Are Automated Bank charges entirely legal?

Hockeyump_2

I was expecting a fairly substantial sum of money into my bank account at about the same time as my mortgage payment was due to go out. On the morning of the transaction I checked my account, saw the money hadn't reached my account and went into my branch of HSBC and deposited more than sufficient cash into my account via one of the instant deposit machines at 12:21. I returned home and checked my account 2 hours later to see if the money I was expecting had come in and saw that the cash deposit had been credited to my account and my account was back in the black so to speak.

The next morning I checked to see if my money had arrived and was amazed to see that my mortgage payment had been returned unpaid and I had been charged a £25 "service fee".

Apparently HSBC were relying on a term of the contract that the money had to be in the account before the Direct Debit request is made and my depositing the cash on the day the request was made was not good enough.

Here is the amazing part from their response. "However, if you pay sufficient cash into the account or action a real time transfer to cover the item, before 15:30 on the day of debiting; our Collections Team may mark the items as paid for you. To ensure this happens, you will need to call our Customer Contact Centre on 08457 404404 and request to speak to our Collections Team regarding confirmation the item will be paid"

A couple of things immediately spring to mind here. It is absolutely clear from this statement that the decision to return the item as unpaid is an automated decision as you have to call them to make certain it is overridden. It is therefore questionable if the £25 "service fee" accurately reflects the actual cost of administration as the FSA seem to want to happen when they fined GMAC-RFC £7m on 29 October 2009, since there is evidently no human intervention and therefore no salaries or extra costs to pay other than the cost of the automated letter sent subsequently (the cost of operating a computer must be spread over every single customer of the bank not just those that they can extract money from).

Secondly, does relying on this term fall foul of the Unfair Terms in Consumer Contract Regulations which states at Section 5
Unfair Terms
5.—(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.
(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.
(Section 8 says that if the term is unfair it is no longer binding on the consumer)?
Is not forcing the consumer to call the Customer Contact Centre on a premium rate number to ensure they take notice of the cash deposit made in good faith to correct the temporary breach of contract putting a significant imbalance on the consumer's obligations to the detriment of the consumer? It is quite conceivable that HSBC could write into their routine that is run after 15:30 to check if there are sufficient funds available at the time of running the routine, as it certainly checks to see if the CCC has overridden the instruction to not pay the item?

Lastly, and this is where the automated bank charges might be made illegal, Section 12 of the Data Protection Act states

Rights in relation to automated decision-taking.

(1)An individual is entitled at any time, by notice in writing to any data controller, to require the data controller to ensure that no decision taken by or on behalf of the data controller which significantly affects that individual is based solely on the processing by automatic means of personal data in respect of which that individual is the data subject for the purpose of evaluating matters relating to him such as, for example, his performance at work, his creditworthiness, his reliability or his conduct.

If I write to HSBC and ask them not to return any item without calling me first (which I already have done in specific regard to my mortgage repayments) can I not effectively remove their condition that I confirm with the Customer Contact Centre?

I wonder what would happen if suddenly all bank customers started enforcing this right under the Data Protection Act by writing to their banks.

opinions4u

There was a big court case thingy.

The banks won.

Hockeyump_2

No, the Case in the Supreme Court allowed the banks to charge a service fee. The difference here is that the FSA subsequently wants service fees to closely reflect the actual cost of administration (something the Supreme Court noted in their judgement was an alternative way for customers to have more of a say in service fees). Secondly, all I want is not to have to be put to the burden of having to call a premium rate number to make sure the bank takes note of the fact I have deposited sufficient funds in my account as they carefully state I am allowed to do in terms of the contract. Writing to them in terms of section 12 of the Data Protection Act would seem to cover this option.

Also what would be the banks' response if tens of thousands of customers wrote to them making this lawful request?

opinions4u

Hockeyump wrote: »

Also what would be the banks' response if tens of thousands of customers wrote to them making this lawful request?

They would do the following:

1) Recruit thousands of agency staff to deal with the requests.
2) Make a little note of how much it costs.
3) Make a big note of what charges are causing the fuss.
4) Work out what they need to change about their charging structures.
5) Give customers 60 days notice of changes to their charging structures, building in income generation plans to recover any costs incurred / income lost in the interim.
6) Make just as much money as before, just by charging in different ways.

Lawpf2001

Ok I only read the first part of your post but in answer to this

Apparently HSBC were relying on a term of the contract that the money had to be in the account before the Direct Debit request is made and my depositing the cash on the day the request was made was not good enough.

Whilst working in customer services for Nationwide we always advised you have the money in your account the working day before its due out. Direct debits usually taken in the early hours of the morning so therefore depositing at midday would have missed when the money was taken.

Hockeyump_2

Yes, I agree that those are the written terms of the contract that have not been individually negotiated. Those are also the terms of the contract that HSBC have relied on to make the £25 charge and return the Direct Debit as unpaid. However there are two points to remember here. Firstly it is a commonly accepted practice verified by case law that the person breaching the contract should have a reasonable opportunity to correct that breach before action is taken on it. HSBC's own statement is that they will allow a customer to do that up until 15:30 which I did. Having corrected the breach they are now telling me that I have to go to further effort to phone them on a premium rate number (0845 is controlled by ICSTIS and HSBC will get 49% of any of the money that call costs you). Sometime after 15:30 their systems check to see if the process of returning the item has been manually overridden and if not returns the item and charges the "service fee". Surely this creates an "imbalance in the rights and obligations arising under the contract"? It is fairly obvious that the routine instead of checking if the instruction has been manually overridden that it could simply check if sufficient cleared funds are now available? This routine has already been written since that would be the check made to trigger the reversal and charge in the first place.

noh

(0845 is controlled by ICSTIS and HSBC will get 49% of any of the money that call costs you)

0845 numbers are not premium rate and are regulated by OFCOM not ICSTIS now called PhonepayPlus
Check the number here:-
http://www.phonepayplus.org.uk/output/check-a-number.aspx

Alternatively you can call one of HSBCs geographic numbers.
http://www.hsbc.co.uk/1/2/popups/important-numbers

jon_boy75

hockeyump

i will be testing these (and other) arguments in court sometime soon, against first direct, so i will let you know how it goes