Bank Charges - illegal?

dchurch24

Also, just to quote the Alfred Mcalpine Capital Projects Limited v Tilebox Limited case:

The judge ruled that the liquidated damages claimed were not sustansially different from the actual loss that Tilebox had incurred (being less than 1% different), and so, under the pre-estimate allowed by law, the costs incurred and the costs claimed were so similar that the pre-estimate stood.

In the case of a bank charging £39 for going 10p over an overdraft limit and sending an automated letter, the difference in actual costs to the claimed costs are substancial enough that they would be considered punitive.

Bear in mind, this is only one legal 'attack' on these charges, there are at least 4 other acts in force that regulate contracts (in particular, contracts where only one party - usually the larger - dictates the contract terms) and which these types of charges are in breach of.

Mark7799

dchurch24 wrote:

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.



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.".

I have seen both situations in my time in banking

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.

What about those who complain about (for example) their house insurance direct debit being bounced but two days earlier, there was a direct debit paid to Sky TV - from the amount it was obviously for a full package.Paying the sky direct debit meant there was not enough money left to pay the house insurance.(this is a real example I can recall)

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'.

Unfortunately this may also be a case of everyone being tarred because of the sins of a minority. I don't disagree that the pursuit of higher profits has led to a lot discretion being removed from branch staff - the Banks will call this 'giving a consistent approach' but it does then bring everyone down to the lowest level.

I would still maintain that a lot of charges can be minimised by people spending more time monitoring their finances and taking charge of their own financial positions. With the availability of internet banking, account information can usually be checked with any frequency a customer wishes.

This is not a personal attack upon you but given the previous comments you have made about the state of your finances, I have often wondered how much time you have spent monitoring your financial position as opposed to instigating action against various banks after situations have arisen to cause charges to be applied.

dchurch24

I would still maintain that a lot of charges can be minimised by people spending more time monitoring their finances and taking charge of their own financial positions. With the availability of internet banking, account information can usually be checked with any frequency a customer wishes.

Some of that is true, a lot of charges could be minimised by checking your account every 5 minutes of every day - something most people do not have time to do, and the banks know it. This ridiculous 'clearing' of cheques, cash-point machines showing un'cleared' funds as 'cleared', Internet banking being out of date and not updated at weekends (Abbey - according to their telephone staff) are all engineered to lull the customer into a situation where they will incur these charges.

Regardless, this thread is (largely) about the legalities of the charges, not the reasons why they are incurred in the first place. In my capacity, if anyone comes to me for help in getting these charges back, I will be as indiscriminate as the banks have been when applying them.

My finances are not in a bad way, despite receiving the odd charge here and there (usually for cheques that don't get put into the bank until six months after I have written them).
There was a point, a few years ago, where I had changed jobs and to cut a long story short, I was not paid on time, or the correct amount and there was a gap of 6 weeks between my last pay at an employer and my first at the new.

I am quite a large wage earner and I lend the bank a lot of my money every year, if I forget about a cheque that I have written some six months ago, I do not expect to be penalised for it if there are no funds in my account to cover it. I do not expect them to honour it either.

It is very bad business in my opinion, as when a bank charges me, I will move on to the next, and therefore I will not be lending them my money any more. If everyone did this, the admin costs involved for the banks would soon dwarf the amount that they are taking in charges.

Despite popular belief, it is very easy, very quick and very inexpensive starting action against a bank (or anyone else for that matter). The banks send threatening letters very quickly, I do the same back and follow through on my threat if they refuse to negotiate.

BWZN93

Fedz wrote:

After much self debating and reading dchurch24 posts regarding bank charges being unfair in law as these in effect can be seen as a profit from a breach of contract.

I faxed Lloyds TSB regarding my past bank charges that total £260.

As expect Lloyds dragged their feet for a few weeks with no repsonse until I called them to bring my fax to their attention.

They then replied within a few days upon which was a refusal - as I did expect from them.

I then faxed again giving notice of legal action proceeding and a copy of my original fax for reference.

I then called the day after this to have a 'chat' with the area assistant manager to bring his attention to the law.

During this converstaion I agreed to compromise with a goodwill gesture of £130 from Lloyds.

I was prepared to goto court over this but, quickly figured for the sake of £130 more I'd have to fill in a N1 at County Court and do some leg-work to gain the difference.

In a nutshell I couldn't be bothered to fill in the N1 and do some leg-work as I was perfectly happy to accept £130 (half the amount) for just faxing twice and talking for 10 mins.

Good outcome and one I owe a massive thanks to dchurch24.

I work within the NHS, so have also passed all my leaned knowledge to other members of staff who are in the process of doing similar to the above - well done dchurch24

Ive just had the first response of a refusal of refund from Lloyds on behalf of my other half, I think ill go with your tack next and see what happens. It was a very polite letter as it happens, but im not letting this one go!

