The new supplier is E-on. So far they seem to have treated her decently. If the outstanding bills are not transferred, then at least I know which direction to proceed in. I can write a letter demanding details of how their figures were arrived at, rather than incorrectly demanding to know why the balance wasn't transferred. I don't believe she has given BG her bank details - ever. However it is possible that someone else has, either by accident or maliciously. I'll help her write another letter demanding a copy of the DD mandate which was used to authorise those transactions.

My friend who still lives in England has changed supplier within the past year, because she couldn't keep up with the bills with the old one, and I found her one that was much cheaper. I had recommended she switch some time before that - I don't know why she didn't. She now pays less for both gas and electricity than she did in 2007. She is still getting payment demands from the old supplier (Southern Electric), and the numbers don't seem to add up by my reckoning. At one point she got a demand for over £4000 for electricity alone, which we flatly ignored as absurd (corresponding to about 10 years worth of completely unpaid bills). The more recent demands are for much smaller amounts, but still roughly twice the amounts I calculate should have been owed, which stem from about 3 months of unpaid bills after two rate hikes in quick succession. My main question is thus: Are outstanding bills from a previous supplier supposed to be transferred to the new one? Another oddity is that British Gas, who is not her new supplier, has somehow managed to activate Direct Debits for at least £250. I do not know how this could possibly have been achieved. I think I can help her sort this out myself, though.

The bank will probably claim that newer leaflets supercede the older ones. Look for a clause in the first one you have, which allows itself to be overridden, typically with 30 days' notice. Then look for a clause in the latest one which states that it overrides the older one, and gives a commencement date. If those are missing, then you can probably use the older one! That's the kind of clause you need to look for. Good on you for finding it. However, that's a relatively weak one - read very carefully what it states is a breach: the act of going overdrawn. This is, legally speaking, not the same thing as not having enough money to satisfy a transaction, and thus might not cover you for the Unpaid Item Fees. Better would be the stronger obligation of keeping enough money in your account to satisfy transactions that you instruct them to make. If you can find such a stronger statement, that will help you much more. Wording like "you must" is just as good as "you are in breach if you do the opposite". The T&Cs that applied at the time of the charge should be used. You might need to separate the charges in groups by date to be watertight about it. I would expect 2001 T&Cs to be covered by the "penalty charge on breach" strategy. You can use either the common-law rules or the UTCCRs for this. This is probably true until the T&Cs were revised, likely in 2006, assuming they did the superceding thing correctly.

Reading Mr. Justice Smith's decision from yesterday, he explicitly avoided saying anything about Abbey's terms. This was because the OFT basically screwed up and gave him the wrong terms to examine in Abbey's example. Beyond that, I suspect your case would rest on the UTCCRs. You do perhaps have an advantage there, in that your bank explicitly admits that their "terms and conditions leaflet" actually does contain the contractual terms that apply to your account. I won't advise you on whether to proceed or not. However, do examine your T&Cs for any clause which you must certainly have breached at the time of the first relevant charge. This could be something like "You must have sufficient funds in Your account when you issue an Instruction which causes funds to be withdrawn." If you do find something very similar to that, you might still be able to go ahead with the old "breach of contract" argument. Otherwise, have a look at my list here and see which of those UTCCR clauses you reckon you can make "stick" to your case. I've cut out the obviously irrelevant ones and put commentary by the others. The test case has so far ruled that the contracts' terms invoking the charges are subject to the UTCCR's fairness test. The OFT has then stated that it believes that by applying the fairness test, the charges are found to be unfair. This is, however, subject to appeal.

I might have a set of "old" charges to test, from an HSBC account that was already closed when I did battle with Natwest. The only trouble is that I'm no longer resident in Britain, which makes it more complicated to file things and turn up in court if necessary. I do think the test case has been done completely the wrong way. Rather than "OFT vs. Banks", this should have been done with a selection of actual consumer cases. As it stands, nobody seems to have any sense of urgency, and everyone is pondering over technicalities rather than logistics.

