Bank Inflicted loan to cover bank charges/overdraft

reetnproper

Hello,

I'm new to this forum and have only just started the reclaiming process.

However, I have a bit of a twist to my bank charges scenario which I can't find any templates for. I can't believe I'm the only one who has/had this twist so decided to post here for any advice/experiences on how to deal.

When I got into bother with my bank, they initially put my account into 'special measures' and charged me nearly £300 for the priviledge. I paid a set amount back off the overdrawn amount, interest free for 6mths and then, because I had proved myself reliable, you understand, they offered me a long term solution. Actually offered isn't quite the right word as I really didn't have any other options other than to pay the entire amount back immediately which was out of the question. Their long term solution was a loan - £49.69 per month, for 80 months. This is significantly more than I owed them in the first place and the vast majority of that is charges.

My question is, how do I go about trying to get them to terminate the loan and, if possible, repay the installments already collected? I suspect that I need to address it early on (letter 2 for example) but how do I word it? I still find it hard to believe that they could legally press this loan on me without giving me other, viable, cheaper options. I couldn't have gone else where as my credit rating was shot to pieces by then.

Any suggestions or similar experiences would be gratefully recieved.

Many thanks
Reet.

xlesleyann

bumped so maybe someone who knows can anser.

Also try posting on this forum:

http://www.consumeractiongroup.co.uk/forum/

Am sure someone somewhere will have an answer for you.

What do you mean when you say your account was put on 'special measure'? Also did you have to sign any loan agreement?

reetnproper

Thanks for that.

Special measures was the phrase they used when they finally decided that I meant it when I said that constantly adding charges was pointless as I'd already told them I couldn't repay them AND I had repeatedly asked them for help. They removed cheque book, overdraft and debit card facilities and basically agreed that I could repay a set amount monthly for an initial 6 month period, without incurring any further charges or interest, after taking into account any direct debits (only had 2). After the 6 months they would review the situation and then we would agree how best to proceed.

When it came to it, they contacted me after 5 months and told me that they were prepared to offer me a loan (80 mths at around 16 or 17%, I think - papers are filed away for safety) to repay the amount. They made it clear that they had no other option to offer and, as my credit rating was shot to pieces by then, I felt I had no choice but to take the loan because I was unable to repay the total amount outstanding due to an inabililty to get a more competitive loan from another source, and so signed the agreement. Probably very niave of me in retrospect but I was under a lot of stress from the letters they had bombarded me with and was terrified that I would end up in court or have the baliff banging on the door.

I had asked them when I initially went £150 overdrawn if they could give me some breathing space as I was expecting some money in (within 10 days) which would have more than covered this amount but they weren't interested in helping at all until the situation got really bad. The cynical part of me believes that they did this deliberately, as it netted them 100s in charges. The more rational part tells me that they were probably just following set proceedures and I hadn't hit 'critical' when I was asking for help.

Either way, I'm now stuck with a loan which is, for the most part, a result of charges being added on top of other charges etc and feel that, as I'm going to try and get the charges refunded, i also need to address the problem of the loan as well but don't know where I stand or how to word it. I'm hoping someone else has had a similar situation.

wheresmymoney_2-2

Hi,

I was in the same position as you 5 years ago. I'd got into the endless spiral of charges and being young and earning very little was 'forced' into a loan to get me back in the black.

I've just started the ball rolling on reclaiming those charges and am also wondering if I can claim back some of the loan. I've finished paying it off this month and it still worries me how they put me in a corner over taking out the loan. They said that I'm in debt to them by X amount (I was overdrawn) and that I had to pay them back. When I said I couldn't they suggested I take out a loan to pay them back (also at around 16%).

Have you found anything out or received any good advice?

Twinkly

I havent been able to find any clear indications of what to do about these particular situations. Reclaiming bank charges is now a massive enterprise yet is actually a relatively new phenomenon. The FO is receiving thousands of complaints regarding bank charges now compared with 2006 and 2005 so the situation has literally exploded in the last 12 months. The full scale of the differing repercussions of unlawful bank charges is probably yet to be determined. The high level of charges has certainly forced many people into debts they otherwise may not have needed.

Where charges can be proved to have been/ be a very high percentage of the overdraft it is blatantly clear a loan will have been offered purely as a money-making enterprise.

I should think these particular circumstances warrant, at the very very least, complaint to the Financial Ombudsman. They are clear examples of the banks abuse of customers and blatant profiteering on the back of unlawful bank charges. It is my advice to contact the FO and I sincerely hope you are able to get some resolution. Good luck