Van Insurance late default charge unreasonable???

Chez36_2

My partner has not been able to work during pandemic lockdown, he’s a self employed electrician. Although he’s  claimed available benefits it’s been financially tough. 

His last DD for van insurance bounced (3rd July) and he has received a letter from Premium Credit

saying they will try the DD again on the 15th July which will include an additional  default charge of £27.50. 

To me this seems very unreasonable at this current time, as he will be able to make this payment and it will be made in the same month before the next due date. 

Is this charge enforceable and was unreasonable??? 

Thanks  

Thrugelmir

Chez36_2 said:

Is this charge enforceable and was unreasonable??? 

Yes it will be. Time needs to be paid for. 

Jeremy535897

Chez36_2 said:

My partner has not been able to work during pandemic lockdown, he’s a self employed electrician. Although he’s  claimed available benefits it’s been financially tough. 

His last DD for van insurance bounced (3rd July) and he has received a letter from Premium Credit

saying they will try the DD again on the 15th July which will include an additional  default charge of £27.50. 

To me this seems very unreasonable at this current time, as he will be able to make this payment and it will be made in the same month before the next due date. 

Is this charge enforceable and was unreasonable??? 

Thanks  

A bank typically charges £5 to £25 for an unpaid direct debit, and they will have costs on top.

MovingForwards

Yes it's reasonable
Yes they can charge it
Yes it would have been in the T&C's

If there were problems with meeting the cost he would have been better off contacting them and seeing if they had some kind of payment holiday, it would have bumped up the remaining months payments, but safer than the position he is in now.

mattyprice4004

The time to let them know payment is going to be late is before, not after - they'll have been charged by their bank, and they also have admin time for the letter and the cost of sending the letter.

Why should this all be done for free when he couldn't be bothered getting in touch? 

dunstonh

Using credit to pay for vehicle insurance is generally priced at sub-prime rates as its mainly people with poorer finances that use it.  It has a higher default and administration rate and that is reflected in the charges.

Is this charge enforceable and was unreasonable??? 

Its high but not unreasonable. And if it is in line with their tariff then it is enforceable.  Unless you fancy taking a punt in the courts and the costs that go with it.

ToxicWomble

 Not paying and having his insurance policy cancelled will cost an awful lot more

danielste

While I agree the company is within their rights (ie what you agreed too) to do this, it doesn't mean you can't appeal to them to be more lenient. They could waive it, or they could issue a good-will credit. 

Call them, apologise for the error, explain the finances are very tight right now. Don't try and argue the fee is unreasonable, because they can simply say 'its in the terms you agreed too', and there's nowhere to go from that. If you've been using the van less, and *not* tried to claim a reduction in your insurance then point that out. 

If you're nearly up for renewal, or free to leave then get some quotes, which if cheaper give you some leverage. They'll take the late payment charge automatically, but they also won't want to lose a customer (especially one who's paying insurance on a van that's sat on the drive...).
If they won't do anything now, it is something to remember when it comes to renewal. If they won't beat your lowest quote by £27.50, take the lower quote. 
No guarantees, but it's worth a try. 

mikefox

Chez36_2 said:

My partner has not been able to work during pandemic lockdown, he’s a self employed electrician. Although he’s claimed available benefits it’s been financially tough. 

His last DD for van insurance bounced (3rd July) and he has received a letter from Premium Credit

saying they will try the DD again on the 15th July which will include an additional  default charge of £27.50. 

this seems very unreasonable at this current time, as he will be able to make this payment and it will be made in the same month before the next due date. Is this charge enforceable and was unreasonable??? 

Thanks  

Customers may on occasion be charged a reasonable estimate of charges against recovery of a default charge. However if the If the amount demanded by the injured party is excessive, they are "unjustly enriched", and the breaching party may have no obligation to pay this. Any clause in a contract which makes a provision by which unjust enrichment may occur may be unenforceable at law - that is to say that if the amount is excessive, the injured party will be unable to enforce the charge in court. Any clause which explicitly provides for unjust enrichment is considered unlawful at common law. The Office of Fair Trading investigated charges being imposed on customers across various industries and banks and in its report, the OFT said that many of their default charges were unlawful, as they constituted unjust enrichment. It stated that it may act upon receiving notice of any charge over a certain amount as a penalty, and therefore unlawful. Since the complex development of E-Commerce many default charges are online automated scripts. This means that the recovery of default charges amount to almost negligible costs by companies. With DEBT emails auto generated etc being active across their whole customer base.

mikefox

mattyprice4004 said:

The time to let them know payment is going to be late is before, not after - they'll have been charged by their bank, and they also have admin time for the letter and the cost of sending the letter.
Why should this all be done for free when he couldn't be bothered getting in touch? 

Customers may on occasion be charged a reasonable estimate of charges against recovery of a default charge. However if the If the amount demanded by the injured party is excessive, they are "unjustly enriched", and the breaching party may have no obligation to pay this. Any clause in a contract which makes a provision by which unjust enrichment may occur may be unenforceable at law - that is to say that if the amount is excessive, the injured party will be unable to enforce the charge in court. Any clause which explicitly provides for unjust enrichment is considered unlawful at common law. The Office of Fair Trading investigated charges being imposed on customers across various industries and banks and in its report, the OFT said that many of their default charges were unlawful, as they constituted unjust enrichment. It stated that it may act upon receiving notice of any charge over a certain amount as a penalty, and therefore unlawful. Since the complex development of E-Commerce many default charges are online automated scripts. This means that the recovery of default charges amount to almost negligible costs by companies. With DEBT emails auto generated etc being active across their whole customer base.

mattyprice4004

mikefox said:

mattyprice4004 said:

The time to let them know payment is going to be late is before, not after - they'll have been charged by their bank, and they also have admin time for the letter and the cost of sending the letter.
Why should this all be done for free when he couldn't be bothered getting in touch? 

Customers may on occasion be charged a reasonable estimate of charges against recovery of a default charge. However if the If the amount demanded by the injured party is excessive, they are "unjustly enriched", and the breaching party may have no obligation to pay this. Any clause in a contract which makes a provision by which unjust enrichment may occur may be unenforceable at law - that is to say that if the amount is excessive, the injured party will be unable to enforce the charge in court. Any clause which explicitly provides for unjust enrichment is considered unlawful at common law. The Office of Fair Trading investigated charges being imposed on customers across various industries and banks and in its report, the OFT said that many of their default charges were unlawful, as they constituted unjust enrichment. It stated that it may act upon receiving notice of any charge over a certain amount as a penalty, and therefore unlawful. Since the complex development of E-Commerce many default charges are online automated scripts. This means that the recovery of default charges amount to almost negligible costs by companies. With DEBT emails auto generated etc being active across their whole customer base.

That doesn't cover the charge the company gets for a returned DD instruction though - I know with my business account I was charged £15 and I'll be damned if I'm picking that up because someone couldn't be bothered to let me know, so I could amend the payment date