Call to boycott NATWEST

Dr.Shoe_2

Here's the situation as it applies to me.

The other month a HP company attempted to take £45.75 DD for an agreement where they should only have taken £40.66. The result was that I went £2.96 over my overdraft limit so the DD bounced, -note that I would have had enough to pay the agreed amount. The bank took a £38 charge. So then I only had £4.89 left when they attempted to take the payment again a few days later (adding £15 charge of their own) I was now £55.56 over my limit so unsurprisingly this bounced too incurring another charge. The net result is that I ended up £76 out of pocket and triggered a £28 "unauthorised borrowing charge". So when my pay goes in and all my "normal" direct debits go out I am £104 behind with all the same unavoidable bills such as gas, water, electricity etc. I get to the end of the month and of course I'm skint when a cheque comes in for £10 (I've only £6.60 odd to pay it with) so this bounces incurring a charge of £38 and triggering an Unauthorised borrowing charge of £28. That day though I use my card to get £5 of petrol because I'd checked my account and found that I could but because in the meantime I'd incurred a charge of £38 I was over my limit and had to pay a £35 card misuse fee. I am now £205 behind because of only one bounced DD. On my budget it will take months to catch up. If somethjing major goes wrong with my car in the meantime I am screwed just because the bank is taking unlawful penalties.

Noz

surely as its the HP company's inital mistake they would be liable to pay some of the charges

Dr.Shoe_2

Noz wrote:

surely as its the HP company's inital mistake they would be liable to pay some of the charges

"You're supposed to ensure you had the funds present," was the oft repeated refrain. I am still waiting for a response back from them as to why my payments have increased, it's supposed to be interest free. I will cancel my direct debits two payments from the finish date and wait for them to chase me for it then offer them a Full and Final Settlement minus the £76, whilst ensuring they don't put anything negative on my file.

Anyhow I used this as an example of how easy it is to spiral out of control when you're on a tight budget. The only reason these penalties are there is to exploit the vulnerable.

amandathepanda

Dr.Shoe wrote:

Here's the situation as it applies to me.

The other month a HP company attempted to take £45.75 DD for an agreement where they should only have taken £40.66. The result was that I went £2.96 over my overdraft limit so the DD bounced, -note that I would have had enough to pay the agreed amount. The bank took a £38 charge. So then I only had £4.89 left when they attempted to take the payment again a few days later (adding £15 charge of their own) I was now £55.56 over my limit so unsurprisingly this bounced too incurring another charge. The net result is that I ended up £76 out of pocket and triggered a £28 "unauthorised borrowing charge". So when my pay goes in and all my "normal" direct debits go out I am £104 behind with all the same unavoidable bills such as gas, water, electricity etc. I get to the end of the month and of course I'm skint when a cheque comes in for £10 (I've only £6.60 odd to pay it with) so this bounces incurring a charge of £38 and triggering an Unauthorised borrowing charge of £28. That day though I use my card to get £5 of petrol because I'd checked my account and found that I could but because in the meantime I'd incurred a charge of £38 I was over my limit and had to pay a £35 card misuse fee. I am now £205 behind because of only one bounced DD. On my budget it will take months to catch up. If somethjing major goes wrong with my car in the meantime I am screwed just because the bank is taking unlawful penalties.

You should be covered under the DD indemnity scheme as the HP company took out more than was due, therefore taking you overdrawn. Go in to the Bank and explain this and they will do an indemnity claim for you. The HP company should refund any charges paid. Full details can be found in the DD Indemnity leaflet which every bank should be able to provide you with.

Dr.Shoe_2

Aha! Thanks for that, I never knew that I could!

westernpromise

Tim_L wrote:

No, Ollyk, you are not paying for anyones mistakes.

Well, not strictly true. Banks wrote off so much money in Third World bad debt in the 80s and 90s that they had to recover it from somebody. The somebodies they selected were people in financial difficulty, because they are the least able to avoid charges by moving their account elsewhere. So those are the people who are paying for others' mistakes - banks' mistakes, that is.

Once they got into the habit of making easy money this way, they were clearly reluctant to give it up.

Amex have just reduced their late payment charge from £25 to £8. This alone should destroy their - and other banks' contention hitherto, i.e. that £25 was a fair charge. Those who approve of banks' levying such charges are in effect supporting banks' right to punish people for exceeding their overdraft, paying late, etc. Yet on the evidence from Amex, £8 has always been the real cost of managing delinquent accounts, and the other £17 was a punishment. Otherwise, if they could prove the cost was really £25, they'd see you in court and argue as much, wouldn't they?

Of course they never do. It is on that precise legal point, re the difference between justifiable added costs versus an arbitrary punishment, that the case for suing one's bank turns.

I too am amazed at those who post here to criticise those who've sued and got their money bank. Even the banks don't think these fees are justifiable for heaven's sake! That's why they never go to court! I can only suppose such people to be Labour voters, bitterly envious of others' financial good fortune!

Incidentally I am not sure that "illegal" is technically the right term to use of these charges. IANAL but "illegal" is not AIUI the same as "unenforceable". Nobody is doing anything illegal by entering into an unforceable contract, it's just that if I enter one, a court won't uphold its terms. If I enter a contract to provide someone with drugs in exchange for s3x and then try to sue, a court won't uphold that contract even if we both agreed because its terms are unenforceable.

westernpromise

ollyk wrote:

Where would banks draw the line? What effect would this have on people who had some sort of ability to handle money responsably?

What will probably happen is that the banks will compete for current account customers on the same basis as they currently compete for credit card customers. That is, the products you'll be able to obtain will reflect your credit history and financial standing.

Those prone to exceeding their overdraft will probably find that the only accounts they can obtain will carry charges which reflect the cost of serving them. Someone who used to get charged £300 a year in unenforceable charges will find they get charged £200 a year in monthly account servicde fees and another £8 for each infraction. In ballpark terms, they'll pay what they always paid, but more predictably and hence more budgeteably. If they cross the line too often, the bank will simply boot them as a customer.

It isn't all going to go such customers' way.

westernpromise

ollyk wrote:

I think you would have to agree that we all need a little flexability from time to time - could such arranged overdrafts not be considered an amendment to T&C's?

No, the overdraft is not part of the T & Cs. The terms under which it is offered to you are what forms part of the T & Cs.

kevin.philips

westernpromise here I think answers every angle quite comprehensively, let's see the come backs though as I am sure they will happen, something along the lines of funding free banking from the "have so much money and anal with it too brigade"

In my own opinion, one of the best posts I've read since joining, incidentally I am not one who is on or has been on the course to reclaim bank charges.

westernpromise

Assuming all charges get reduced to £8 or so, like Amex's, then it will no longer be worth suing for them because they will argue that £8 is the actual cost. You would either lose in court or get back maybe £1 or £2 of the £8, which is a much less enticing prospect than getting back £35 a pop or whatever.

Banks still need to replace the profit from these charges and the only way I can see them doing this is to move to a system of charging for accounts again, with charges aimed at those with the dodgiest credit history. As with current charges, they need to be aimed at people who can't evade them by taking their business elsewhere.

My guess would be that they'll reduce interest rates on current accounts under a certain average balance and perhaps introduce a sliding scale of account charges on the same basis.

From my perspective, as someone who almost never pays bank charges, the worst outcome would be if they moved to a per-transaction basis for account charges. This is presumably entirely technically feasible but it would clobber me pretty hard.