I bought a small 2nd property late 2006 and just found out I was charged a £50 fee for not taking out the lenders buildings insurance. I declined their insurance because it was too expensive.

I have only just found out I was charged the fee when clearing up some paperwork.

I’ve asked for the money back but the bank declined. Next step is small claims track.

What grounds do I have? The following comes to mind

1. Charging a fee for not purchasing their product – so it’s a penalty

2 there is no actual tangible loss to the bank from me buying somebody else’s insurance product – again it’s a penalty

3. Premium quoted by the bank in was in any event - too high

4. Contradicts Schedule 2(e) of Regulation 5(5) of the Unfair Terms in Consumer Contracts Regulations 1999

5. contradicts the Unsolicited Goods & Services Act 1971 – the service is mandatory solely under the bank’s free will to provide a financial gain for the bank.

Any comments? – good or bad.

It is an admin fee for making sure the property is adequately insured and for them checking out your policy etc. However £50 is on the high side, most Banks/building Society's charge £25 for this and the new insurance company would normally offer to pay this in order to get the business.

The bank hasn't contended its an admin fee to check the charge property is insured. If they did, I'd argue the fee is disproportionately high.

Anyhoooo I've whizzed letter #2 off but I won't take it further if rebuked, TBH I cant be faffed.

I'd like to know if there's a legal position on this.

Dear Sir/Madam

 

Re: Fee of £50 withdrawn from the Mortgage account xxxxxxxxxxxxxxx

 

Thanks for your letter of 8th instance with a copy of the mortgage contract received by me today. However your letter confirms you charged me a fee of £50 on 16/10/06 for taking out somebody else’s insurance policy.

 

This means your fee is a penalty and its sole purpose is to make a gain for yourself. You have required me to pay you £50 in compensation because I failed to fulfill my contractual obligation to buy your insurance product, and you did not declare the insurance premium cost before charging the fee. Therefore the fee charged plus costs and interest becomes recoverable under common law.

 

In order that we can bring this matter to a quick and speedy conclusion please refund the sum of £61.57 which includes your £50 fee and mortgage interest charged on the amount and statutory Interest at 0.00022% per day since the money became due on 16/10/06 within the next seven days.

 

Yours

We won & got a refund! and FYI this is what it took when we decided to play word-games with the bank in the name of £50 squid.

Answer: a volley of 3 letters out and 5 letters back incuding the cheque.

Well done for getting them to agree to a refund, but it's a shame they still say they won't actually uphold the complaint. I think their position is anti-competitive and I'd be surprised if it's not against the law.

Their excuse that another company's cover might not be as good, is a very weak excuse. All they would have to do is ask you for confirmation of your insurer and policy number, and then they would easily be able to check if the cover is at least as good as theirs. Most insurers publish their policy booklets online nowadays, so it shouldn't be too difficult for the bank to check the level of cover.

Put a complaint in to the FOS and also to Consumer Direct just for the record - and to cause a bit of extra aggravation for the bank