If this had happened in the USA, the bank would have filed a Motion To Compel Arbitration, and that would have been the end of it. The man (probably) wouldn't have pursued it any further, and even if he had, the results would be confidential.

_{/ianal, but arbitration clauses do piss me off}

I'm all for sticking it to the man, and bank charges are indeed obscene, but this seems more than a little inappropriate. The man was fully aware of the bank's fee/penalty setup when he opened the account.

People still use banks?

21st Century. Credit Union.

Bank settles. Not quite the same.

His shopuld give the money to his church.

Subby, c'mon, I'm against the banks but RTFA.

£30 for a bounced cheque? WTF, man?

Thank God in wasn,t in $. That's real money.

I took my bank to court over £4500 in charges last year, they settled just before the court date as well.

RE: I'm all for sticking it to the man, and bank charges are indeed obscene, but this seems more than a little inappropriate. The man was fully aware of the bank's fee/penalty setup when he opened the account (sorry, don't know how to quote another post)

This is indeed a valid point. One of the main issues here is that the true cost of these overdraft fees to banks runs to maybe £2 \ $4, they cannot then legally charge the customer any more than it actually costs them to administer this fee. As most (all?) banking these days is done by computer, any bank would have a hard time proving that sending a letter informing you that you are overdrawn would cost them more than £2 - not the £30 they regularly charge.

Many people, including myself, have been waiting for a case like this to make it to court, so that the judge can order the bank to disclose the formula they use for coming with these fees. The reason they always settle out of court is that they know this, and they are obviously not keen to disclose the fact they the pull the charge fee figures out of their asses.

LookOutForThatTree!: wasn,t

gravity seems to have had an effect on your apostrophe

ssteedman

Well, as long as you know I'm better than you, eh?

Clearly it's in the interest of Fark.com that its readers not be misled by, well, wrong headlines, right admins?

Maybe you should change it.

Psyked: This is indeed a valid point. One of the main issues here is that the true cost of these overdraft fees to banks runs to maybe £2 \ $4, they cannot then legally charge the customer any more than it actually costs them to administer this fee.

You're wrong. People can charge what they want, legally. The price you can charge someone for something need have no bearing on the cost.

Do you think each copy of Mac OSX costs £89 to produce? Or even close to that? Or some "formula" based on that? Of course not. It's an arbitary price for something with a base cost of a few quid for the packaging.

Why should they have to disclose how they arrive at the charge? It's got nothing to do with you as a customer. You signed up. You agreed to it. Don't like it? Don't sign up.

Psyked

Many people, including myself, have been waiting for a case like this to make it to court, so that the judge can order the bank to disclose the formula they use for coming with these fees.

You should keep an eye on this case then. One of NatWest's customers has taken them to court rather than accept the settlement they are offering, at the risk of losing and bankrupting himself. Apparently the court date has been delayed.

farkeruk

From my case notes (submitted to the court shortly before the bank settled):

"Defendant's charges are a disproportionate
penalty and therefore unenforceable as they
are contrary to common law. They are also
invalid under the Unfair Contracts Terms Act
1977 s.4 and under the Unfair Terms in
Consumer Contracts Regulations 1999.Para.8
and sch.2.1.e. Defendant has declined
justification of charges despite written
requests.
In the event that the charges are not a
penalty they are unreasonable within the
meaning of the Supply of Goods and Services
Act 1982 s.15."

Sounds like the charges are illegal if you ask me. Surely they would have contested every case in court had the law been on their side?

Try reading www.consumeractiongroup.co.uk or www.monseysavingexpert.co.uk if you have any doubts.

farkeruk

You're wrong.

No he isn't. Legally, banks can charge you for going into unauthorised borrowing, but only for what it costs them to deal with this.

ssteedman

I need to add color to my map.

farkeruk

You're wrong. People can charge what they want, legally. The price you can charge someone for something need have no bearing on the cost.

Sure that explains why Nickelback albums still come with price-tags, but this is different. We're talking about a penalty fee, not a product.

The legal view is that banks have a right to claim damages when a customer goes overdrawn or a cheque bounces, to pay for the costs incurred. However, the amount they demand can only be the amount they can claim to have lost in the first place. Anything on top of that is considered a penalty charge which, people are now claiming, is unenforceable.

I suppose it's a bit like someone crashing into my car and me trying to charge them a £4000 'Crashing Into My Car' penalty on top of the repair costs. Judges might not like that.

farkeruk: You're wrong. People can charge what they want, legally.

