FlexAccount Opeing Charges for member of 40 years

[Docman]

Has anyone had experience of Nationwide charging OD fees when opening a FlexAccount?

My sister and her OH have everything in joint accounts but she has had a savings account in her sole name with the Nationwide dating from when she was saving to get married. As it’s her Ruby anniversary next year that means she has been a member of the Nationwide for over 40 years.

She has added small amounts over the years to the savings account. Recently she opened a FlexAccount as she wanted to have her State pension paid into a bank account rather than collect it at the Post Office. Nationwide arranged all the paperwork for her to transfer the pension payments to them and then sent my sister her FlexAccount details including an ATM card to draw cash.

My sister had a couple of queries about the operation of the account and popped into her local branch on Friday 31 July. The staff were apparently very helpful and showed her how the ATM worked and how to put in her PIN number etc. When the ATM asked how much money she wanted to withdraw, the staff told her to enter an amount. She tapped in £250 since she had just had confirmation that over £370 in pension and arrears was being transferred to the Nationwide. The ATM duly coughed up £250 which Sis then used for shopping etc.

In fact the pension of £374 wasn’t credited to my sister’s FlexAccount until Monday 4 August, which left her with a credit balance of £124. She returned from holiday last week to find a Notification of Unauthorised Overdraft charges of £20. Naturally, she was not amused and earlier this week went into the branch to demand that any charge be waived as she was only following the instructions of the staff. Not only did the manager say he couldn’t waive the charge, but that because the account was also overdrawn in August, she would be charged ANOTHER £20 i.e. £40 for following the instruction of staff and being ‘overdrawn’ for a weekend.

Has anyone else come across similar underhand tricks by Nationwide?

[Guest Old_andrew2018]

Bump

[indebtstudent]

So was it the staff or the ATM which showed the credit?

 

If she doesn't have an overdraft then it SHOULD NOT have let her withdraw that amount. There is a facility, the name of which escapsed me, which means a customer can draw more than is there. Best I can recall it is called a shadow overdraft. In my charges research I read about this on a briefing which said DO NOT TELL the customer about this, so questioning them on that issue might be a good place to start.

[Docman]

That's a good question, whether it was the staff or the ATM. All I have seen is Sis's bank statement. This shows a zero balance for nearly a week before she went into the branch and then the withdrawal of £250, which I believe is the maximum amount of cash you can withdraw from a Nationwide ATM (£300 for other banks).

 

I rang the branch up to demand an explanantion. I was ready for the usual Data Protection argument preventing them from discussing the account but I had all the statements from Sis so it didn't bother me. I just told them what I already knew. Surprisingly, they didn't raise the DP Act but did try to say my call wan't a complaint, so I gave them a mouthful of regulations (CAG has made me very aware of teh 'regulations'). They said they would deal with it in due course. I have expected a letter to Sis saying they would reply in 8 weeks. However, they rang me back after about an hour to say they would be writing to Sis with an apology and making a full refund. The cynic in me thinks the manager looked up Sis's account (she has a lot of cash with them) and went S#iT. That was on Friday, so we are waiting to see what arrives in the post.

[carolan78]

Nationwide let you take out £300 a day at their machines..my husbands flex account does anyway. Not that it matters now fingers crossed the refund will be there soon

[MilkTrayMan]

...she has had a savings account in her sole name with the Nationwide...She has added small amounts over the years to the savings account.

 

...the manager looked up Sis's account (she has a lot of cash with them)

I'm very surprised that your sister has persisted with (presumably) the Nationwide Cashbuilder Account.

...The rate of interest is frankly pathetic.

A much better option would be to look at the e-savings account if she is confident with online banking or the myriad of ISA's/Bonds that are alternatively available via her local branch.

Surely her branch manager MUST have made her aware of her options?

[indebtstudent]

"Recently she opened a FlexAccount as she wanted to have her State pension paid into a bank account rather than collect it at the Post Office."

 

A minor point but you CAN have payments like this put into a savings account, there is a generic sort code and account no for such payments.

