Written by John Kruse, one of the leading experts on Bailiff Law, this consumer friendly guide is essential reading for anyone who comes into contact with a bailiff.
The book is easy to understand and clearly explains the rights
a bailiff has, and also what they cannot do when collecting debts and repossessing goods etc.
I think the interest rate issue depends on whether the charges put you overdrawn or not, and to a greater degree, whether it’s a current or credit card account. The statutory/contractual issue is a confusing red herring, IMHO. Contractual Interest is irrelevant, and Statutory Interest, in most situations, is not really for you to work out, but the Court.
Basic principles: Remember, you are taking a civil action, to recover a sum of money, as compensation for money that was unlawfully taken from you.
Example: If I put £20 on your bill, and charged you £1 per week while it was unpaid, (because you are now 'overdrawn' with me), in 30 weeks you would owe me £50. If the £20 charge is subsequently deemed ‘unlawful’, then, to properly compensate you for the wrong, I have to give you £50. Not £20. Not £20 +8% (say £21). Again, you are claiming monetary compensation to 'put right what was wrong'. £50 undoes it exactly, no more and no less.
If the £20 *didn't* put you overdrawn with me, and I effectively borrowed it from you (no overdraft interest charges apply), then you can ask me to give you the £20 back, and Statutory Interest at 8% on it to compensate you for you not having your own money for the period. Here, £21 'puts right what was wrong'.
If the banks have taken, say, £1000 over the last 3 years, then, to truly reflect your monetary loss, you must account for any interest they have added to it, at whatever rate they charged you. If you were overdrawn because of the charges, then the interest charged must ALL be undone. If they've added £100 or £500, this is how much you need to get back to be properly compensated. It could be nothing if you did not get overdrawn - and here you can only charge them for borrowing from you, at 8% (SI) in the absence of an originally agreed rate.
My understanding of Contractual Interest (IMHO) is that it does not apply here, and it does *not* refer to the rate of interest charged by the banks.
Contractual Interest, (again IMHO), is where the original agreement (between me and you say) tries to cover specific breaches up front in the agreement itself. Example? I send you a bill and ask that it is settled by a certain date. After that the rate that we agreed beforehand (at 2%, 8% or 12% or whatever), then applies. That is my understanding of Contractual Interest. And it surely does not apply to the situation between us and the banks?
The final issue, as I see it, is that once you've quantified your claim (say £1000) and issued an N1, you are effectively lodging a liability against the bank, for which Statutory Interest accrues at 8%, or 0.022% per day, about £1.54 per week, if you ask for it, and if the court gives it to you.
Recap?
1. Claim back your charges. The exact amounts only, no interest.
2. If you remained in credit, and in the absence of Contractual Interest, on the spreadsheet, charge them 8% for borrowing from you. (Probably applies to a bank current account.)
3. If you were overdrawn because of the charges, and were charged interest at say 20%, then you must claim this back too, in order to be properly compensated. (Applies for a credit card account.)
4. Charge 8% (Statutory Interest) from N1 issue up to the point you win, and it is paid back. (Refer to interest in the N1, and let the court work it out.)
Surely, contractual interest does not apply (unless they have a clause along the lines of "if we unlawfully take your money, we'll only give you 0.001% on balances when we return it"!) Contractual Interest only applies if was specifically catered for in the original agreement. This is unlikely in the case of unlawful bank charges.
The only gritty problem is with current accounts, which have gone in and out of overdrawn positions, partly because of charges. In spite of interest at 15% (say) while you are overdrawn, I think it's hard to justify going back to year dot and compounding at this rate up to date. Again, I think 8% would be fair and defendable.
The only real way (IMHO) to calculate the 'damages' to put right a current account which has gone in and out of overdrawn positions is to load up your statements into MS-Money or Quicken, zero out the charges, calculate and pay yourself interest at the same points they did and at the same rate (0.25%!) and compare the ending balance to the real one on your last bank statement. That difference would compensate you exactly. Wouldn't it be better to just accept the 8%?
The ‘what do I charge for interest?’ issue on this site has got very confused, but is very simple:
Spreadsheet Interest Recap (v2!)
1. Credit Card Account - whichever rate you've been charged.
2. Bank Current Account - 8% (SI).
Just a point to would-be claimants. If your claim ends up in court, whether that's at a small claims hearing, a trial or a disposal hearing the judge will expect you to be able to tell them the amount of interest you are claiming to that date. They will not sit and work it out, and if you didn't plead it in the first place you won't get it.
Todge, agree with you completely in principal, we are trying to get restitution for historical wrongs therefore the compensation should equal exactly the wrong.
Considering interest we have two fields to account for;
· Historical interest that was deducted by the bank due to the account being overdrawn a proportion of which should be claimed for if the account went overdrawn due to penalty charges.
· Compound interest on funds deducted as a penalty from the date they were deducted on the basis the account holder was unlawfully denied the use of that money.
The first of these is very complicated to ascertain to the point I have completely ignored it in my own claim. In my own case I have two entrys on my statements for each month, one paying me interest for the periods I was in credit and one deducting interest for the periods I was in debit. The difference over my 4 year period is only £25.00 and therefore insignificant.
The second area is much easier to understand, the bank deducted a sum from the account denying the account holder the use of that money therefore it should accrue interest until it’s repaid, the difficulty comes in what percentage to apply.
A contract exists that states a percentage interest rate for borrowing of money why is it unreasonable to claim that this is the rate for the banks to borrow at as well as the account holder? This seems totally fair and reasonable to me, if the market rate set by the bank is X% then that’s the market rate for either party.
Finally and my major concern with your post is asking the courts to calculate interest, this forms a part of your claim once you commence proceedings and should be included in the figures at N1/MCOL submission.
If the court has a problem with the way you have calculated interest then the judge will adjust his award, as no standard "give me my money back" claims have ever got this far I suggest whichever calculation gives you the biggest claim is the one to go with and let the bank make the offer or default, either way they pay.
Interest on claims. A simpler perspective?
interest charges apply), then you can ask me to give you the £20 back, and Statutory Interest at 8% on it to compensate you for you not having your own money for the period. Here, £21 'puts right what was wrong'.
Reply With Quote
