I requested a refund from MBNA of charges totalling approx £950 and received a response from a Steve Bailey saying that the charges were detailed in their t&c’s and that they were allowed to charge these fees if I did not comply with the t&c’s of my account. He said that he had credited my account with £100 in full and final settlement as a goodwill gesture. The letter had a contact number for one of his team, and said that I should call if I wanted to discuss further.
I called the guy today and he asked what I was looking for, told him I wanted all charges refunded which amounted to £1256 according to him which was more that I had thought. He asked on what basis I felt that they should do this and I said under Unfair Terms Regs the charges were a penalty etc and the OFT statement also which states that they would deem that a charge of more than £12 as legally unfair. He has asked me to put my request for a review of their decision in writing but warned me that it did not mean that they would agree to request for a full refund. He also tried to play a bit of hardball asking why my account was always over, I told him that I was trying to get it down and paid around 130 every month on a balance of £4000, but them charging my £25 every month wasn’t helping. I have drafted the letter below and just wanted to get opinion on it if poss!
Further to our telephone conversation today and Steve Bailey’s letter dated 13th April, this is a formal written request that you review your decision not to refund penalty charges amounting to £1256 on the above account. I appreciate that you have made a goodwill gesture by crediting £100 to the account, but unfortunately this gesture does not reflect the level of illegal penalties that have been charged to my account. I am requesting that you refund all of the penalties applied.
MBNA states that it can impose charges in accordance with its terms and conditions of contract. However, those terms and conditions are subject to common law as well as the Unfair Terms in Consumer Contract Regulations 1999 (UTCCR). The UTCCR takes precedence over any contractual term where the court finds a term to be ‘unfair’. The court can then treat that term of contract as having no legal effect. As you will be aware, a court will only award (in a non-negotiated consumer contract) a sum to reimburse actual loss. Your charges do not reflect actual loss. Rather, they include a massive penalty and they subsidise the bank's global debt recovery costs and lending losses. The OFT confirmed in their 5th April statement that default charges should only be used to recover certain administrative costs and that current fees are unfair and illegal penalties, which do not reflect the costs incurred in the automated processes.
The OFT have stated that credit card default charges have been set at a significantly higher level than is legally fair and that they expect all credit card issuers to recalculate default charges and where any charge is greater than £12 the OFT will automatically assume that it is unfair. MBNA charge £25 for an over limit or late fee, which on the basis of the OFT statement is clearly legally unfair. This is a view that a court is very likely to uphold on the basis that the condition in your contracts which allows you to charge this fee is an unfair term and the charge does not bear any reflection to costs incurred and is a penalty. The OFT has not ruled out legal action if companies do not reduce the level of fees and they have said that a default charge is not automatically deemed as fair if below £12.
In addition, I note that Steve Bailey’s letter of the 13th April does not mention the Financial Ombudsman Service and my right to take my complaint to them, which I believe is a requirement for all companies regulated by the Financial Services Authority in the UK.
If I do not hear from you within the next 7 days with an acceptable resolution, which in this case would be a refund of penalty charges to the value of £1156 then I regret I will have no option but to raise an action of payment at the Sheriff Court under summary cause procedure. In that eventuality, I would require you to lodge in court financial vouching for the actual loss sustained in my case, together with your full financial accounts revealing how much income is generated from your bank charges, as against the cost of administering dishonoured transactions.