bank charges RE financial difficulty

[allan48]

Advice please

 

i sent the following letter on the 25th June 2009

 

Dear Sir/Madam,

I refer to the charges relating to unauthorised overdrafts and unpaid direct debits which have been applied to my account by HSBC since 17/2/2007, amounting to £1087.

These charges are unfair and unlawful and I require the bank to repay these charges to me.

It’s my case that under the Unfair Terms in Consumer Contract Regulations 1999 (the regulations) and/or the law of penalties, the charges applied to my account are unfair and unenforceable. I would draw your attention in particular to schedule 2, paragraph 1(e) of the regulations, which provides that a term may be unfair if it has the object or effect of requiring a consumer who fails to fulfil his/her obligation to pay a disproportionately high sum in compensation. Whether or not the charges relate to a breach of contract, the bank has charged me amounts which are disproportionately high in relation to any expense which the bank may have incurred as a result of my use of the account. As a result the charges are unfair and unenforceable.

I am aware of the decisions of the county court in the Berwick case that certain charges related to borrowings which the bank had in fact agreed to, and that, as those charges were not charges for breach of contract they were therefore exempt from challenge under the regulations. I am also aware of the decision in the Gillin case. However, as you will know, both the High Court and the Court of Appeal have since ruled that these charges are not exempt from an assessment for fairness under the regulations.

I therefore ask that you repay the amount of all the charges and additional interest charged for unauthorised overdrafts [and direct debits] and the interest that has been charged upon these charges and any compound interest charged. I look forward to receiving your response within a maximum of eight weeks of the date of this letter or I will issue proceedings with the Financial Ombudsman Service to reclaim the full amount of charges and/or the small claims court.

I am also aware of the Financial Services Authority Waiver, which allows banks to put claims such as mine on hold. However, cases of financial hardship are exempt from the waiver. The FSA defines financial hardship as:

“A complainant is considered to be in financial difficulty when his or her income is insufficient to cover reasonable living expenses and meet financial commitments as they become due.”

I believe that I meet the criteria of financial hardship as 4 of the 5 unpaid direct debits in this period were for my Mortgage. The interest and charges accrued relate to utility payments being sanctioned over my limit. My annual salary was reduced by 18% from £50k to £41K on September 1st 2008. I ceased contributions to my Pension in September 2008. You will also note that I have attempted to secure a consolidation loan with you in November 2008. I have had to change my mortgage to an interest only account in December 2008. I asked to increase my credit limit on my HSBC credit card April 2009 and asked to increase my overdraft facility June 2009, Requests were denied with a reason of that I had reached my available limit for borrowing even though you stated that my credit score was high enough.

I am happy for you to contact me on xxx after 7pm to discuss the matter and to provide proof of my financial situation.

Yours faithfully

see next response for their replies.

Allan48

[allan48]

letter dated 4th July

 

Dear XXX

 

We achknowledge receipt of your complaint about bank charges. We believe that your complaint concerns the level, fairness or lawfulness of the charges. If it concerns something else, such as an administrative error, please let us know.

We do not agree that our charges are in any way unfair or unenforceable.

However, the bank has now become involved in legal proceedings with the OFT in relation to bank charges which we believe will resolve the legal issues regarding the fairness and legality of your bank charges.

it would be our normal approach to resolve your complaint through our internal complaints process as quickly as possible.However, until the determination of the legal issues in the above proceedings, we have asked the FSA to suspend the normal timetable for dealing with bank charges complaints, and the FSA has agreed to this request subject to conditions that protect your rights.

We can assure you we have registered and stored your complaint. Please retain your bank recoords, as this will make it easier for you to support your complaint on resolution of the test case. Once the legal proceedings between the OFT and the banks finish, we will resolve your complaint as quickly as possible.

we are sorry that we have not been able to respond in full to your complaint now, but we think that it is necessary to resolve the key legal issues before we decide how we should respond to your complaint.

obviously, exactly what will happen next will depend on the courts. we do not know how long the case will take - we have promised to proceed as quickly as possible but inevitably, given the importance of the issues being considered, this may take many months to finally resolve. But we can assure you that once the legal proceedings are completed we will resolve your complaint as quickly as possible. if at that stage you do not agree with our conclusions you will of course be able to refer your case to the FOS.

given this court case we have asked both the FOS and the courts not to proceed with any other case they are hearing until the test case is resolved. FOS has indicated that as a general proposition it will indedd not proceed with cases which rely on the legal issues being considered in the test case. similarly, you should be aware that if you choose to issue a claim in the courts, we will immediately apply to the court for an order to stay your action until resolution of the banks proceedings with the OFT.

the FSA requires us to ensure that your complaint will not be adversely affected by the delay in dealing with it and we can assure you that this will not be the case.

