Overdrawn charge not a fee but a service charge ?

[The Phantom]

Hi there

quick one for the HSBC fan club. I have noticed that HSBC now call their fee for going overdrawn an "informal overdraft request arrangement fee" or something to that effect.
Apparently it is now not a penalty charge but a service charge ?
They say when you go overdrawn you are making an informal request to HSBC for an overdraft , for this they charge to arrange it. (They charge every time you go overdrawn, as it is considered a new "informal request".)
Now that they call it a service fee, can it be inlcuded in a request for refund of charges or not ?
Has anybody re-claimed this "service" fee or not ? Would be interesting to know.

[Advoc8]

Different name for the same thing. Should still be claimable as it's the nature of the charge not the name that counts.

[lateralus]

advoc8, got any literature on the arrangement fee - i asked the mods to add it to the charge descriptions as reclaimable and they asked to see something on it - i'm not a customer. anything you could scan and send me?

[Bookworm]

If it looks like a dog, barks like a dog, bites like a dog....

Please note this quote from the FOS in todays' Mail:

Banks' secret blitz on overdraft claims | the Mail on Sunday

A spokesman for the Financial Ombudsman said: 'No one has actually defined in court what these charges currently are.
'In general the names are not important - it is what the charges do. We have said in the past that you can't use language to change the actual function of that charge.'

Hope that answers your query.

[The Phantom]

Hi Bookworm

many thanks - I was unsure as they actually phoned me the other day and said "your informal overdraft request has been approved" (I went overdrawn, shame on me). So I was worried that they now call it a service fee and ...hmm..provide a service by phoning you , they can use that to defend these charges. It just used to be all automated, go overdrawn, computer adds charge and on you go. Now they phone you and tell you your request has been approved, so they may be saying, well , it is a service we provide, it is not automated and the phone call costs £25.- (each time)
But I suppose the more I think about it, the more it appears to be the proverbial woolly hat ?
The lady also told me that any other payment requests made against the account whilst overdrawn MAY be returned or MAY not be returned, but in any case further charges would apply. I at that point jumped in and informed her that I would be reclaiming all charges that in my opinion were not a true reflection of their costs incurred and advised her to be very conservative in the charges approach towards my account as I was fully aware of the publicity around unfair bank charges and what to do about it. She was then quite keen to end the phone call. I wonder why.

[ladybird17]

I've put these "service charges" on my HSBC claim. Same meat, different gravy. Afraid I cannot see how they can breakdown & justify why it should cost them 25 (sorry I'm in Canada & this PC doesn't have a pounds key!) when I go a few pounds over my limit. Let them convince a judge it's not a penalty.

[The Phantom]

Hi Ladybird
Many thanks for your reply !
I thought so much, but wanted to make sure.
It puts me back on the right track here.

[Advoc8]

I would still say that the charge would be unfair under the UTCCR - I say it would be arguable that regardless of its name it is a fee of a type exemplified by sch2(1)(e) (disproportionate).

The legal authorities from Dunlop tyre onwards state that it is the nature of the charge not its name that determines whether it is a penalty or not. For copyright reasons I'm loath to paste in the extract from Halsbury's Laws about how you distinguish liquidated damages from penalties but it's at paragraph 1066 of volume 12(1) if anyone has access to it and it supports the argument that this is still just a penalty charge and that the name is not relevant.

[victimjode]

Hi
Im not sure if we're talking abouth the same charge issue............I have just received a letter of offer, which is £300 short of my claim, however there is a paragraph saying
'When you contacted us to arrange a temporary overdraft limit you were advised of the fee for the service and it was accepted by you at the time. We have therefore deducted £100 from the amount of your claim'
I am doing this for my daughter, but she cant remember being advised of anything (although it may be the case?)
On the schedule there are charges listed on the statements as 'Overdraft fee' at £25 a time. Is the the charge you are talking of.
Its really thrown me, as i dont know if i should remove these entries from my schedule and reduce my claim by £100.
There are entries for Overdraft fee, and excess overdraft fee, every month.
Can anyone say if i can claim both or i have to reduce my claim.
Im reluctant to proceed with the claim without being sure.
Thanks

[The Phantom]

