Bank Charges - illegal?

May

Just to let you all know....

Complained to Nationwide about their charges.
They refunded them without a quibble.

comicmankev

what was the value (if you don't mind me asking!)?

Pere_Ubu

My husband complained to the Nationwide about a £30 penalty fee. They reimbursed him because he is "a valued customer". We have written to all the institutions who have charged us in the past for late payments etc and intend to recover all monies owed to us.

Promsan

I've heard about all this before, but I only decided to look into it today after seeing it on Working Lunch today.

We got a charge for going over after using it in a supermarket just before Capitalismas - the cash machine said we had enough. The bank sent us the usual notification, but they deigned to avail themselves of £30 English pounds instead of £28, and on the 10th instead of the 19th - this could have left us with another charge (being church mice etc...), I think it's a bit "pearl necklace" (reckless, feckless, ...) and "King Kong" (wrong, pong, large meaty don[snip] [never mind]...).

What really piped me up though, was how in May 2005, we got a charge of £28 for [gulp] going 37p, yes, a vain and vulgar 37p over the agreed overdraught [correct spelling] for a digraceful three days before my wife's pay decided to land after circling the bank account.

Being a dab hand at the old manual calculator as an engineering student, I was able to calculate that the interest should possibly be 0.000814p in total at 2.2% a month, making the total debt still a matter of pence even with bulk stationary [including the "free" hole-punching (I'd like to punch their holes... erm, on second thoughts...)], ink, electricity and sychophantic staff costs for the "Armitage Shank" (bank).

This charge came at a bad time for us, and led to a naughty knock-on charge (as them making an unfair charge caused me to "break T&Cs), the following month, of £28 as we were shoved over the limit by the first charge! - and to an even more profligate sum of £12 over . That naughty little 37p had exponentiated 151 times to £56 in charges.

I think back to us shuffling into the branch like a pair of Oliver Twists gazing up at bespectacled Scrooge, humbly scrunching our tawny threadbare clothcaps, asking him if (begging your pardon sir) he might let us off the charge... "Sorry I can't" boomed the clarty fecktroll without making eye contact - I bet that felt good, made his willy seem like a mighty obelisk of middle-class alpha male power. (and people wonder why poor people damage and steal?!)
Anyway, the cheek of the feller with hindsight - he was breaking the law! (I should have had my butler thrash him to within an inch of his lucrative retirement package).

So, I've totted up a couple of other less impressive but similar "charge" events (they once pinched a tenner off me for going £6.23 over in 2001 and I want interest!), and thrown in a couple of other refunded errors due to staff incompetence ("Ah fink ah prissed vuh rong buh'on Trayce" "Ooh, you go 'ava tea break lav, you've bin on yer ahrse awl mownin'"), and I've decided to round it to a nice binary figure of £100.

This will constitute my charge to the bank for posting me a letter saying they we going to charge me one amount on one day, and then actually a different amount on a different day - strike three, as far as I'm concerned, because what it adds up to is them putting me in a position where I might break T&Cs, which being the third error (a previous one was charging me for NOT going over my limit; and setting payments to go to the wrong account incurring a compouding charge - both refunded without me charging them for incompetence), and coupled with that 37p experience, it's an absilyute phacking cheek Carruthers.

Not that they're a bad bank, but like all of them, if you don't know yer maths or yer law, they'll do yuz.
Seriously though, I've done the online small claims thing before, it was quite cheap if I remember... surely I can still DO VEM for 100 nicker?

The other thing I don't get, is people keep talking about "refusing to pay", well don't the banks just take it anyway?
Perhaps my bank (The Perfidious Royal Colombian Racehorse Bank & Pawnbrokers of Corruptistan) is a special case?

- - -

My thoughts on reading this thread - I won't name any names ('cos I can't remember 'em), but all that sanctimonious "ye merrie folk of englande suffering 'cos of a few bad apples deliberately mismanaging their accounts" crap is, well, utter, crap.