 

Milktrayman is right there are lots of better accounts assuming she has a cashbuilder. If she doesn't want to change then e-savings or an E-bond could get her a higher rate.

 

Anyway back on topic sounds like a good result and not much stress at all. Keep us posted, and remember cash machines lie! I'm not saying this was the case here but it is quite easy to see a balance which is not there ie is not available funds because the cash machines can and do show this.

 

I'm quite sure banks could make it impossible to overdraw in this manner but IMO they're making too much from it to change.

[Wizard of ID]

I have consistently run into this problem during my 20 years with Nationwide. Despite having no overdraft agreement, Nationwide lets you withdraw more cash than you have available, then writes to tell you that it's imposing a charge for going overdrawn.

 

They haven't much of an excuse. If you don't have the funds to cover a withdrawal, and you haven't agreed a loan or an overdraft, then you're not entitled to the money and they shouldn't issue it to you. If they choose to of their own free will and generosity (or theire computer system's inadequacy), you shouldn't be held responsible for that.

 

Times when I've complained in the past, they've told me that it's a computer issue. However, it's never been fixed. You can try complaining, but unfortunately, Nationwide has (far, far from their advertising) the most bureaucratic culture and inflexible, lazy, slapdash staff I've encountered anywhere outside the civil service.

 

I've found the best way to get things done in Nationwide is to make a scene. I don't like doing it, but it's the only thing that makes them take you seriously:

 

1. Choose a busy time when there's lots of people waiting to be served.

 

2. Start at the service desk, and ask them to read aloud the prominent notice on the wall (there's always one) stating that the customer's needs are "Nationwide's No 1 priority". Then make your case -- don't shout, but speak loudly enough that everybody close by can hear you. Don't forget to demand regularly how this equates your needs with Nationwide's No 1 priority.

 

3. When you get nowhere, demand to see the supervisor. Repeat step 2.

 

4. When you get nowhere, demand to see the manager. They will probably send you a junior manager. Repeat step 2.

 

5. When you get nowhere, demand to see the branch manager. He will probably ask you to come into a private room. tell him that you'd rather do it in public where everybody can see. Repeat step 2.

 

At all times, be plain spoken but professional. Do not submit to the temptation to become abusive or insolent. The point is not to win the argument, but to embarass Nationwide publicly, and to win the sympathy of their own customers.

 

I'd say you've got a good chance if you keep the whole thing public -- little old ladies collecting their pensions are very easy to sympathise with against the big, nasty banks!

[indebtstudent]

"Times when I've complained in the past, they've told me that it's a computer issue. However, it's never been fixed."

 

It is NOT a computer issue, I've seen an old briefing which explains this. It explicitly states customers are not to be told about this facility which probably explains the mis-information. Either that or the shoddy staff you mentioned earlier

 

I likve your step by step guide, I'd like to add repeating the question how can the ATM dispence £250 when the £250 isn't there????

 

Seems like a simply question to me, and one which a massive flaw in Nationwide's system exposing them to potentially large losses, the flip side is I suspect it generates a lot of charges. You could point that out too.

[Wizard of ID]

It is NOT a computer issue, I've seen an old briefing which explains this. It explicitly states customers are not to be told about this facility which probably explains the mis-information. Either that or the shoddy staff you mentioned earlier .

 

Interesting. Are you saying that Nationwide knowingly lets people overdraw their accounts, in order to give Nationwide an excuse to charge them for it?

 

I do hope so! I'm going to Nationwide's "Talkback" meeting in Cardiff in November, where the public gets to put questions to the executives. This would be a good one!!!!

[indebtstudent]

Yes and no, its not like its happening all the time, purely because the sort of circumstances in which it operates are very limited.

 

Yes there is a facility which is called a shadow overdraft, I'm not even sure if it shows up on the system (can't remember). You would usually only come across it with someone who has a debit card, or has had an account for a long time. It was a fairly old briefing but it clearlt stated the customer was not to be told about this (I don't really see how you could explain the charge without explaining this but nevermind).