Well, this is *my* interpretation: This is the crux of the argument, as it essentially codifies the elements of common law (specifically the test on "liquidated damages") which we were relying on to begin with. The consumer's "obligation" in this case is to keep sufficient funds in his account to satisfy any and all transactions he instructs; failing to do so in various forms causes the charges to be applied. Rough calculations I did around 2005 note that the cost of rejecting a Direct Debit is no higher than 35p, and bouncing a cheque 70p, the bulk of this being the cost of first-class postage. At that time NatWest was charging a hundred times that for Unpaid Item Fees. For every one of my DDs or cheques that they bounced, they levied more charges than the original transaction had been worth. This is thrown up by the latest decision, as of 21st January. The banks typically refer to their "terms and conditions leaflets" when questions of contract terms come up, yet Mr. Justice Smith is of the firm opinion that at least some of these do not read as sets of contract terms. Thus it seems unclear what the contract terms actually are. The common refrain among consumers affected by charges is that they had no idea that the banks could levy such high charges. The banks decide for themselves whether to refuse a transaction (causing an Unpaid Item Fee) or to initiate an unplanned overdraft (giving rise to Paid Referral, Unauthorised Overdraft, Overdraft Maintenance and Debit Interest charges). Needless to say, they normally choose the latter option in the first instance. It would be fairly easy to argue that the unilateral initiation of an overdraft facility, on an account where no overdraft facility had previously existed ,would count as invoking this clause. This is doubly true where an "arranged overdraft" had previously been refused - and I can document this as having occurred at least once. Banks have repeatedly refused to take consumers' financial predicament into account when asked. They have also, whether by incompetence or malice (or some combination of the two), misled consumers as to their rights. At the same time, they widely and clearly advertise their "compliance" with the Banking Code, which prohibits those two actions, among others. If I'm not much mistaken, references to the Bank Code even appear in these "terms and conditions leaflets" that they are so fond of shoving under our noses. Certainly Natwest sent me a copy of the Banking Code in response to one of my nastygrams, upon which I went through it and highlighted all the provisions of it that they'd breached so far. I have personally seen Natwest apparently become unable to perform simple arithmetic, resulting in some extremely odd series of "corrections". You would naïvely assume that these were core competencies for a bank. But let the consumer sneeze in the wrong way, and watch the banks come down on them like a ton of bricks. This is a good one. The banks love to point the consumer at the Ombudsman in order to distract them from the legal system. Some of them also make it difficult to obtain back statements, despite their obligation to make them available under the Data Protection Act (another core competency). Finally, they appear to have successfully obfuscated the identity of the contract terms which apply to the account, making it very difficult to formulate robust legal arguments. The UTCCRs don't apply to contracts between businesses, although it could be argued that they could apply to a "sole trader" in the client position. IANAL, of course - though I have stared down a bank in the past.

Sounds like they confused a "Paid Referral" with an "Unpaid Item Fee". But yes. The fundamental issue now seems to be precisely which terms apply to the contract between customers and banks. And it's probably incumbent on the bank to show this - if only somebody knows to ask.

Not exactly. Mr. Smith pointed out very clearly that, for the specific terms considered at that point, the breach would occur when the overdraft was created, *not* due to the "attempt" to create the overdraft. He noted (with reference to Abbey) that the Unpaid Item Fee is what would create the overdraft if it were to be levied. In fact he rejected Abbey's part of the decision simply because the terms he was asked to consider did not actually apply to the type of account the leaflet was supposedly printed for. The "Instant Plus" account didn't have cheques or cheque-guarantee cards, and the terms he was shown only applied to cheques and cheque guarantees. The last two sentences of that are worth noting in their own right. I noticed that Natwest tended to allow "paid referrals" as long as the account was initially in credit, but turned to "unpaid items" otherwise, and is may be part of the reasons why. There are no other references to "direct debits" in the entire decision, except in a clause that Mr. Smith described as "of advisory or hortatory effect" and thus not a contractual term.

