Bank Charges - illegal?

May

Update: Read the full guide to reclaiming bank charges , including full free template letters to download and send to your bank.

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Reclaim illegal bank charges article.

Hi everyone, I recently posted a thread about my bank charges for unpaid direct debits. I was kindly advised that these were penalty charges that could not be added to my account and that I should write to the bank advising them that it was illegal. The Courts would not enforce Penalty charges. (www.bankchargeshell.co.uk)

I have written a letter to the bank concerned advising that they cannot enforce a penalty charge. However, the bank doesn't seem fazed.

Can anyone advise what I should do now? I don't really want to risk it with the Courts.

fagun

Not sure about the accuracy of the specifics in this website. There are a number of additional arguments you can use with them (courtesy of the FSA).

Firstly, financial institutions need to comply with the Principles for Business. Principle 6 Customers' interests requires them to "pay due regard to the interests of its customers and treat them fairly". This is currently a big theme for the FSA - see here for more information on this.

Secondly, the FSA has taken on more responsibility for challenging unfair contact terms - see here and here for more information on this.

Depending on the firm concerned and the details of your case, using these terms may work. Finally, I've always found that I have more luck in getting charges waived as a one-off goodwill gesture if you escalate up the chain (ask to speak to a supervisor). However, if you've written to them, the informal approach may not work.

Try e-mailing the CEO (letters get intercepted) with a concise letter explaining the problem and why you feel you haven't been treated fairly.

grumbler

May wrote:

..I don't really want to risk it with the Courts.

I think dchurch24 is the main expert here. He claims that this is 'cheap, easy and risk free (if the amount is less than 5k)'. See his recent posts #15 , #17 and #19 in The Co-operative Bank – A little less customer led, a little less ethically guided thread. Search his other posts for more information. Good luck ...

dchurch24

Expert? Moi? Well maybe.

The bank will almost certainly not agree with the legal analysis, they will hope that you just go away.

It really is cheap and easy to start legal proceedings against them for recovery of these charges.

There is a whole host of reasons why they are illegal.

Write them a letter explaining that they are a breach of the 1999 Consumer Credit Act and that they are punitive charges and therefore not enforcable in law. Tell them to send the charges back to you within 7 days or you will take legal action.

When they don't give the money back (sometimes they do - MBNA, Barclaycard just roll over and give it back when threatened with legal action), start an on-line money claim at the HMCS site and add the 8% APR for each charges.

You will have to pay up front but you will get this money back from the bank. If the amount is over £1500, then you will have to pay an additional £100 when a court is allocated, although, again - you will get this back from the bank.

I have done this 3 times now and am about to start another 2 cases against Barclays and Abbey.

As to not risking it with the courts - there is no risk apart from your initial court costs (minimal expense - to get £1711 from Abbey cost me £120, which I got back).

I do not know of any bank that has let it go as far as court - they know as well as I do that they would lose, and that it would open the floodgates for similar cases - a situation that they will avoid at all costs.

Out of interest, which bank is it?

MrSmartprice

I administer my father's account at one of the High St banks (which I wouldn't touch with a bargepole with my money) and they are always making errors.

I now enforce a penalty charge on THEM every time they foul up. When they first got wind of this, they moaned like hell, but they never claim that the charges are unfair. They know you have them over a barrel, and now they pay up without question. So far I have charged them £220 in penalties and received every penny!

fagun

MrSmartprice wrote:

I administer my father's account at one of the High St banks (which I wouldn't touch with a bargepole with my money) and they are always making errors.

I now enforce a penalty charge on THEM every time they foul up. When they first got wind of this, they moaned like hell, but they never claim that the charges are unfair. They know you have them over a barrel, and now they pay up without question. So far I have charged them £220 in penalties and received every penny!

Did you inform them in advance that you were going to do this? Do you have a stock letter? Interested in seeing (and cribbing) the wording. Saying that, my current account bank's actually quite good - which is why I don't move to one of the MSE suggestions.

