When your bank applies bank charges to your account, they do this normally because you have no money in the account.

Because you have no money in your account, the bank charges will have the effect of putting you overdrawn.

Maybe you are overdrawn already in which case the bank charges will make you even more overdrawn.

If you are overdrawn then the bank will charge you interest on the overdraft balance. If your overdraft is within agreed limits then you will be charged a high rate of interest. This has typically been between 16% and 20%.

If your overdraft is outside the agreed limit then your bank will be charging you interest at an excessively high rate. This is the “unauthorised borrowing rate” and has typically been between 26% and 29%.

The point that I am getting to is that if you have suffered bank charges and you have been overdrawn, then that must mean that your overdraft is least partly made up of unlawful bank charges. If the bank has been applying interest to unlawful bank charges then it follows that this interest is also unlawful.

You should be claiming that back too.

Some people are aware of this – but I am starting t understand that a very large number of people – maybe the majority – are not aware.

The calculation of the interest which has been levied on your bank charges is a complicated business. In fact, in the past I have seen several people posting that they cannot be bothered to work out the interest which they have paid and that as long as they get a charges settlement, then they will be quite satisfied.

What people fail to realise that the interest on bank charges very soon adds up to a significant amount. In fact it only takes about 3 years before the interest which you have paid is equal to the charges which have been taken. It then starts to go up exponentially and by the time you have calculated a full 6 years of bank charges interest, you may well find that it is as much as 3 or 4 times the value of the charges which have been taken from you.

This can be a very large amount of money.

In the next few months will be discussing a legal basis for reclaiming your bank charges back at least until 1995. (Watch this space).

It could be that the interest which you have paid up to the present day might be equal to 10 times the value of the charges which have been taken from you.

Why write this off to your bank. If you really don’t want the money then give it to a charity – or to give it to The Consumer Action Group. We need it more than the banks do and I’d like to think that we deserve it more than they do as well.

Calculating your overdraft interest is a bit fiddly while your overdraft is comprised both of legitimate debt as well as charges and related interest. You have to spend time identifying the portion of the interest which relates to the charges.

However, once you get to the point that your overdraft is composed wholly of charges and related interest – then it gets very easy. At the point that the entire overdraft is comprised of charges, it then became true to say that you are not really in the red at all because of all of the money is yours – taken by the bank. At that point, whether you are within your limit or outside of the limit, all of the interest which is levied against you by your bank is levied against you unlawfully and you should be reclaim it.

At this it becomes very easy for you to highlight the charges on your statement PLUS all of the overdraft interest for each month and to put it down on your claim.

Add to that a further 8% statutory interest when you begin your court claim and you are looking at a lot of money.

If you are someone who has already claimed your charges and who missed this point about the interest, don’t worry. Start another claim just for the interest and put your claim in straightaway.

By starting a court claim now, you will be able to add 8% statutory interest. This may not be possible after the test case.

Get your charges and charges-related interest working for you NOW. 8% is presently an extremely good rate. You can’t get it anywhere else.

CAG definitely deserves the money more than the banks do. I would say that MPs deserve the money more than the banks do. As least the MPs did not directly destroy the economy.

But how do we go about calculating this interest, or is that to come?

If you have started a claim, would it not be better to amend the existing claim rather than commence another claim? Would normally be cheaper to amend in terms of court fees.

Prior to the test case, when it was standard for claimants to issue a claim at court, the biggest stumbling block and the thing that caused people the greatest headache, was spreadsheets, ie calculating just s69 8% interest, let alone anything more complex, like the Advanced Spreadsheet to reclaim the interest

Which is why ' in the past I have seen several people posting that they cannot be bothered to work out the interest which they have paid and that as long as they get a charges settlement, then they will be quite satisfied.'

If CAG is going to encourage people to go down this route, it will have to be accompanied by either an easily understood method or to have an entire team of knowledgeable helpers

If CAG is going to encourage people to go down this route, it will have to be accompanied by either an easily understood method or to have an entire team of knowledgeable helpers

Yes, a lot of people are going to need help to do this.

However, the amount of money at stake is very high.

It is very difficult to explain in a forum situation. I think that if enough people get into the discussion then the understanding will grow and the method of explaing will develop.

What is absolutely unassailable is that if the charges are unlawful, then any interest which you have paid on the charges is also unlawful.

The banks must not be allowed to get away merely with repaying the charges and not the interest which they have taken.

Make no mistake, they will try to do this - and I can imagine that any FSA agreed repayment scheme will conveniently try to get away with merely repaying the charges.