Cheers

Jo xx

Fedz

jw1096 wrote:

Ive just had the first response of a refusal of refund from Lloyds on behalf of my other half, I think ill go with your tack next and see what happens. It was a very polite letter as it happens, but im not letting this one go!

On the letter of reply from Lloyds is a telephone number of the assistant manager of your accounts region - that's the number to call.

I just reiterated what had been in my original letter and quoting the unfair terms in contracts 1999 - profiting on a breach of contract and that I had been to the County Court and started filling in the N1 form to take them to court. They'll say a different view but, when they've finished talking I pointed out that they'd not even offered any goodwill gesture, he then changed his tune and focused on the goodwill gesture and what I thought a reasonable amount. I just said £130 - 50% of the total charges. He just accepted it.

I was polite throughout and did apologise for my errors though.

hope this helps

Mark7799

dchurch24 wrote:

Some of that is true, a lot of charges could be minimised by checking your account every 5 minutes of every day - something most people do not have time to do, and the banks know it.

Bit of an off-hand comment - I spend about five minutes, two or three times per week.

dchurch24 wrote:

Regardless, this thread is (largely) about the legalities of the charges, not the reasons why they are incurred in the first place. In my capacity, if anyone comes to me for help in getting these charges back, I will be as indiscriminate as the banks have been when applying them.

Point taken but wouldn't it be easier and less stress to avoid the charges occuring in the first place?

dchurch24 wrote:

My finances are not in a bad way, despite receiving the odd charge here and there (usually for cheques that don't get put into the bank until six months after I have written them).

I am quite a large wage earner and I lend the bank a lot of my money every year, if I forget about a cheque that I have written some six months ago, I do not expect to be penalised for it if there are no funds in my account to cover it. I do not expect them to honour it either.

It is very bad business in my opinion, as when a bank charges me, I will move on to the next, and therefore I will not be lending them my money any more. If everyone did this, the admin costs involved for the banks would soon dwarf the amount that they are taking in charges.

All the above could be avoided with a bit of financial management.

dchurch24

Mark7799 wrote:

All the above could be avoided with a bit of financial management.

No amount of financial management will spirit money out of the air.

It's rather a moot point, as the charges (I believe) have been proven to be illegal - why else would ALL of the banks cough up instead of actually testing the legality in court?

kevin.philips

Another interesting point.. why haven't the banks fought the claim...?

It will be because of the cost of defending each and every claim, what I would bet is that while time is ticking they are building a very strong defence and when a customer has enough for them to attack they will go all guns blazing and make an example in proving costs.

It only takes one bank to justify costs (At a level close enough to what they currently charge) for the test case to be established, future rulings will then include that decision.

djohn2002uk

Point taken but wouldn't it be easier and less stress to avoid the charges occuring in the first place?

You may check your balance once or twice a week, I check mine when the statement arrives and never incur charges. BUT, not everyone is in such a fortunate position.

2 or 3 kids, a mortgage and only one wage comming in and suddenly wages not in the bank on time and a week later a letter arrives. £25 for the letter and it announces that another £35 is being charged because they couldn't pay the mortgage DD. Are you seriously saying they should get their finances in order or is this a bit of the old holier than thou attitude.

About time legislation was brought in to curb the banks attitude of "Let's try it on and most customers will just pay up and shut up".

inmypocketnottheirs

Hmmm some interesting points in the last few postings.

Here is my scenario.

On the 12/12/05 I wrote to the co-op requesting a refund of my charges, total £1331.50 over the last six years. I gave them seven days to respond, failing which I would commence legal action.

On the 16/12/05 they responded saying they needed 21 days and they hoped I would allow them this time.

I somewhat generously (as I have been in the US over Christmas and New Year) allowed them until the 9th January 2006, a full 28 days from my original request.

By 9/01/06 I had heard nothing, so I wrote a 'Final Notice Before Action' letter giving 7 days before I commence legal action. The 7 days expire on Monday.

So, to date, they have not acknowledged or denied my claim. I have to hold good on my threat to commence action, so I will toddle of to the County Court on Monday to lodge my claim. Will have to stump up £250 costs though!

Still worth a go, I am prepared to see this through.

A comment to some of the recent posters, who seem to think that bank charges are incurred through poor financial management. No doubt sometimes they are, but in my case I suffered extreme hardship following the demise of a very successful business, and it was incerdibly difficult to adjust from a six figure income to a few hundred pounds a week, especially when the bank put me on a reducing overdraft and kepthammering me with charges.

Lucky for those who have had a steady and reliable income. I never have, but I always had bundles of cash passing thorough so I survived on a healthy cashflow. But when the cash dries up, it would be nice if banks could look at previous history and offer some constructive help. As I have always said 'banks lend you an umbrella on a sunny day, then demand its return when there is a forecast of rain in six weeks time'.

It is time this immoral profiteering was stopped and the banks made accountable for the misery and hardship they inflict.

Will keep you informed of the progress.