collective profits (profits not turnover!). It can be afforded!

Martin

Martin, I applaud your general approach to money saving, but you're wrong on this one, and it will rebound on you once the vast majority of people who currently benefit from free banking realise who was responsible for their losing it.

Banks are there to make profits. No profits - no banks. Charging used to be the norm (unless you had a minimum balance of around £100 - more like £500 in today's terms) some years back, and the only reason it isn't now the norm is that banks have found other ways to charge. Take those other charges away and we'll all have to pay again. Yes, there is competition, but no matter how much competition there is they'll still want to keep up the current level of profits somehow. Life's like that - they can't just report dramatically lower profits to shareholders or the directors' jobs would be on the line. They're not in it for charity, and you're being naive if you think they're not going to find other ways to charge.

You might be a hero to some people, but there are many more of us who see this campaign as something which is going to backfire horribly on all of us - and you too.

[TANZARELLI]

The fact of the matter is that penalties are irrecoverable under common law but also in equity.

Charges that provide a service yes agreed then banks can make profit from these. However if they have puposely reworded their T&Cs to cloak and veil the charges into something they are not then this to me proves they knew their charges were unlawful and therefore proves to me they have been deliberately concealing their charges for x amount of years. I think the banks underestimated the bank charges debate and now are trying to cling on to this money by coming up with the service arguement.

We should be looking to re-claim all charges not just the recent last 6 years.

20. Lord Denning MR explained the meaning of the expression "concealed by the fraud of [the defendant or his agent]" in King v Victor Parsons & Co [1973] 1 WLR 29, 33-34 as follows:

• "The word 'fraud' here is not used in the common law sense. It is used in the equitable sense to denote conduct by the defendant or his agent such that it would be 'against conscience' for him to avail himself of the lapse of time. The cases show that, if a man knowingly commits a wrong (such as digging underground another man's coal); or a breach of contract (such as putting in bad foundations to a house), in such circumstances that it is unlikely to be found out for many a long day, he cannot rely on the Statute of Limitations as a bar to the claim: see Bulli Coal Mining Co v Osborne [1899] AC 351 and Applegate v Moss [1971] 1 QB 406. In order to show that he 'concealed' the right of action 'by fraud', it is not necessary to show that he took active steps to conceal his wrongdoing or breach of contract. It is sufficient that he knowingly committed it and did not tell the owner anything about it. He did the wrong or committed the breach secretly. By saying nothing he keeps it secret. He conceals the right of action. He conceals it by 'fraud' as those words have been interpreted in the cases. To this word 'knowingly' there must be added recklessly': see Beaman v ARTS Ltd [1949] 1 KB 550, 565-566. Like the man who turns a blind eye. He is aware that what he is doing may well be a wrong, or a breach of contract, but he takes the risk of it being so. He refrains from further inquiry least it should prove to be correct: and says nothing about it. The court will not allow him to get away with conduct of that kind. It may be that he has no dishonest motive: but that does not matter. He has kept the plaintiff out of the knowledge of his right of action: and that is enough: see Kitchen v Royal Air Force Association [1958] 1 WLR 563. If the defendant was, however, quite unaware that he was committing a wrong or a breach of contract, it would be different. So if by an honest blunder he unwittingly commits a wrong (by digging another man's coal), or a breach of contract (by putting in an insufficient foundation) then he could avail himself of the Statute of Limitations" (emphasis added).

• http://www.bailii.org/uk/cases/UKHL/2002/18.html

• Cave v. Robinson Jarvis & Rolf [2002] UKHL 18 (25th April, 2002)

[brightonman]

Originally Posted by Newbold

Banks are there to make profits. No profits - no banks.

Newbold -- please don't be so patronising. Nobody here imagines that banks aren't in business to make profits. What we find objectionable is the creation of excessive profits based on unlawful penalty charges meted out to people who are often the most vulnerable. We champion Martin because he, and a few others like him, have given a voice to those least able to defend themselves against the vast corporate bodies that banks have become..