Don't forget, that in order to claim the interest which you have paid on the charges - you don't actually have to do any interest calculations yourself.

It is much easier than that.

You simply look at each statement, add up your charges but also you look at the figure for overdraft interest as well.

Th trick is in recognising how much of that overdraft interest figure is being applied to charges that month and the previous months.

Of course, the overdraft interest figure will also apply to overdraft interest which has been added to your overdraft in previous months too. This is why it will add up to such a large amount of money.

However, once your accumulated charges and interest become equal or greater than your overdraft, then it becomes easy because at that point, all of the overdraft interest is yours and you can claim it back.

So the fiddly bit lasts only for as long as your overdraft (the money you owe them) is greater than your charges and charges-related interest (the money they owe you).

For most people, who start getting charges, this point - when you become the creditor of the bank, happens pretty quickly.

Most people will be amazed how much they have actually spent servicing the banks' greed.

People should stop feeling at all guilty that they might have mismanaged their affairs.

It is the banks which have mismanaged their own affairs but they have managed to con their cusomers into taking the blame - and also into paying the bill.

Most of the people who visit this forum are creditors of their bank.

In the next few months will be discussing a legal basis for reclaiming your bank charges back at least until 1995. (Watch this space).

It could be that the interest which you have paid up to the present day might be equal to 10 times the value of the charges which have been taken from you.

 

Interesting. I assume this would be something to do with the consumer regulations coming into force.

 

PW

Yes, a lot of people are going to need help to do this.

 

It is very difficult to explain in a forum situation.

I think that if enough people get into the discussion then the understanding will grow and the method of explaing will develop.

I think, in my honest opinion, that the guide and the reasoning should have been done prior to the post and a guide ready to go on perhaps existing claims in Court who didn't claim statutory interest. As I said, it is a lot more complicated than it appears.

Micheal, the "someone else" being a judge, because should the bank argue that the figures are wrong, how is "joe bloggs" going to argue contractual as opposed to statutory and justify the figures and amounts if they already have a legitimate overdraft which they use and claim interest on charges. This has to be done clearly to a judge. I understand the concept, but the judge would undoubtedly go with charges + 8% s.69(or the KISS principle).

This has nothing to do with contractual interest. Furthermore, it doesn't exclude statutory interest.

The principles are completely basic - you are merely claiming back what has been taken from you. No more and no less.

Then if the bank won't pay on demand, you begin a court claim and add 8%: a very nice little earner.

Actually it all has a delicious irony.

thebanks themselves through their greed and ineptitude have brought the economy to its knees. The interest rate is at an historic low. S.69 interest continues at 8% which means that it is extremly high.

Your best investment is to have your charges with your bank and your county court claim running.

Because of the gross injustice of the FSA waiver, the banks' debt to their customers is on hold but carries increasing at 8% per annum.

You would never dream of getting such incredible value for money.

This is why you should start your claim in the county courts right now. Don't waste time.

calculate your charges. Calculate the interest they have charged you on those charges - because any overdraft you had was probably your own money anyway.

Then write to the bank and give them 7 days to cough up.

Then add your 8% - backdated and sue them.

The banks are so stupid they will get your claim stayed - but that''s OK because you will continue earning 8% until they decide to pay you out.

The boorish blindness of the UK banks is so extreme that they don't seem to have figured out that with today's interest rates so low, it would pay them to give you your money back right now before the claim is issued because in that way they will avoid having to pay you a very high rate of interest.

Hi BankFodder,

Thank you for a very interesting and thought provoking (if slightly complicated) thread.

I'm only a mere novice and a lot of what is said by you experts on CAG is very complex and hard to understand, but I'm gradually getting to grips with some of it!

OH and I have recently put in a claim for charges to Lloyds TSB and have asked for consideration on the grounds of hardship (priority debt arrears etc). So far they are refusing to play ball, so we will be filing at court very soon.

I used the Excel Complex Bank Charges spreadsheets, which as I understand does include overdraft interest when calculating what is to be refunded. As I understood it, this spreadsheet works out (based upon the figures you enter for your authorised/non-authorised overdraft facility at a given date) how much of the overdraft interest was charged for borrowing over and above your limit and to an extent that which was charged as a result of their charges. I realise that this must be virtually impossible to calculate without the software used by the banks themselves.

Are you saying that using these spreadsheets is the way to go, or is there more to it than that? I guess so - it can't be that simple!

