unfair removal of overdraft

megastar

In January I recieved a letter from my bank saying that since i had not replied to their letter (which i had not recieved) they had removed my overdraft facility and were now charging me at a higher rate. Since then i have requested my bank charges back and have recieved the first refusal which states that default charges do not apply to me as i have not broken any agreements with them, needless to say i took no notice and have sent the next letter threatening them with court action if they dont pay. Anyway if i have not broken any agrrements with them, then can they remove my overdraft facility willynilly, and is does this go under the unfair terms of consumer contracts 1999?

Seaxwyn

Hi megastar

Last year Nat West reduced my overdraft from 5k to 2,500 without telling me. When I rang to find out why my card was being refused they informed me what they'd done. I complained first to my branch and then to the complaints dept and I got all the charges refunded instantly and an apologetic letter.

rog2

Totally Unfair Megastar, but since when have the Banks been behaving fairly? :mad: :mad:
HSBC sent me a letter, last May, to say that they would be renewing the £10k overdraft Facility, on my Business Account, for another year. They informed me, at the bottom of the letter, that they had debited the account with the £200 (ish) charge for this service. My business account was within the agreed limit, so I was quite relaxed. In June, I received phone calls from my insurers to say that the Direct debit payment had been refused, and O2 cut off my mobile phone, for the same reason. Both dds were for around £60, had been presented, and refused, twice, incurring £112 in penalty charges from the Bank and a total of £50 in admin charges by O2 and Royal & Sun Assurance.
And they tell us that their charges are not unlawfull.:mad: :mad:

MarkyMarkD

I'm not sure what that has to do with unlawfulness, rog2. Aren't you just saying that they told you they were renewing the overdraft but failed to renew it on their systems and hence bounced the DDs?

rog2

MarkyMarkD wrote: »

I'm not sure what that has to do with unlawfulness, rog2. Aren't you just saying that they told you they were renewing the overdraft but failed to renew it on their systems and hence bounced the DDs?

No - when I questioned it, they said that they had decided to remove the facility - they had not notified me - and it did seem conveniently coincidental, for HSBC, that the facility was withdrawn within two months of having taken the fee for its renewal.
I fail to see, if the scenario were as you describe, why we should be expected to forgive the banks for the occasional 'human error' when they show no similar forgiveness, or tolerance, to us for sinilar errors.
With regard to unlawfulness, may I suggest that you look at the 'reclaiming bank charges' forum.

MarkyMarkD

Thanks for the explanation, rog2. But there's a difference between errors, which the banks should definitely compensate customers for, and the general "unlawfulness" debate.

In your case, you should have been compensated - not because their charges were unlawful, but because they were erroneous. And they should compensate you for the charges made by your suppliers as the bouncing of the DDs was not your fault.

megastar

The reason Im questioning the unlawfulness is because it is unfair, and automatically imposes fees on the unsuspecting, also because itis again punitive, even though in their own words i have not broken any agreements

megastar

hi Seaxwyn this was not something done by my own branch, this was done higher up, I have spent 3 hours on my hobile trying to sort it out, only to be told to go into any branch and they would sort it out then went into a branch to be told there was nothing they could do. then rang an 0800 helpline no to be told that there is a message on my account saying no lending or borrowing for a minimum of 6 to 12 months

MarkyMarkD

megastar wrote: »

The reason Im questioning the unlawfulness is because it is unfair, and automatically imposes fees on the unsuspecting, also because itis again punitive, even though in their own words i have not broken any agreements

I was questioning why rog2 was talking about unlawfulness in his situation, not yours.

As for yours, any lender can withdraw an overdraft facility whenever they like. They don't need a reason. As long as they tell you (and give you some sort of reasonable notice) then that's up to them. There's nothing unlawful about that.

onedayiwill

Hi megastar,

Can you clarify ... are you trying to claim back charges (i.e. individual charges made for bounced cheques, unpaid direct debits etc) or are you trying to claim back the interest that they have charged you at the higher rate since removing your overdraft. It doesn't seem clear to me from your message, and the letter from your bank saying that default charges don't apply because you haven't broken agreement confuses me a little.

Charges for bounced cheques, unpaid direct debits etc can be claimed back because they are "unfair and unlawful" because they charge you more than it costs the bank, and the law says they aren't actually allowed to do this.

If you are trying to claim back charges in the form of the higher interest rate you have been charged you are probably out of luck. The bank has the right to withdraw your overdraft at any time. The interest rate for "authorised" and "unauthorised" overdraft (which is what you now have if they have withdrawn your overdraft but you are still in it!) are stated in the Terms & Conditions you agreed to when you opened the account and are not "unfair and unlawful" as the charges above are.

As MarkyMark said, they can withdraw the overdraft facility at any time with or without reason, and it is not unlawful. But it's really horrible when it happens and it feels very unfair! I know this from experience.

Did you call the bank when you received the letter saying that they were withdrawing your overdraft and tell them that you had not received their last letter and cannot afford to repay it "just like that"?

I had a similar situation and called the bank ... instead of removing the overdraft immediately and leaving me with the higher rate of interest they allowed me to reduce it by a set amount that I could afford each month. No higher interest rate and turned out to be a very good way to get out of that "living in overdraft" situation.

Take care.