It's not like most middle-earners can't afford to pay a few pence a month for services they decreasingly use as t'inter seeps into every fetid crevise of life.
All we want is the fair price of summat - I've been poor for quite a while, and they make a tidy profit of my credit card (same bank) thank you very much - as they do with most proles.

I don't need some insolent sibilant spotty tvvat telling me "it's not our job to manage your finances sir" down the phone to me after I've listend to Chris de Burgh over and over again for half an hour. As far as I'm concerned, if I an't got the money in my account, then the payments should be declined, not profiteered from usuariously. (...but of course, I'm being idealistic, the whole capitalist system is a giant status-anxt-based usuary and pyramid-selling racket - paah tu tha peepoo!)

And now we've got a loan from them (don't athk), a huge chunk of which big dribbly gravy covered profit. You want thympathy? You want me to lithen to the merrie middle clathh of englande being fleeced whilst they sit in their very Chelsea tractors? you want me to weep at wail of the bank's diamond-encrusted stradavarius, I'd sooner smash it over their heads, the cheeky cun...[snip]

kevin.philips

One of the best articles on the internet, perfect....

But on this whole illegal charges thing it will be interesting to see what the courts have to say, the law on penalty charges is not as clear as most people who are taking action would like to think, in many cases (No previous punitive bank examples to quote) the courts have not sided with the claimants, the liquidated damages that people are charged from breaching terms with their banks are clear when the contract is made, I'm afraid that with the claims being bought against the banks, some people thinking they're smarter than everyone else may cause banks to start charging for their current free services, let's not forget this.... If charging isn't the way they may make their account acceptance procedures tighter by refusing risk at lower levels, how smart would the claims be then eh..?

"Sorry everone for charging you - here have your thirty quid back and now let's see if you can get banking facilities anywhere else"

How about a combination of the both:

Low Risk = free banking
Medium Risk = small fee to pay each month
High Risk = no banking facilities at all

So, don't get me wrong, I think the banks are wrong for charging extortionate amounts of money and that they should be regulated but why shouldn't a bank make a charge when somebody does something wrong..?

Everyone wants something for nothing but in most cases what is there to gain... Most claimants are arguing over amassed debt so all they could hope to gain is the debt written off, then having to beg their employers to pay them in cash because they're not allowed banking facilities while in the meantime they are the ones who screwed it up for everyone else - very clever.

dchurch24

So, don't get me wrong, I think the banks are wrong for charging extortionate amounts of money and that they should be regulated but why shouldn't a bank make a charge when somebody does something wrong..?

Because it's illegal to profit from a breach of contract.

kevin.philips

Because it's illegal to profit from a breach of contract.

I agree completely with you and commend you on your site, I just find it interesting that you have not quoted cases where the rulings have been against the claimant and I don't exactly understand what it is that you seek to achieve from the mass of claims against the financial institutions anyway..? [As per my comments before]

Recent Case for Your Site:

Alfred Mcalpine Capital Projects Limited v Tilebox Limited [2005] EWHC 281 (TCC):

Further to this do you really believe that these 'penalty charges' forced you to perform your part of the contract in terrorem or is it that you just don't like charges for a wrong-doing and believe that a remedy in contract law to recover financial losses is the route to take...? And who will be able to make a real estimate of the losses to the bank for a breach in area's of going overdrawn anyway (I mean if the bank use a weighted average including the cost of tracing debtors then who else could challenge the figures). (Cost of Systems per transaction, Staffing Costs, Debt Tracing, External Agencies, Credit File Management, Risk Analysis etc etc)

It is the same with all of these things that while it may benefit a small minority the negative changes that I fear this may introduce will be felt by the majority.

All said I wish you well in your claims and as a final thought when finished with this claim you could also challenge every city council in the country for the penalty clauses they have in overstaying a parking time, I mean £30 for being parked 10 minutes too long - now that's one I will offer my full support on...

Good Luck

dchurch24

It is the same with all of these things that while it may benefit a small minority the negative changes that I fear this may introduce will be felt by the majority.