So far Lloyds have responded by stating that they never refund (overdraft) interest charges as the customer has had the benefit of borrowing the money in the form of their overdraft facility.

I will be following this thread with great interest (pardon the pun) even though most of it will probably be over my head!

Thanks again for a great thread.

Regards,

Landy x

The main purpose of my posting as hard as I am doing on the issue of charges-related interest is because I realise now how few people are actually going to the trouble of claiming it.

If you have included it in your calculations then obviously I am preaching to the converted.

Of course, it is everyone's choice to decide how much work they want to put into it.

However, I am concerned that many people are completely unaware of what they have lost to their banks in the name of "reasonable and transparent" charges and the associated interest on those charges.

I feel that if they at least understand how much it is they have lost and how to work out the figure then they can decide what they want to do about getting their own money back.

One important thing to appreciate is that there are NO interest calculations.

You don't have to calculate 29% per annum of anything.

You simply highlight the overdraft interest figure on each statement.

You then have to know how much they have taken in charges so far.

Work out what proportion of your overdraft those charges are - one third, one half.

Then you add that portion of the overdraft charges for that month to your claim.

It really is easy - just a lot of work to begin with - and then suddenly it gets awfully easy because there is scarcely any work involved at all.

For instance you are overdrawn £2000

charges seized so far £300

therefore 15% of your overdraft is actually your own money, so you want it back.

Overdraft interest for that month £30

15% of that interest has been charged on your own money, so you want that back too.

15% of £30 = £4.50

So you add £4.50 to your charges and interest total so far

Move on to the next month and repeat the exercise.

Overdraft £2000

overdraft interest is £30

last months charges+interest = £304.50

this month's charges = £150

total interest and charges to date= £454.50

£454.50 as a portion of £2000 = 22.72 percent

22.72% of £30 = £??? - nearly £7

total accumulated charges and interest for this month = £454.50 + (nearly £7)

go on to the next month and repeat for each month until the present day.

It is exponential so within a few months your total charges and interest figure will be equal to your overdraft.

After that you never need to calculate percentages again.

You just add the overdraft interest for every month to the accumulated charges total. It becomes child's play.

It also becomes a shed-load of money

.......................................................................................

I used a spreadsheet by mindszai (no longer a registered user?) that calculated the proportion of overdraft interest caused by bank charges each month - I found it was easy to use and it was always successful for me.

Can't find a link to it now though, so I've attached the v1.8 one I had as a template... HTH?

Cheers

Michael

CompoundSheet_v1.8.xls

Hi there

I've been reading this thread with interest and wonder if you can help me with something?

How can you find out what charges have been applied to your account if you haven't got your bank statements anymore? We lost all of our paperwork when our house burnt down last year so only have the ones since that time.

Thanks a million.

Hi there

 

I've been reading this thread with interest and wonder if you can help me with something?

 

How can you find out what charges have been applied to your account if you haven't got your bank statements anymore? We lost all of our paperwork when our house burnt down last year so only have the ones since that time.

 

Thanks a million.

You need to send a SAR to your bank http://www.consumerforums.com/resources/templates-library/48-bank-templates/110--data-protection-act-1998-subject-access-request- once they receive that they have 40 days to send you the necessary information

This is fine for bank charges but what about credit card charges?

I think that credit card charges are the same.

Even though they are not the subject of the test case, I don't expect that a judge would have too much difficulty accepting that they were subject to the UTTCR as well.

The OFT has already pronounced on a "fair rate" of £12. The credit card companies didn't murmur a word of objection that the OFT had no jusrisdiction over them.

The courts have been happy to stay CC charges claims as well.

I think that they get all the same treatment.

The only thing is that it may not be possible to claim back CC charges if they were actually levied at the OFT capped rate of £12.

I think that you will only be able to recover those charges which were lvied at a higher rate.

But if they charges was levied ata higher rate, you will be able to get it back in full - plus al interest which has been taken on those invalid charges.

Hi I used the spreadsheet from this site and it calculated easily everything required. I had already obtained my bank statements using the template request letter from this site (see a pattern lol)

I had a reply from Barclays saying that they have registered my complaint, if I go to court they will immediately request a stay until the High Court decision is known.

Is it best for me to start proceedings anyway - I didn't realise that the 8% was only added once the Court Claim was underway.