You have mentioned that you are presently in financial difficulties. To see wher we can help we will need to undertake a review of your financial situation to determine the extent of your current difficulties. this will be required, whether or not we have had previous discussions with you about your difficulties, as customers financial affairs can change from time to time.

BLAH BLAH range of options etc.

Clearly if you do consider to be suffering financial difficulties, it is essential that we discuss matters as soon as possible. Once you have completed the income and expenditure form (NOT GIVEN) please contact us on etc.

 

next response coming

[allan48]

letter dated 3 august 2009.

 

Dear XXX

 

As part of your claim for a refund of overdraft charges, you mentioned that you were in financial difficulty. in response, we wrote to you to ask if you would like us to carry out a review with you of your financial circumstances in order to explore wyas taht we may be able to alleviate any financial problems you may have.

As you do not appear to have made contact with our specialist team for your review, we are writing again, as it is always important that attemts to address financial dificulties are made as soon as possible. in case of need, our telephone number is XXX.

May i aslo remind you that, before you contact us, please have to hand full details of your income and expenditure so we can go through it with you as part of the review.

it is around one month since we last wrote to you. Should we not hear from you within the next two weeks, we can only assume you do not, wish to go through an assessment of your circumstances. i do have to tell you that as far as your overdraft charges refund claim is concerned, this will remain on hold until the court case has concluded, as advised in our previous letter.

 

yours

[allan48]

dear all

 

just a footnote to say that i have previously succeded in reclaiming £1700 worth of charges from HSBC up to feb 2007.

Question. Do i reply to their letter or do i wait for the eight weeks to expire as per letter of 25/6 and submit a small claim and wait whilst acquiring 8% interest.

 

allan

[allan48]

since opening the claim

 

i have incurred a further £125 in charges!!!

[johnnymitch]

Hi allan ,

 

They're really piling up the misdemeanurs , aren't they .

 

I think would write and point out that you have not replied to their request for your I & E because they failed to enclose the appropriate form . Also that , having acknowledged that there is a problem which must wait for the resolution of the Test Case , they are admitting that the account is 'In Dispute' , therefore under the terms of the FSA Waiver , they should not be adding further charges ....

 

You could also let them know that the 8 -week clock you gave them is still ticking and that you will commence legal action at the termination of that period which is xx xxx xx (date) .

Or .... you could report them to FSA - who will probably advise you to take legal action anyway

 

Be interesting to see what they come back with this time.......

[allan48]

johnnymitch

 

will do today

 

allan

[yourbank]

Hi allan ,

 

They're really piling up the misdemeanurs , aren't they .

 

I think would write and point out that you have not replied to their request for your I & E because they failed to enclose the appropriate form . Also that , having acknowledged that there is a problem which must wait for the resolution of the Test Case , they are admitting that the account is 'In Dispute' , therefore under the terms of the FSA Waiver , they should not be adding further charges ....

That's not in the Waiver re no charges being added so not sure where that info is from.

You could also let them know that the 8 -week clock you gave them is still ticking and that you will commence legal action at the termination of that period which is xx xxx xx (date) .

The claim is already acknowledged by the bank. We can debate the FSA Waiver and the thought processes behind it which was to make it certain that because of the OFT test case that litigation and the cost(if incurred by the claimant) would be unnecessary since the bank would have to pay interest on any amount claimed.

Or .... you could report them to FSA - who will probably advise you to take legal action anyway

On what basis?

Be interesting to see what they come back with this time.......

 

They don't HAVE to send out an income and expenditure form and if you want the number for Financial Hardship then here it is:

0845 6006423 and is available Monday to Friday - 08:00 to 18:00

Quote reference: LCC01.

There is an income and expenditure form on their site that you can complete which should be household income and expenditure:

New Window: HSBC Bank plc: Budget Calculator: Instructions

Include notices of arrears if you are writing to them

[allan48]

so, should i send a completed I and E form and quote appendix 2 of the FSA guidance 27/7/09 (monthly) as well as stating that the clock is ticking to 20/8/09

 

allan48

[yourbank]

so, should i send a completed I and E form and quote appendix 2 of the FSA guidance 27/7/09 (monthly) as well as stating that the clock is ticking to 20/8/09

 

allan48

 

The answer is no, because you should basically state that a lifestyle change, ie loss of income, separation, etc,etc(so something caused you to not have the funds to pay the money that was going out) lead to charges which then impact on your ability to pay you bills(most Financial institutions are looking at mortgage/rent, council tax, utilities or priority debts.

You can file a claim in court if it makes you happy but the court should automatically stay the claim.

It's your claim so it has to be your choice, personally, I thinking filing a claim is pointless unless you are on benefits and get fee remission ie form EX150 when you file a county court claim but it is only my opinion.

[johnnymitch]

Again , I 'm going to disagree with yourbank I'm afarid , allan .......