Just because you say it's so doesn't make it so. The government has been pretty consistent in saying that administrative fees and penalties (not goods, not services) must be in proportion to the actual costs incurred by the company for your bad behavior. The banks know this, and they (despite their claims to the contrary) believe that their specific charges will fail the test if it ends up in a court of law. Which is why every challenge has been settled before it can get to court, precisely to avoid that outcome.

Maybe what you meant to say is "People should be able to charge what they want, legally." Maybe so, maybe not. The point is, "You signed up for it" doesn't mean that any illegal terms in the contract are valid. Contracts are still subject to law. And that's what's going on here, with the banks protecting a possibly unlawful clause of their contract by paying out to the few who will challenge it. This allows them to continue collecting from the majority who will accept the "It couldn't be in the contract if it weren't legal" mantra.

farkeruk

"You're wrong", indeed. I believe the intranet term "owned" would apply?

UK law states that banks cannot dramatically overcharge for such fees like overdraft.

You signed up. You agreed to it. Don't like it? Don't sign up.

In this case it's more: These are the laws in the UK. Don't like it? Don't do business here.

farkeruk: OSX costs that much because that's how much it cost per unit to develop/test/produce/ship/line-steve-jobs-pockets. Bank charges, specifically, are required by law to be reasonable. Yes, the green-grocer on the corner can charge £2,000 for a potato if he wants, but the banks are under far stricter regulation. In this day and age, it doesn't cost a bank £30 for a computer to spit out a letter. The financial ombudsman found that to be a bit silly, and suggested people ask their bank for any ridiculous fees charged in the last 6 (?) years back, and the banks are forced to comply.

dave420 last 6 (?) years

Yes, you're right. So far, claimants have been limited (statute of limitations) to claiming back only the last 6 years worth of their charges. Some recent cases have challenged this, however, and it now seems that the people are able to claim back further. Good news for us all I think!

Binnster Thanks for that link to Tom Brennans case - being a barrister, I would think if anyone can pull this off, it would be him. Best of luck to him and I will be following his case with interest.

Saxmachine: Maybe what you meant to say is "People should be able to charge what they want, legally." Maybe so, maybe not. The point is, "You signed up for it" doesn't mean that any illegal terms in the contract are valid. Contracts are still subject to law. And that's what's going on here, with the banks protecting a possibly unlawful clause of their contract by paying out to the few who will challenge it. This allows them to continue collecting from the majority who will accept the "It couldn't be in the contract if it weren't legal" mantra.

Thanks for the clarification.

I had no idea that the government had stuck their big nannying nose into this issue, but I suppose I shouldn't be surprised. There seem to be few areas left where they don't want to wetnurse every feckless and irresponsible asshole.

farkeruk

I had no idea that the government had stuck their big nannying nose into this issue, but I suppose I shouldn't be surprised.


Actually, that's not quite the way it works; it's down to common law. The judiciary has ruled on various cases and established precedents which appear to define these bank charges as penalty charges and therefore unenforceable. Please refer to the following court cases:

- Wilson v Love (1896) established that a charge was a penalty if it did not relate to the true cost of an item.

- Dunlop Pneumatic Tyre v New Garage and Motor (1915) - a penalty is a sum "greater than the greatest loss that could be suffered from the breach of contract" (your going into the red). Charges should not be "extravagant and unconscionable".

- Murray v Leisureplay (2004) ruled a "penalty clause" could not be enforced.

I don't know if this is just a credit union feature or if all banks offer this but I have a line of credit that is used in the event that I overdraft my account.

farkeruk

Not all people stung for charges are irresponsible. Banks routinely process debits before credits in the day, and force one to be overdrawn for a short amount of time to extort charges.

farkeruk: I had no idea that the government had stuck their big nannying nose into this issue, but I suppose I shouldn't be surprised. There seem to be few areas left where they don't want to wetnurse every feckless and irresponsible asshole.

Some of us who have plenty of feck and who aren't irresponsible assholes also like the fact that there are government protections against unethical business practices.

UK farker here:

I got the last 4 years of charges refunded in january, the best thing about the whole thing is that the charges are a penalty, therefore, at the point at which you reclaim them they become additional earnings. I got just shy of a £1000, for about 2 hours effort spent downloading and filling in a form letter. Thank you HSBC.

marmalade shark: I got just shy of a £1000, for about 2 hours effort spent downloading and filling in a form letter.