Yes, that is what they have been doing in the past. But Mr. Justice Smith has now given us a very big lever to suggest that the leaflets are not, in fact, sufficient to show that a contractual obligation exists. By levying these charges, the banks are, by default, asserting that they have a contractual right to do so. What I'm suggesting is that we make them prove that contractual right by showing us the terms.

It's worth reading the judgement in detail. I don't think it's a loss as far as post-2003 claims are concerned at all. Instead, it strongly implies that the T&Cs leaflets are *not*, in fact, the terms of the contract (in most cases). In which case we should be asking what the terms of the contract actually *are*. I think a worthwhile tactic for existing and future claims would be to ask the banks to show the terms which they believe allow them to charge the fees. So far, they have been shoving leaflets under our noses... BTW, jaxads, that 17th January birthday you were thinking of? That was mine. ;-)

I've read the judgement very carefully just now. Since it is only ten pages, that was fortunately not too difficult! The decision actually hinges upon whether or not the "leaflets" containing "terms and conditions" actually form part of the contract between the bank and the customer. In most cases they did not. In which case, where *are* the contractual terms to which the customer and bank are subject in their business relationship? I don't seem to have been given any. In the two cases where the decision was that the terms in the leaflet *did* apply to the contract, the precise terms considered in one of them was inappropriately specific. This is the OFT's fault - Mr. Justice Smith is not able to "show initiative" in this kind of case. As such, he has not actually answered any substantive questions as far as we consumers are concerned. Instead, he has raised new questions. However, these new questions may turn out to be useful. Here's a new avenue to consider: Ask the bank to clarify which *contractual* terms apply to the account, and to point out under which of them it was entitled to charge the fees.

Unfortunately, she's a weak reader - this place would totally overwhelm her. I suspect I'm better off helping her directly, with advice from you people when necessary.

Assuming they follow the correct procedure... If they file against you in court, you'll get court papers informing you of their POC's, and giving you the ability to Acknowledge and to File Defence. You would put your counterclaim in the Defence. Those more knowledgeable than me should advise on the precise details to put there. I imagine however that you would advise the court (through the defence) that you believe the debt they are claiming is solely made up of penalty charges, and then outline the legal basis for your belief in the same way as if it were a POC sheet. You could also reference your existing case in your defence, noting that the same principles of law apply. You could even use the banks' own tactic against them and apply for a stay, suggesting that you'll lift your stay when the bank lifts theirs! I assume you've already repaid the original 20p overdraft. If not, perhaps you should do so to make things simpler. Note that as the defendant, you wouldn't have the luxury of breaking off the action if the bank decides it wants to settle. Instead you will have to press to win your case, and maybe the bank will get nervous and break it off themselves. You will also have to be particularly well-prepared if it actually goes to the courtroom. You might even be able to make things interesting by talking about "vexatious litigation". However, this is an area I am totally infamiliar with, and you should ask an expert about it.

I say... let them take you to court for the £280-whatever in charges. They barked, it's up to them to bite. You might need to open a parachute account to operate with in the meantime. Your defence, if they bother to do so, would probably be in the form of a counterclaim, similar to the claims in your existing case. If they don't bother to actually take you to court (have they got the nerve?), perhaps you could consider claiming financial difficulty to the court, as grounds for lifting the stay on your original case.

Personally, I think the idea of using Lloyds' admission of your financial difficulties to try and get the stay lifted... is a good one. Did you try it yet?

It is difficult getting through to her. She is used to trusting the bank to make her payments for her. I'm basically telling her flat-out that the bank is now stealing her money, that the payments are not in fact being made, and that she won't get frostbite from going out in +5°C weather to do something about it. I said she didn't have much financial acumen - she isn't even prioritising her money. She alternately complains about not having enough money to make the utility bills, and having to borrow money from her mother to buy food - and the next day she tells me about the big holiday she's promised her daughter, and that she's set up a direct debit to start paying for that. I've written her a clear and simple plan, which starts with regaining control of what little income she has, goes on to proper financial priorities, and then talks about dealing with the bank. Now I'm just tring to get her to accept it.