MrSmartprice

Nope, just told them that their "terms & conditions" cut both ways. If they charge me for a mistake, I am justified in charging them.

Wouldn't it be wonderful if they wrote back saying that charging them £30 for an error was an unfair charge?! The Financial Ombudsman would probably kill for a copy of such a letter in view of his investigations into penalty charges!

Robert_Sterling_3

I wish a bank would charge me a penalty and not repay it on request. Such fun. So far I have always agreed with them that they could make the charge because it was detailed in the T&Cs. I then invite them, as a gesture of good will to make an ex gratia payment of the same amount. This has been done every time so far. What a chiz.

dchurch24

Seriously, though. You MUST sue them for recovery. You wouldn't let any other thief get away with this, and so too, you mustn't let them.

There really is no risk, apart from the initial court costs, which are minimal. I am not aware of any bank actually allowing themselves to be taken to court - for obvious reasons. It takes about an hour of your time in total (writing letters etc... which I can provide for you) over the period of the legal proceedings. Surely getting your money back from such thieving banks is worth an hour of anyones time?

The Financial Ombudsman would probably kill for a copy of such a letter in view of his investigations into penalty charges!

Just being a pedant, but it's actually the Office of Fair Trading that is (was) investigating the charges - even though, they have let the Credit Card companies go over their deadline, and are showing no signs of enforcing their ruling :-(

We (bankchargeshell.co.uk) are about to issue a press release designed to embarrass them to come good on their threat. I suspect that they have had pressure put on them by the Govt. regarding this issue. The Govt. have been promoting benefits receivers to have their benefits paid into banks - so they have allied themselves quite closely with the private banking sector.

I believe that we should all fight back NOW.

If everyone who has had their money taken from them in this way started legal proceedings against their bank, then I think a re-think for the banks would be on the cards sooner rather than later.

virgin_moneysaver

dchurch24 wrote:

Expert? Moi? Well maybe.

The bank will almost certainly not agree with the legal analysis, they will hope that you just go away.

It really is cheap and easy to start legal proceedings against them for recovery of these charges.

There is a whole host of reasons why they are illegal.

Write them a letter explaining that they are a breach of the 1999 Consumer Credit Act and that they are punitive charges and therefore not enforcable in law. Tell them to send the charges back to you within 7 days or you will take legal action.

When they don't give the money back (sometimes they do - MBNA, Barclaycard just roll over and give it back when threatened with legal action), start an on-line money claim at the HMCS site and add the 8% APR for each charges.

You will have to pay up front but you will get this money back from the bank. If the amount is over £1500, then you will have to pay an additional £100 when a court is allocated, although, again - you will get this back from the bank.

I have done this 3 times now and am about to start another 2 cases against Barclays and Abbey.

As to not risking it with the courts - there is no risk apart from your initial court costs (minimal expense - to get £1711 from Abbey cost me £120, which I got back).

I do not know of any bank that has let it go as far as court - they know as well as I do that they would lose, and that it would open the floodgates for similar cases - a situation that they will avoid at all costs.

Out of interest, which bank is it?

just out of interest - you say you've done this 3 times & are about to start another 2 cases - do you set out on purpose to accrue bank charges just to make a point?

Caped_Avenger

dchurch24 wrote:

If everyone who has had their money taken from them in this way started legal proceedings against their bank, then I think a re-think for the banks would be on the cards sooner rather than later.

Precisely what sort of re-think are you looking for? For banks to allow customers to abuse the terms and conditions of their accounts as they see fit?

Research has shown (and, unfortunately, i can't find it right now) that the public believe that banks would be irresponsible if they allowed their customers to exceed their facilities without imposing some sort of charge.

I can assure you that if banks had to reduce/remove overlimit/late-payment/recall charges, there would be an increase in interest rates on lending, and almost certainly a reduction on interest rates for credit balances on current/savings accounts.

On this basis, why exactly should those of us who can operate our accounts as we agreed to when we signed the T&Cs be punished for those who are incapable of doing so, or simply choose not to?