 

If you don't send back an I&E form duly completed , it'll give them the 'out' that they couldn't consider 'Hardship' .

 

Also , yourbank seems to have missed the point that you can claim back your Court fees and reasonable costs ... along with 8% statutory Interest - but whilst the majority of the Caggers on here recommend carrying on to the 'Stayed in Court' stage .. yourbank doesn't .

 

We agree to differ yb & I - so it has to be your call which way you go ....

[yourbank]

Again , I 'm going to disagree with yourbank I'm afarid , allan .......

 

If you don't send back an I&E form duly completed , it'll give them the 'out' that they couldn't consider 'Hardship' .

I have clarified this issue with Allan, I have said NO to sending in Annex 2 on financial hardship and Not NO on the I&E form but I can see that it would appear I was saying No to both.

Also , yourbank seems to have missed the point that you can claim back your Court fees and reasonable costs ... along with 8% statutory Interest - but whilst the majority of the Caggers on here recommend carrying on to the 'Stayed in Court' stage .. yourbank doesn't .

I don't normally do this and I apologise in advance to one of the most respected posters on all bank charges forums(and he knows I am genuine in the remarks I have just made), but Michael Browne has regularly stated that an acknowledgment from the bank is sufficient. If he had stated otherwise and the worldly view stated to get in a claim, I would have agreed. The current OFT test case is about the construction of UTCCR 1999 and I would say to you that the contruction of the FSA Waiver certainly would have had the Courts in mind with regards to its construction and the terms of the waiver.

We agree to differ yb & I - so it has to be your call which way you go ....

Thought a clarification was needed with regards to I&E and my own views.

What about this bit on freezing charges of accounts in dispute within the waiver? (It doesn't exist).

[allan48]

letter being sent with an I and E

 

Dear Sir/Madam,

I refer to your letters of 4th july, which did not include an I and E sheet, and your letter of 3rd August.

I have acquired a copy of your I and E sheet from your website after being directed their by one of your specialist team. Please use the attached form to assist you in your understanding of my financial hardship.

I believe that i meet the criteria as set out in annex 2 of the FSA guidance 27/7/09 (monthly). The document states in part 2 the following

In making an assessment of financial difficulty the firm will take into account:

a. evidence of changes in lifestyle, including loss of employment; disability; serious illness; imprisonment; relationship breakdown; death of a partner; starting a lower paid job; parental/carer leave; and starting full-time education;

b. evidence of the following events:

i. items repeatedly being returned unpaid due to lack of available funds;

ii. failing to make loan repayments or other commitments;

iii. discontinuation of regular credits;

iv. notification of some form of insolvency or court proceedings;

v. regular requests for increased borrowing or repeated rescheduling of debts;

vi. making frequent cash withdrawals on a credit card at a non-promotional rate of interest; and

vii. repeatedly exceeding a credit card or overdraft limit without agreement (and, in this regard, where a complainant has incurred over £500 in unauthorised overdraft charges in the previous 12 months, that is to be treated as indicative of financial difficulty).

I believe that i have provided evidence of changes in lifestyle part2 a when i informed you of my loss of employment and subsequent re-employment at 18% below my previous salary.

I believe that i have provided evidence of the events in part 2b when i notified you that 4 of the 5 unpaid direct debits in this period were for my Mortgage and that the interest and charges accrued relate to utility payments being sanctioned over my limit. You will note that i have made several credit card transactions over the last few months at supermarkets for food/fuel and incurred bank charges in excess of the £500 in charges over the last 12 months referred to in 2b(vii). You currently have charged me £1212 since 2/07 with £600 in the last 12 months.

You will note that i have attempted to balance my books by ceasing contributions to my Pension in September 2008 and i have had to change my mortgage to an interest only account in December 2008. I went into arrears with council tax in February 2009 and have only recently made an arrangement with them. I have now gone into arrears with my Northern Rock loan. You will also note that I have attempted to secure a consolidation loan with you in November 2008 and asked to increase my credit limit on my HSBC credit card April 2009 and asked to increase my overdraft facility June 2009, Requests were denied with a reason of that I had reached my available limit for borrowing even though you stated that my credit score was high enough.

You will be aware that i gave you an 8 week deadline on 25/6/09 to repay the charges to me, i will enter a small claim for £1212 on the 20/8/09 if they are not repaid. I would have been willing to discuss further but you have added a further £125 since my first letter.

Yours faithfully

 

 

Allan48

[johnnymitch]

That's a good letter allan - I would keep a copy ready to send to the FOS with a covering letter if you have any further problems with them ......

 

the FSA waiver states :

 

Annex 2 – Dealing with complainants in financial difficulty

1. The firm will be sympathetic and positive when considering any financial difficulties claimed by the complainant. Firms will not subject a complainant to harassment or undue pressure when discussing their problems.

 

So what is piling on another £125 if it's not harasssment or undue pressure .