Did you mention the Consumer Credit Act, and the magic words of a Subject Access Request? Have a look for these terms (CCA, SAR) to see what you might have missed out.

Not at all - all you've done so far is send letters, which they've ignored. Go ahead and send another Letter Before Action, including the older charges as well as the newer ones, and you could probably even reference your earlier letter. But this time, don't faff around, just get on with the process on the right timescale.

I've previous won my own battle against NatWest in late 2005. Since then I've moved out of the country, but I still have friends "back home", so to speak. One of my better friends is JC. She's disabled (heart defect and so on), but lives alone with her young daughter. Her entire income is made up of various benefits, plus the proceeds of a stable investment made by the daughter's father on her behalf. Needless to say, this is only just enough to get by. This is exacerbated by the fact that her ex-partner (not the father) moved out a while ago, leaving several substantial household debts unpaid, and taking most of their savings to boot. I've helped her in the past by finding ways to save money. What she needs right now, though, is a near miracle. She's almost got out of the debt hole her ex-partner left her in, but now her bank - Lloyds - is very rapidly digging a new one under her feet. She's really not very financially savvy, and she is also very timid - she's the type to grasp at any straw held out to her, even if it brings an anvil down on her head, if it means she doesn't have to have a confrontation. This can be very frustrating when trying to help her. So she believes that the massive series of charges Lloyds are putting on her account are actually her fault, and would rather work out of them herself despite the fact that this is probably impossible. I am, of course, strenuously encouraging her to stand up for herself. My immediate advice for her is to open a Post Office account to receive her benefits into, and have them transferred to it immediately. This is particularly important as she is due to receive Cold Weather supplements due to her vulnerable status. I told her to do it that moment, while the post office was still open, but she said it was too cold to go outside. (My online sources tell me it was in fact above freezing.) So she has not yet done that. I believe she should also instruct Lloyds to cancel any and all Direct Debits and Standing Orders on her account, to limit the rate at which charges are applied. Not all of the charges seem to be Unpaid Item Fees (or whatever Lloyds call them), but as I'm in the "wrong" country I haven't seen the full details. At this point I think the best strategy is to abandon and "ignore" the overdrawn account and get her back on her feet in the "cash economy". But eventually we will have to confront Lloyds directly. I'm a little bit out of touch with the many developments since the turn of 2006, so can someone point me at the present recommended strategy for dealing with a personal claim of this type? At present I believe the amount involved is about £150 recently, but JC says that similar charges were levied a few years ago, when she was living at a different address, which she was able to work herself out of. I suspect that these would still fall within the 6-year limitations.

Right, so far as I can tell: - Southern claim that the account is *not* in credit. The demand letter is presumably because the Direct debit bounced. I *still* haven't seen all the details on the bill, so I don't know the relationship between present consumption and repayment rates. However, the balance *may* be within limits for transfer to a different supplier. - Lloyds are applying penalty charges right left and centre. Again, I don't know the full details yet, but it looks like Unpaid Item and Unauthorised Overdraft Arrangement & Daily Maintenance Fees. I'll shift discussion of Lloyds into the appropriate Banking forum. I've advised her to immediately move her benefits payments - including the cold-weather supplement she's supposed to get soon - to a new account at the Post Office. Unfortunately I'm having trouble getting her to understand just how urgent and necessary this is, so she didn't do it while she still had time today.

Okay, I've just found out the situation is far more serious than we realised. I'm still finding out the details, but we may well need the forum's help in several areas.

Yep, good ideas there, which I'll bear in mind. I don't actually need advice at this point, I'm just documenting things to help others. If things get nasty, I'll ask more specific questions. JC recently had the same problem with BT, actually, and so did her mother. The "overseas" call centre (described by her as "f****** p*k*s") tried to claim that £35 per month was accounted for by a "calling plan", when she had made no outgoing calls on the line. I discovered no calling plan on BT's website that got anywhere near that total, and anyway she hadn't asked for one. So I helped her write a strongly-worded letter which got things fixed pretty much immediately - now it's more like £12 a month, and she got a refund of the credit balance. I think the difference is that a letter gets read by a British citizen who actually has the tools and authority to do something.