Well, if you read the link Bookworm has posted (a few posts above) of the Mail newspaper, you will see that HSBC has changed the name of the overdraft fee to "informal overdraft request arrangement fee" .They now say by going overdrawn you are making a request for an overdraft which they then accept and charge you £25.- for arranging it. The thing is, they do this for each time you go overdrawn in one month, as they treat it as a new request by the customer.
To somehow conceal it as a service they phone you (well they phoned me) to tell me "my informal request for an overdraft had been accepted" and tell you they will charge you for this at the end of the month
Maybe they consider this acceptance or something ? I told the lady from HSBC that I would be reclaiming everything that appeared to be disproportionate, so I am pretty sure I did not agree to this, so I am waiting to see what shows at the end of the month on my statement.
I was overdrawn for a weekend , it was cleared again the Monday and I am back in credit, so I will see what they do.
It may be the same in your case. Did they phone your daughter and tell her she would be charged for her informal overdraft request ? I would in any case not drop the £100.- and ask to see evidence of the acceptance of the charges, i.e. ask them to see where your daughter signed to say she accepted these charges. (And remember: just because it is or may be in their terms and conditions doesn't make it legal, so that is not a reason in any case. (just in case they refer to their terms and conditions.))
Or just ignore it and pursue for the whole amount, they can always show a judge evidence of the fairness of their charges and proof that your daughter accepted them. Which of course they do not want to do anyway, so they may still settle for the entire amount if you persevere.
If you are claiming you are driving the issue, so you dictate. If you are happy to drop the £100.- fine, if not, just push it.

[squeakywheel]

Yes indeed, since December 2006 HSBC changed their terms & conditions so that when you go over your overdraft limit you are making an unoffial request for an O/D which they state "may" incur a charge. When they charged me £118 for the pleasure of going over my limit in December I phoned to ask what this "arrangement fee" (as stated on monthly statement) was for & how it was calculated. I was told that it totalled the amount I had gone over my OD limit by. Same thing happened again last month & I got £50 in "arrangement fees" slapped on.
On both occasions the figures don't add up - in fact if what i was told is corect they should have charged me MORE!! Should I be grateful for small mercies???
It seems they are plucking arbitrary figures out of the air - there is no formula to it & therefore no way I can calculate what my charges are going to be.
I've only just started looking into this whole thing so haven't done the reading yet. So far I've only had £168 taken (did I say only!!) which is small fry in comparison to some but I'd still like my money back. Not sure if the same litigation applies so should I be questioning this from a different angle?
Also, use of the word "may" in terms & conditions implies a "may not" no? If they are definitely going to charge every time, how can these terms be upheld?

[The Phantom]

You are right. When the HSBC phoned me they also said I MAY incur a charge and MAY incur further charges if direct debits and cheques are returned. So looking at what you are saying there may not be a clear line to it anymore and they really make it up now as they go along. I don't know how they can justify this system any more than the previous charging system. I would definitely try to re-claim it along the same lines as all other charges outlined here on the website, because if you read through the thread here it would appear the name of the charge makes no difference and it should still be re-claimable.
I also do not see how they can arrive at a figure of £118.- in your case. If you go overdrawn you "may" get charged £25.- on each occasion, so the total charge at the end of the month must be a multiple of 25 and although I am not a maths guru , i know 118 is not. Unless you went overdrawn four times and 18 is interest or something, but they must be able to split it down for you surely ?

[The Phantom]

Hi - just had a letter through informing me they will be charging me £25.- for going overdrawn that week-end as described above and they are calling it an arrangement fee
I just spoke to them on the phone and they won't refund, so will have to start
the normal procedures for £25.- but to me that's a lot of money
Initial letter will be sent today asking them to refer from debiting my account with it (apparently it will be on the 19.04. or just after that) and then we will go through the usual procedures

[The Phantom]

They have replied saying they will look into my complaint, have in the meantime taken the money out of my account anyway
If I proceed to take them to court over £25.- I was wondering how likely are they to close my account ? I have read a few posts to show that HSBC does tend to do that, but I don't know for what amounts in dispute.

[nettyg]

they don't usually close your account after a first claim but if they do, you should write a letter of complaint to the FOS. they're not to happy about banks taking retaliatory action and closing accounts and sometimes they are paying out compensation to customers who have had their accounts closed (i've heard £200 in some cases).

do you have internet banking? just a thought. i complained about charges (for a second claim) via email on internet banking and sent a letter to heidi daniels telling her that i would be claiming my charges back. i won after sending her my own version of a lba, before i had to take it to court. as your claim is for £25 i'd try getting it back that way, before issuing a claim in court. - just a thought!!

[HSBCrusher]

I got my second claim from HSBC over the phone while waiting for the first to get paid into my account (it was then the closure notice came oh joy)