 

If you want to put them on the spot you could also point out that Mr Beale the CEO has openly admitted that those who pay charges fund free in credit banking for everyone else. This is what the anti charges campaingers were saying and, TBH, I'm supprised this admission didn't cause more of a fuss.

 

Finally I'd LOVE to know how much they've spent on legal fees for the test case, just before I left they'd spent a million I believe.

 

I'd say its a tie between asking about that and stating Natwest now charge £5 for an unpaid item, do you believe they are now losing £25 a time?

[Wizard of ID]

Well, it's taken a while, but I've finally managed to get a partial explanation from Nationwide concerning these transactions that are funded despite the account containing insufficent funds to cover it. I have to state that Nationwide seems hardly eager to explain itself. I've had to write twice -- their first answer was a cop-out, their second fails to address some rather glaring questions.

 

However, Nationwide's first letter said that they will "occasionally" approve a transaction so that the customer is not inconvenienced. I replied that so far as I can tell, there's nothing "occasional" about it -- it's actually routine and normal, so far as I can tell. Nationwide's second letter failed to comment.

 

Nationwide has said that it is the customer's responsibility to monitor his account balance, and keep his spending within approved limits. My reaction was: "the customer is at best an imperfect calculator, while Nationwide has a perfect calculator in its computer system. However, when a customer is about to enact a transaction that will overdraw his account, you make no effort to discover whether he is content to incur your charges, nor do you give him an opportunity to reconsider. Instead, you take advantage of the very real possibility that he may have made an error to extend to him a loan of which he is unaware, and for which he has neither applied nor agreed to accept, at an immense cost to him. Your charges are anything but open and transparent in this regard ... A desire to avoid embarrassing or inconveniencing the customer would be noble if Nationwide took measures to alert him to the consequences of proceeding with his purchase; or if it acted swiftly to warn him after the event, giving him a period of grace in which to fund his account at negligible cost. As things stand, Nationwide only informs the customer as a matter of leisurely routine when it is already too late for the customer to avoid Nationwide’s charges. This despite the fact that it is entirely within Nationwide’s ability to issue a computer-generated phone call or letter quickly and at next-to-no expense. "

 

Although it stated that alerting a customer when making a debit-card purchase is impractical (which is probably fair comment), Nationwide has not explained why it cannot do this when withdrawing cash (it would need only require a fairly minor addition to the software -- it could probably be programmed within a couple of hours), or why they can't offer the period of grace I mentioned.

 

Nor did Nationwide respond to my request that they justify their apparent conflict of interest.

 

What really interests me, however, is a statement in their second letter: "I have arranged for the facility to be removed from your account so you should no longer be able to withdraw funds or make payments when you have insufficient funds in your account." So this is a facility, like a regular overdraft, that is added to the account (without the customer's knowledge) and can be removed. This is not a computer glitch -- it is entirely deliberate.

 

In which case, how is it not an agreed overdraft? If it is an agreed overdraft, why do they charge so much more than they would for an agreed overdraft?

 

Nationwide has also failed to respond to a third question: I asked how they justified their conflict of interest with the trust implied by a fiduciary relationship. According to Wikipedia, "In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests ... he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents." Black's Law Dictionary further states that "taking advantage of the forgetfulness or negligence of the client are totally prohibited by a fiduciary." So, although it might be the customer's responsibility to monitor his account balance, Nationwide cannot make a profit if he fails to do so. In which case, they shouldn't be imposing draconian charges and extortionate interest rates for a facility that is materially no different from a regular overdraft.

 

This is a different twist on the charges argument, and I am dying to take it up with Nationwide. However, I'm not a lawyer. Before I risk making a fool of myself, can anyone tell me whether an ordinary current account, such as a Nationwide Flexaccount, constitutes a fiduciary relationship?

 

I'm fairly certain it does, but it's been fifteen years since I studied contractual law at uni. I'd appreciate a confirmation from anyone who's studied it more recently than I have.

[MilkTrayMan]

This is a different twist on the charges argument, and I am dying to take it up with Nationwide. However, I'm not a lawyer. Before I risk making a fool of myself, can anyone tell me whether an ordinary current account, such as a Nationwide Flexaccount, constitutes a fiduciary relationship? Yep...A Nationwide Flexaccount is deffo a fiduciary relationship. The current account holder becomes a member of a mutual building society.