I wonder if anything like that could work in the US. Probably not, sigh.

/lovely pseudo, btw

marmalade shark I got the last 4 years of charges refunded in january

Well done to you! :-)

PianoJosh: The man was fully aware of the bank's fee/penalty setup when he opened the account.

The clauses were still illegal. Under UK law, you cannot contract to break the law, hence the charges were recoverable.

On this side of the argument, all the UK banks charge ridiculous amounts for 'administration fees' so where else are you supposed to go? It's almost impossible to get by without a bank account.

Sue D. Nymme

marmalade shark:I got just shy of a £1000, for about 2 hours effort spent downloading and filling in a form letter.

I wonder if anything like that could work in the US. Probably not, sigh.

/lovely pseudo, btw

Well in theory US laws are based on the same common law concepts that the UK is, but they diverged a long time before these particular precedents were made of course, so while it should be feasible to get the same decision, theres no guarantee of it.

Fuce

Subby, c'mon, I'm against the banks but RTFA.

falkensmaze

Yeah submitter. The bank settled out of court.

All UK banks have settled in similar cases - tens of thousands of them now - so saying they lost the case may not be accurate, but they are clearly aware they would lose any case they challenged, all they do is drag out any of the larger cases to try to bluff some of the people involved into giving up due to the hassles and costs involved. That tactic doesn't seem to have much of a success rate either though.

farkeruk: I had no idea that the government had stuck their big nannying nose into this issue, but I suppose I shouldn't be surprised. There seem to be few areas left where they don't want to wetnurse every feckless and irresponsible asshole.

I haven't claimed anything back because I'd have hardly anything to claim back, since I haven't had too much by way of charges in the past 5 year (Scotland's limit differs from England's). The bank milked the hell out of me when I was a student though, and it fecking hurt. Trying to live on £35 a week (I shiat you not) to cover everything except accomodation doesn't leave a lot of room for error, and being charged £30 for being overdrawn by £2 helped not at all.

Banks don't talk about penalties, they talk about administration fees. The administration fees they charge bear no resemblance to the costs they incur, hence they are illegal.

It has been dubbed the biggest consumer revolt ever. A couple of months ago me and my friends printed off the letters sent them off to reclaim the unfair amount for missed direct debits / bounce cheque charges. It goes something like this, the cost of sending out a letter to inform you is less than what is charged. I think my bank were charging me around £35 per time when a fair figure would be around £5 so i put in a claim and got back around £500 for charges over the last 6 years.

The bank could contest it but they would be unlikly to win so they dont turn up to court meaning you win by default.

One of my friends who cannont manage money to save his life got back over £3.5k!

My credit union here in Vermont was asked by the agengy of child support to hand ofer personal identification information and banking statements of *some* of it's members.
Instead, it sent over ALL records in a zip file that was hacked. SO the credit union had to send out letters explaining this. Of course this came AFTER the CHild SUpport peopl sent out letters to every one on the list of names they received.
SO I had to explain to my now ex-girlfriend (Thanks to the credit union) why I was receiving a letter from the offices of child support, even though I told her I've never had any children.
Then, the Credit union had the stones to cancell my account on the grounds of inactivity. Like I'm going to put any more money in their institution.
Fark them.
I went down to collect my check for the balance and let them know I wouldn't ever put anymore money in the account, and since my wealth management company had urged me to shash at least a few mil locally, they lost out.
Of course, I would like to have my girl back, but if she trusts a government institution over me, no big loss.

There's nothing banks understand better than greed, and the only way everyone is going to get their charges back is if one person looks past their own interests and declines to settle out of court (not criticising, I'd take the cash too). Of course, if this happens, then the banks will have to make up for the loss of that nice little earner by doing things like charging people a monthly fee for everyday banking (despite the fact that they would, of course, continue to make billions using our money as capital). So personally, as someone who has never gone past my agreed overdraft (though I lived close to it for a long while), I'd rather they keep charging people £30 for a bad cheque and my bank account stay free.

reverend_alex

There's nothing banks understand better than greed, and the only way everyone is going to get their charges back is if one person looks past their own interests and declines to settle out of court (not criticising, I'd take the cash too). Of course, if this happens...

See my post @ 2007-04-17 04:48:15 AM.

My bank manager must like me. I've gone overdrawn (by a small amount for a day or two) on numerous occasions and never been charged a fee. This was with Midland Bank (now HSBC).