I've never deliberately gone overdrawn in my life. I happen to run a business, and the bank charges all my transactions anyway, so the concept of 'free banking' is somewhat foreign to me, and those of us who run businesses have had to carry the cost of free banking for personal accounts for years. Personally, I'd rather see charges on banking that can be itemised and verified, rather than the absurd structure of penalty charges that currently exists. I am one of those who has suffered multiple charges in a single month as a result of the bank's own charges taking me much further into debt than I would have been, and I'm still furious about it.

As for £5, I think that's a realistic compromise., and actually still very generous to the banks. We could argue for years about a lower figure, closer to the actual 'true' cost to the banks, but such wrangling would serve nobody but the banks, who could drag it out forever.

[TANZARELLI]

Originally Posted by brightonman

As for £5, I think that's a realistic compromise., and actually still very generous to the banks. We could argue for years about a lower figure, closer to the actual 'true' cost to the banks, but such wrangling would serve nobody but the banks, who could drag it out forever.

I agree that it is still very generous and that is why I disagree with it. If we agree to it then we are still saying they can profit from penalties which they can't. If we accept it then in the future decide to bring an action will we have a leg to stand on?

[I Perseus]

Quote:
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I'll be honest with you i've not heard of legal beagles or consumer credit support. If they'd like to join in - they'd be more than welcome. This has been up on the site here in various guises asking for consultation for nearly two weeks. Sadly no one from those organisations contacted me to offer their support and help. The aim is to provide an inclusive body of campaigning groups (though not with claims handlers). And they'd be welcome.

As there are a number of posts above from people with them in their sign-off; I can only presume there's been some lobbying posts on those sites. Sadly no one thought to get in touch earlier or we could've sorted it.

Hi Martin, and thanks for the opportunity to have open discussion about this.
The above quote; One of 'The Big Three' (CAG) were contacted by www.consumercreditsupport.co.uk some time ago, offering support and input to this 'combined' approach. Sadly 'We' never heard anything back! That - is a shame!

...providing a simple solution of £5 compared to the current horrors of £35 has an elegance to it.

Remember this is a 'broad-church' document of three different groups. If we got everything in the charter I'd be whooping for joy; though of course at the edges people will differ.

Two drafts of the charter were here on the site for suggestions and discussions; but there comes a point when you just have to go for it.

Martin

A Charter - presented to the UKs major regulatory bodies and for consideration by the UKs financial institutions, which is hoped to be adopted as a standard is most definitely deserving of absolute clarity and accuracy.
I'm sorry to disagree with your quote, but to offer a 'Near enough' document that has the potential to affect every UK consumer in banking is a huge responsibility.
Which leads me to...

On the £5 issue

The phrasing of this is quite deliberate. The £5 estimate is done because when analysed a £2.50 to £4.50 costing was given. £5 is a round simple number; remember on credit card the OFT said £12 - which we all believe is too high.

The OFT and FSA/FOS will be arguing their case using sections 5, 8, 13 and Schedule 2 of the UTCCR1999.
To propose a 'nominal' figure of anything other than genuine pre-estimated or
liquidated costs whilst arguing points of law in a High Court is absurd in my opinion.
'We' the consumer, proffering a 'Charter' advocating the use of an estimated or nominal charge figure is contradictory in the least, and undermines the test case principles, and the argument of every single penalty charge case.
This is an opportunity to ask/plead/persuade the regulatory bodies to enforce and sanction, rather than 'appease' - yes appease the financial institutions.

I'm saddened those above who support reclaiming don't feel they can support the charter based on a technicality. As much consultation as possible was done for it and we've done our best to get a charter than covers the main points without seeming unreasonable. I would ask you to look again at the bigger picture.

Please see above - the bigger picture is what the reclaim era has relied on throughout. Technicalities are what the court consider in every claim that has been processed, and won.
Why change a working method?

Tanzarelli's post regarding concealment, statute of limitations and 'cloaking/disguising penalties by virtue of another name' are extremely relevant points to be considered, else we should sell out the opportunity of using section 32 of Limititations Act!

There is no mention of vulnerable, hardship or benefit claimants what-so-ever - that's a big miss!

Fiinally, as many others have said, you are a loud voice in support of the consumers rights, and credit where it is due, but please consider further the impact of the Charter as is, and the need to 'get it right from the start'.

Regards
Perseus

Moderator Consumer Credit Support, member CAG, MSE, Penalty Charges Forum.