Storage heaters are supposed to retain heat throughout the day and release it gradually. They contain a big pile of oil which has a high heat capacity, and I think they have shutters in them so they don't let the heat out when you don't want them to. So do learn how to use them, they could still save you money even if you're in at irregular hours. The best way to get an updated bill is to submit a fresh meter reading. That way you know the bill will be accurate. I believe utilities *must* send you an up-to-date bill if you send them a reading, unless they very recently sent you an estimated bill that was substantially accurate. But the bill might not be a paper one, if you have an "online only" account. You should check that, and make sure you know how to log into the account if so. If it is not an online-only account, you should definitely be receiving regular paper bills.

Pre-payment meters are indeed a ripoff. The question remains over to what extent. It is well known that pre-payment tariffs are, counter-intuitively, more expensive than direct debit tariffs. The official claim is that this is to compensate retailers with their charging machines. It would be very interesting to find out how much commission the retailers actually get, and compare it to the difference in the tariff. The "time value of money" principle dictates that prepayment tariffs should cost less than credit tariffs, before commission is taken into account. Not all suppliers insist on a prepayment meter if you happen to get into debt - simply increasing the monthly direct-debit amount is sufficient and indeed equivalent to taking a weekly "bite" with the prepay meter. I reckon that insisting on prepay when the reason for the original debt ultimately lies with their lax meter-reading schedule is highly disingenuous. The trick is that with the cheaper credit tariff, you would probably be saving more than enough to pay off the original debt quite quickly. Fortunately you can calculate the amount of energy you are actually using without resorting to the meter. You can then compare this calculated use with the meter readings taken before and after a measured activity, to see if the meter is accurate. You can also calculate the unit rate from the meter readings and the credit used. A suitable calculation can be done on a hot bathtub. First, measure the temperature of the cold water supply at the bath. Then measure the flow rate of the taps by timing filling a bucket of known volume, with the taps set for normal bath temperature. Then when you fill the bath, you will know the volume of the bathwater by measuring the time the taps are left on. Before running the bath, turn off all other gas consuming appliances, including the central heating, living room fire and kitchen stove. Also turn off any immersion heater. Now read the meter and make sure it isn't moving. You can turn the heating on again as soon as you have read the meter a second time. (If your hot water is supplied by the central heating boiler, set the heating thermostat to the snowflake or lowest setting rather than turning it off entirely.) After reading the meter the first time, run the bath, not forgetting to time the volume. As soon as it has finished running, measure the temperature of the water, and read the meter a second time. Then you can set other gas appliances to normal. If you have a hot-water tank rather than an "instant" boiler, wait until the tank has re-heated before reading the meter. You can then use a simple thermal equation to determine how much heat energy was added to the water. The actual gas consumption will be slightly higher than this due to unavoidable inefficiencies in the system - the flue gases carry some heat out of the boiler, heat leaks out of water pipes, etc. The equation is: Heat (Joules) = (Hot Temperature - Cold Temperature (Celcius)) * Water Volume (Litres) * Water Specific Heat Capacity (Joules per Kilogram Kelvin). Three of these values are what you measured earlier. The fourth is a physical constant, 4.18 J/Kg.K. One litre of water weighs exactly one kilogram (within measurement error), so the equation works well. Similarly you should work out the energy content of the gas used during the bath run. To do this, subtract the two readings to obtain the units used. Now multiply this by the "calorific content per unit" value, which should be printed on your bill. You will probably need to convert the result from BTUs or kilojoules to joules, to match the previous calculation. The two calculations should approximately match, with the meter reading slightly higher than the energy found in the bath. If it's within 20%, the meter is probably accurate enough. If it's wildly wrong, you may have done your measurements or calculations wrong, so double-check them, but it's also possible that the meter is faulty.

I would even suggest that bank charges have a *greater* effect psychologically than a normal debt, because the individual has no direct control over it. The resulting feeling of helplessness would not be at all healthy for someone predisposed to depression and self-destructive thoughts.