According to yesterdays 'Working Lunch' BBC2 - one in four bank users are hit with these charges.

My real objection is that the banks will not publish how they came about their 'pre-estimate' which leads a reasonable person to believe that they are punitive in nature. Indeed, I have a recording of the head of LloydsTSB saying that these charges are indeed punitive. I have a written statement from an Abbey employee and a written statement from the head of Customer Services at Nationwide all saying the same things.

I object to banks thinking that they are above the law and bloating their shareholders profits (which incidentily, they seem to think should increase year on year way above inflation, rather than provide a steady income stream) at the expense of those that can least afford it.

I don't think that banks will start charging for each and every service - there is too much competition out there at present.

We don't just encourage claims against banks - indeed, we would much rather banks treat people in financial difficulty with sympathy (as they claim in the banking code) than be forced to resort to legal action. We actively seek publicity for our cause and are in constant contact with organisations such as the OFT and the financial ombudsman with a view to getting these charges reduced to a reasonable level and for banking to be fair. I had a cheque take 9 days to clear once - why?

As per the parking fines - I'm with you on that one too - but sadly, govt. agencies/councils etc... cannot be handled in the same way - they have sown the law up!!

Also, I believe that the Alfred Mcalpine case was heard in Australia. Please correct me if I am wrong about this.

I have tried to find cases where claimants claiming punitive vs. liquidated damages clauses have lost, but have been unable to find any.

I agree completely with you and commend you on your site

Thank you; I do understand your concerns and they have been put in a very diplomatic way for which I also thank you, unlike some other posters who become somewhat angry about my view.

Do you mean the new action group site?

Mark7799

Apart from a few occasions where it has descended into name-calling, this has in my opinion been one of the best threads on these boards in a long time.

I'm interested in the comments expressed by dhcurch24 and would like to ask your thoughts on the following scenario.

Whilst I accept that there are many cases where people have suffered massive charges disproportionate to the amounts of overdraft involved, there have been some cases where people have deliberately abused systems for no reasons other than greed or 'because they can'. Do you take a different view where these charges are caused ONLY by the customer's greed?

By way of background before you ask, yes I am an ex-bank manager having spent over twenty years working for one of the'big four' although I left over five years ago when my job disappeared. I put the question in the previous paragraph as I have seen examples that would fit in to this category and wonder what your view is then.

dchurch24

I have been flippant regarding these charges and the ease in which people seem to be getting their money back - this is not a reflection on my views of the seriousness of some peoples situations.

Do you take a different view where these charges are caused ONLY by the customer's greed?

I'm not entirely sure what you mean. Do you mean that people will pay (or attempt to pay) things out of an account where funds are not available and have no intention of paying back the amounts borrowed?
Or do you mean that people have thought "I haven't got enough money to pay for this; never mind, I'll bounce a cheque.".

If it is the former, then of course I do not condone such behaviour; if it is the latter, then that is a tough question to answer.
Of course, you should not spend money you haven't got (most of the cases I get to hear about are mainly due, in part to the way their banks have operated and in part due to financial difficulties.). In those cases I think the banks have, almost without fail, been vindictive and greedy with no regard for the well-being of their customers. These banks volantarily subscribe to the banking code, which means that they have a duty of care about their customers which they have no intention of honoring.

It would be very difficult to differentiate from people who are abusing the system to buy things they have no money to buy with, and someone who through nessesity is paying an electric bill with a bounced cheque (for example) for fear of being cut off.

In short, each case should be judged on it's merits and if it were, then the charges that were imposed and enforced would in-turn pay for the time/effort expended by the bank to determine which cases are genuine and which cases are not.

At present, of course, the banks will see everyone as a potential liar and attempt to enforce these charges wherever they can - regardless of their duty under the banking code, and indeed law. The upshot of this is of course that their shareholders receive increased value in their holdings year on year at the expense of 1/4 of bank account holders - the 1/4 who can least afford to subsidise those at 'the top'.