Hi,

One of the benefits of 'Halliday v HBOS' is that Mr Justice Underhill said quite clearly what you are entitled to:

17. Authorities do not give comfort in the case of banker customer relationship to insert implied terms. It remains the case that the courts will only imply what it is necessary to do. It may well be as ‘Treitel’ states that necessary has a different shade of meaning from the business efficacy test. But the particular term must be necessary. I can find no necessity for the term the Appellant seeks to imply. The customer has a right to the charges, any interest deducted and a right to claim statutory interest for the period he was deprived of the deductions, provided he brings proceedings to recover them.

This is a binding ruling of the High Court which County Court Judges MUST follow.

The figures in Halliday were calculated using 'vamps' spreadsheet discussed above and were accepted by the Judge.

Dad

Bankfodder, and all.

I agree wholeheartedly that you should also make claim for the additional interest the bank has applied/deprived you of due to the charges.

By also accounting for such interest, you often quite quickly reach a point whereby you can actually see that any subsequent "overdraft excess" or "limit breach" that then later gave rise to charges arose solely due to accumulated earlier charges and the interest upon such.

I would even suggest considering going even further.

Many people are also forced at some point to take consolidation loans with their banks in order to repay "borrowing".

.... borrowing that is often solely or mostly originally made up of charges and interest upon such !!

The calculations are admittedly a bit more involved and difficult to determine, but for anyone who makes the effort the results can be quite an eye opener !!

The chain of events would go something like this:

1/ You incur bank charges.

2/ The bank applies/deprives you of account interest as a result.

3/ The bank then puts you under pressure to take out a consolidation loan, to repay your existing borrowing .... but we contend that this existing borrowing consisted either solely or largely of charges and interest upon your original account.

4/ The consolidation loan then incurs yet more interest.

5/ ALSO...the account you make the loan installments from, then incurs/ is deprived of further interest due to making the monthly loan repayments.

6/ As a result, the account that the installments are made from then goes overdrawn..... often due largely to the loan installments... thus incurring even more charges, and interest.

........ and the whole cycle starts all over again.

I am currently working on modifying some of Mindzais sheets to try and create a set of (preferably a single) spreadsheets that would more easily allow the calculation of such a chain of events.

I am no mathematician or accountant though, and work on such is slow, so if anyone else more competent is interested in helping me then post up here or get in touch?

Such spreadsheets are currently being worked on in "Open Office", which is free to download software from the web, meaning that you wouldn't need to buy any software to use them, and also means they can be universally used on either PC or Mac.

PM

I have been discussing this issue with BF, and looking at formulas etc to cover this issue.

However, it is vitally important to note that we are NOT talking about Contractual and/or Compounded Interest.

It is simply about recovering the portion of interest charged that relates to the charges applied.

My initial thoughts on this are as follows:

Current Overdraft Rate 1,000 (a)

Charges applied on (date) total - 60.00 (b)

Interest applied on same date = 5.25 ©

Interest on charges = (©/(a))*(b) = 0.31

So then your running total = 60.31 (d)

Next set of charges applied = 75.00 (e)

Interest charged = 6.75 (f)

Interest on charges = ((f)/(a))*((d)+(e)) = 0.91

Once your running total is equal to or greater than the overdraft figure, in this case 1,000, then you would remove the formula and simply enter the full amount of the interest charge.

Gosh, it seemed so simple, but still looks really complicated when you lay it out like that. But on the spreadsheet the formulas would be embedded so that the calculations would be automatic.

Please discuss, dissect and dismiss as necessary!

I agree completely that interest paid on consolidation loans should be claimed back in its entirety.

It is really quite disgusting that the banks have taken people's money, put them in debt and then obliged them to borrow more money simply to repay their own money!!

My problem is that I am not too clear at the moment as to how to express this as a head of damage so that it falls within a conventional cause of action.

However, I am sure that it will come to me.

Hi,

 

One of the benefits of 'Halliday v HBOS' is that Mr Justice Underhill said quite clearly what you are entitled to:

 

 

 

This is a binding ruling of the High Court which County Court Judges MUST follow.

 

The figures in Halliday were calculated using 'vamps' spreadsheet discussed above and were accepted by the Judge.

 

Dad

Absolutely.

The only difficulty is reminding people to include their interest paid or to convince them that it is worthwhile

Hi I used the spreadsheet from this site and it calculated easily everything required. I had already obtained my bank statements using the template request letter from this site (see a pattern lol)

I had a reply from Barclays saying that they have registered my complaint, if I go to court they will immediately request a stay until the High Court decision is known.

 

Is it best for me to start proceedings anyway - I didn't realise that the 8% was only added once the Court Claim was underway.

Can anyone give me a link to that spreadsheet please?