 Draft letter to the BBA
Nothing terribly revolutionary but Angela Knight managed to annoy me with her comments. Any thoughts welcome.
Dear Mrs Knight
I read with some interest your open letter of 30 January 2007 to the Chairman of Which? I am concerned by what I consider to be your deliberate misinterpretation of the law in respect of charges for unauthorised overdrafts and the way in which your members are dealing with complaints about such charges from members of the public.
By way of background I am a senior moderator of the Consumer Action Group website and I have recovered substantial sums in unlawful charges from one of your members and a mortgage provider.
As a former Conservative Member of Parliament I am sure that you would agree with me that it is important to uphold the rule of law. The issue in respect of charges for unauthorised overdrafts is now whether they are set out in the terms and conditions signed by a customer but whether they are lawful.
I imagine that you are familiar with the basis on which it is argued that charges for unauthorised overdrafts can be unlawful if they exceed the cost incurred by the bank as a result of the customer’s breach of contract. There is a wealth of statute and case law to support the assertion that such a charge is unlawful.
I fail to understand how someone with such a distinguished background in public life is able to advance an argument that such charges are acceptable. However, your own approach to this matter pales into insignificance beside the cynicism and rank hypocrisy of your members.
Over the past year your members have refunded millions of pounds to thousands of people despite arguing that their charges for unauthorised overdrafts and similar transactions are lawful. In many cases they have not made the recover process easy. They have placed every obstacle they can think of in the path of customers including flouting the Data Protection Act to stop them obtaining details of charges and , in my opinion, abusing the court system to the point where if they were the claimant in these cases they would probably be declared vexatious litigants.
The true “lurid pantomime” in this situation is that the banks have failed to defend a single claim for unauthorised overdraft charges in court. If your members seriously believe that such charges are lawful then they would by now have had the courage of their convictions and defended a claim. The argument that it is not “commercially worthwhile” to do so is becoming less convincing as the amount being repaid increases on a daily basis. In a survey CAG members report having recovered £6.7m and this is only a small proportion of the total amount that has been reclaimed. If your members are so certain that their charges are lawful, surely, given the amounts now being recovered, they should have the courage to put these arguments in front of a judge.
Unfortunately, the disgraceful reality is that your members know that such unauthorised overdraft and similar charges are unlawful and they would lose in court. Moreover, they would be required to disclose the true cost of dealing with such breaches of contract. Even your own Association admitted on its website until recently that such charges include an “element of profit”.
Instead of behaving with some semblance of corporate responsibility your members continue to levy unlawful charges on customers and pursue some through the courts for debts wholly or largely made up of such charges. This is more like the behaviour of the schoolyard bully than that of multi-billion pound corporations. I am amazed that you can in good conscience defend such conduct.
Yours sincerely | 