 

I'm fairly certain it does, but it's been fifteen years since I studied contractual law at uni. I'd appreciate a confirmation from anyone who's studied it more recently than I have.

Here are a couple of links to explain the term 'Fiducial Duty' + also some Case Law...

 

Gillhams Solicitors

 

Oxford University Press

 

 

[Wizard of ID]

Fantastic information. Thank you.

[Docman]

Wizard

 

Great news about the Nationwide 'facility'. No wonder they do not want to disclose its existence as it creates a few more issues with the Consumer Credit Act.

 

As to having a fiduciary relationship, I believe there is such a relationship between a BANK and its customer but I'm not a lawyer. However, as MTM pointed out, Natoinwide is a mutual which I believe reinforces the fiduciary point. I hope you cotinue with the point and bank charges generally.

 

As an update Sis did get the charges refunded but no letter of apology. I tried but inertia and 'not wanting to make a fuss' kicked in. I despair sometimes but have come to realise that such an attitude is what the banks depend on. No matter what sh## the banks pile on the great British public, the majority just seem to lie back and take it. Well Sis may be like that but I am not any longer.

[MilkTrayMan]

...the majority just seem to lie back and take it. Well Sis may be like that but I am not any longer.

Only a brother could get away with saying something like that Dm. :eek:

:D pmsl

[indebtstudent]

"I have arranged for the facility to be removed from your account so you should no longer be able to withdraw funds or make payments when you have insufficient funds in your account."

 

This is VERY interesting since, to the best of my knowledge this is not possible. IF, as this suggest it IT possible, then they've put themselves in a clear conflict of interest as you say.

 

It is also possible you are dealing with someone who doesn't know what they are talking about... but you would hope that this wouldn't be the case when you are dealing in writing...

[Wizard of ID]

Well, it's taken some time -- Nationwide isn't exactly forthcoming among its operations, as I've noted before. However, if you persist and you go high enough, answers do apparently start to emerge. Here is their explanation so far:

 

"...the facility is commonly known as a shadow overdraft and as previously mentioned, it is a facility which seeks to offer some flexibility to customers to allow certain payments to be paid which would otherwise have been returned unpaid. We do this in the best interests of the customers, because we feel it is more beneficial for them to allow the payments to be made rather than cause the unnecessary embarassment of payments being declined. We do not notify customers of their shadow overdraft limit or seek their agreement for this, although not all customers will have a shadow limit, and the limit itself is regularly reviewed taking into account a number of factorssuch as those mentioned in my previous letter. Hasten to say [sic] the principle of the shadow limit is that it is the overdraft limit we would provide a customer with if applied for, and we genuinely believe it is better for customers to be able to use such a facility to avoid unpaid item charges, which are considerably higher than the unauthorised overdraft fee levied when a shadow overdraft is used."

There was a time when banks insisted their staff understood the basics of English grammar. However, this is the reply I have sent them:

 

"First, I would note that your comment “We do this in the best interest of our customers” betrays an almost fantastic degree of presumption on your part. Who are you to decree without our knowledge what is or is not in our best interests? Are we children to be nannied and have our noses wiped? By what right do you assert this authority to act in loco parentis of grown, mature adults? By what right do you withhold information from them, denying them an opportunity to exercise responsibility for themselves? Your explanation implies such astonishing arrogance, I have immense difficulty believing it can be the true reason. You are all the more contemptible if it is. The best interest of the customers is in being provided with adequate information to make up their own minds! What is your justification for such absurd and intolerable conceit?

Secondly, when you wrote to me in 2008, telling me that you were withdrawing my overdraft, the reason you gave was that I did not have sufficient regular income to qualify for one. Please clarify this in the light of your statement: “not all customers will have a shadow limit … the principle of a shadow overdraft is that it is the overdraft limit we would provide a customer with if applied for.” If my income disqualified me from having a regular overdraft facility, how was I qualified to have the shadow overdraft that you did not withdraw?