[yourbank]

That's a good letter allan - I would keep a copy ready to send to the FOS with a covering letter if you have any further problems with them ......

Allan the letter is better than when I first read it but you need a financial hardship closure letter from the bank if you are simply going to the FOS with nothing. Without it you will probably be waiting months.

 

the FSA waiver states :

 

Annex 2 – Dealing with complainants in financial difficulty

1. The firm will be sympathetic and positive when considering any financial difficulties claimed by the complainant. Firms will not subject a complainant to harassment or undue pressure when discussing their problems.

So what is piling on another £125 if it's not harasssment or undue pressure .

 

JM, Allan hasn't AFAIK called them or them called him to discuss his Complaint on financial difficulty.

You have been around as long as I have to know that £125.00 automated charges cannot in a court of law be described as harrassment of undue pressure. The computer program has no brain to think nor has the OP be harrassed AFAIK.

[allan48]

hi Caggers

 

received telephone call this morning from financial hardship team telling me case under review, further details and issues clarified with budget. i pointed out that a kindly judge may look favourably on my position and they would be asked to pay up.

Senior member of team will call in next few days to discuss further!!!

Keep you all posted

 

allan48

[allan48]

NB they have a deadline of thursday!!!

 

allan48

[johnnymitch]

Nice one , allan ...... keep 'em on the back foot !

[InformedSearcher]

Well financial hardship call to say they are reviewing is a standard with HSBC but does not mean anything. I've been through this before with them and they look (very) 'carefully' at your previous 3 months bank statements. Their team is quite small but on some other thread I've mentioned my (cynical) reasons for this. In my personal case when I did this back in March I lost because of the way I handled my current account prior to this and was given the opportunity to immediately apply again with the same result. They probably had a good laugh!

With respect I know of no court who has ever overturned any financial institutions decision. They use the (valuntary code!) of section 14 from the FSA with more emphasis on CCCS than anything else as a place to go to. The (debateable) FSA waiver is in place too. Sadly this makes us all even more exasperated if they say 'no' then it's a 'no'. It's voluntary and they need not pay out anything if they decide on that.

Of course when they do they state it's a 'goodwill payment'. If they end up losing the charges case then that will no doubt open up the floodgates again as 'goodwill' does not mean from what you've paid does in it? I wish you luck but if they do say 'no' then I doubt you are going to be able to force them to retract that. There's of couse nothing at all to stop them closing your account either so make sure you have another basic account opened elsewhere.

Michael

[allan48]

Received phone call which was derisory in respect of my affordability of the essential living requirements, it was the fault of my external creditors that were pushing me into a precarious financial position. Hey ho never mind - time to send in a small claim and gain the 8% interest whilst we wait for the test case.

 

allan48

[InformedSearcher]

Received phone call which was derisory in respect of my affordability of the essential living requirements, it was the fault of my external creditors that were pushing me into a precarious financial position. Hey ho never mind - time to send in a small claim and gain the 8% interest whilst we wait for the test case.

 

allan48

 

I have suffered this only too often. Their worldwide call centres have no feelings and it does not matter your financial status to them calling. I, personally have no disposable income and how may times even though they know it and after torrid (good word!) conversations have they finished with, 'And how much will you be paying today?' However lately they seldom ever call me, probably because they realise (at last!) that it's pointless.

The greatest problem is that once you take off the essentials anything (if any) left should be divided pro rata in payments. In other words if you are going to be in default they want/expect you to be in dafualt with them all.

 

Maybe Kerry Katona has the secrets of, in her case being bankrupt but managing to swan off on continantal holidays with her 4 kids?! I don't go on holidays anymore and even a chance for a pint would be wishful.

 

Michael

[kate1975]

i received a letter 2day to say that they had assessed and approved my financial hardship but as a goodwill gesture they would give me £2053 in stead of £3089. and if they lost their court case i would get the rest then is it a good idea to take the 2k now or wait till after the test case

[Castlebest]

yes but accept it as an intermediate payment of your claim .

 

The Waiver the banks have been allowed to hide behind does not allow them to make full and final settlements untill the High Court Case is settled.

 

I'm sure the money will find a good use .

 

pete

[InformedSearcher]

I'd accept fast!

I still contend that using the term 'goodwill' means exactly that - goodwill = gift and not we'll take it off what we owe you. But we don't owe you anything kind of thing unless we lose the case.

Michael

[allan48]

small claim sent in after receiving two letters this week.

 

1. including ...

"we confirm that after a further review, the Bank's position in relation to your complaint about your financial difficulty assessment and the solutions offered () remains as previously stated. We accept that you are in financial difficulty as defined in the Banking code, however you have stated that you are unhappy with the solution that we have offered you to resolve this. (stop paying your external creditors!!!!!)

 

muppets should get an interesting response from the judge after that admission.

 

allan48