In reality, your claim to have withdrawn my overdraft was a lie, was it not? Despite your letter, you had not withdrawn my ability to go overdrawn at all. You had merely withdrawn my ability to do it cheaply. That is your right, but your failure to explain this, coupled with your insistence that I repay the balance of my overdraft immediately, can only have been calculated to convey an impression that was deceptive and wholly inappropriate in a fiduciary relationship. You withheld information that was crucial to my ability to make financial decisions, and you did it in a manner that was at best incompetent, but more likely, was wilfully deceptive. As a result, I assumed (perfectly reasonably, I think) that I was no longer permitted to go overdrawn, and that when my balance reached zero, cash machines would stop spitting out money, and debit transactions would be declined. This was not the case, although you failed to inform me of that fact – apparently in my “best interests” – and you got to rake in some big, fat charges without my understanding, knowledge or agreement.

Why should you not refund them to me in full? Furthermore, given that the only way I could repay my overdraft balance at such short notice was by withdrawing cash against my wife’s credit card, why should you not also refund her credit-card charges and interest?"

 

I will, of course, update you all when I get a valid response.

[indebtstudent]

Very good work, if I understand correctly thier position is best summed up as we presume to know what is best for our customer. WOW, just wow.

 

I'm glad my brain retained that bit of random information and hope you get somewhere on this.

[yourbank]

This letter Wizard, would you have a scan copy of it, it could well help in reclaims with Nationwide across the board.

 

Excellent work and look forward to seeing what they come back with after your letter.

[AA99]

I have also had a FlexAccount for nearly 30 years. I have also had an agreed overdraft facility with them. I have often been 'allowed' to pay for items or withdraw cash which has taken me over the limit and been subsequently charged. I was advised that because it's a VISA card, that VISA 'allocates'/'reserves' that money automatically.

 

Also, my young son, on JSA, was given automatically a £100 o/d facility and when he was £95 overdrawn, he can withdraw the minimum £10 at an ATM but then of course gets charged £25 for going over his limit:-o

 

I also queried why, say on a Monday morning, all the debits get put through first, and then a credit! The debits can be returned or cause you to go over your balance, albeit temporarily until the credit is processed, all on the same day! I was also told the computer does it!

[indebtstudent]

"Excellent work and look forward to seeing what they come back with after your letter."

 

Lets hope they don't take the Halifax approach, no further correspondance will be entered into. Can they even do that I mean under FSA guidelines and such?

 

AA99 all of what you say people have been saying for a long time. Is it in there interest of a business, any business, to allow a customer to incur debts they cannot pay? I'd say not, but banks don't seem to grasp this. They are willing to gamble most people will pay up, with no thought for the potential consequences.

[Wizard of ID]

Well, they didn't exactly say, "No further correspondence can be entered into," but they are refusing to say anything further.

 

This is the letter I received today:

 

"I feel that i have provided you with detailed responses in my letters dated 16 November and 1 December 2009 and am unable to add anything further. My letter dated 2 November 2009 notified you of the removal of the facility from your account and we agreed to the refund of the £20 fee, as a one-off gesture.

 

Any further correspondence regarding the issue will be placed on file and as previously advised you still have the right to contact the Financial Ombudsman Service ... You should notice if you decide to pursue this matter with the Ombudsman, you should do so within six months from the date of my letter dated 2 November 2009"

 

So basically, they have no justification nor apology for presuming to act in loco parentis of their adult customers, witholding information that their customers need to make financial decisions, deceiving their customers, substantially raising their overdraft rates without informing their customers, and generally acting in a manner not in keeping with a relationship of trust.

 

Sounds like a good one for the Ombudsman, or at least, it would do if so many other people on this forum hadn't had such a poor experience with the Financial Services Ombudsman. What do you think I should do?

[AA99]

Definitely put a complaint in to the FOS! It costs the bank money;) and it is at least registered as a complaint! The first thing they will ask though, is if you have had NW's 'Final Response'.

 

Quick and easy to do online:cool: