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Bank charges new parents £1,700 in fees for going 8p overdrawn



By Colin Fernandez

Last updated at 4:21 AM on 27th October 2010



  • 'Unwanted' upgrade to silver account incurred charges

They were only overdrawn by 8p. But that trifling amount has left Angela Hannibal and Wayne Green with more than £1,700 in bank charges – and may even cost them their home.

Miss Hannibal, 21, who has just had a baby, opened a basic current account with Lloyds TSB when she was 15.

When she was 18, that was upgraded to a ‘silver’ account which offered her travel insurance, mobile phone insurance and breakdown cover for an £8 monthly payment.


article-1323847-0BC703F6000005DC-121_468x381.jpg Money worries: Angela Hannibal and Wayne Green with their two-week old daughter, Ashlyn. The young couple now face losing their home


But in January 2009, after the monthly service charge was taken out, Miss Hannibal was left with an unauthorised overdraft of 8p and was told she would have to pay the bank a charge of £170.


Struggling with bills and rent, the 21-year-old offered to pay the bank back at a rate of £30 a month. But she has had to pay a series of further unauthorised overdraft charges – at about £170 a time.


In total, the couple, whose daughter Ashlyn was born two weeks ago, have repaid £1,000 in instalments. But they still owe £700 – and the debt is rising at a rate of £10 a day.


Miss Hannibal, of Colchester, Essex, said yesterday: ‘Apparently I went 8p overdrawn in January 2009 and since then the charges have just mounted and mounted.


'I was completely shocked when they asked me to pay £170 back. I was scraping around and set up a payment plan and have been using my wages to try and keep up with the payments. It’s led to real financial hardship for us, especially with a new baby.’


Furthermore, Mr Green, 23, was made redundant from his job as a builder in August.

And the couple have been ordered to leave their three-bedroom home because of the rent arrears.



article-1323847-0BC6C3B0000005DC-887_468x620.jpg Troubled: Angela and Wayne say they have been hit with more than £1,000 in overdraft charges by Lloyds TSB



Mr Green explained: ‘Because we have been paying so much to Lloyds and now I have lost my job, we have been struggling to keep up our rent and council tax payments.’

But although she was already in debt with the bank, Miss Hannibal said staff offered her a credit card.


The office clerk, who earns about £950 a month, said: ‘I didn’t really want it but they said I could cover the payments.


‘Because of the pressure of paying back these charges, Wayne losing his job and having a baby, I ran up a bill of £500 which I’ve just managed to clear.’


The couple said they have visited the bank nearly every week to try to find a solution but had been unable to resolve the problem.


Mr Green said: ‘It’s a ridiculous situation. We are paying back the money, and I took in £150 and £200 when I’d been paid, but every couple of months they would charge us again.


‘It just spiralled from there. We don’t understand why they keep charging us. We went in and spoke to people but they didn’t seem to know either.’


Miss Hannibal added: ‘Every time I go into the bank I’m normally in there about three hours. I talk through the situation with people but at the end of the day they cannot do anything to help. They don’t seem willing to help me.’


article-1323847-0BC5EF8D000005DC-215_468x286.jpg Charges: Lloyds TSB charged the family more than £1,000 in penalties after they went overdrawn by just 8p (file picture)



Before Mr Green lost his job, the couple said they came within about £30 of clearing their overdraft but were again hit with another overdraft payment which plunged them deeper into the red. Mr Green said: ‘It seemed like they realised we were close to paying up and so they decided to make us pay more.’

Miss Hannibal said she had written to the bank to complain. She added: ‘It should be against the law to charge such high charges. I’ve had to pay more than £1,000 for an 8p overdraft, it’s ridiculous.’

Lloyds TSB replied by letter that an investigation by the Office of Fair Trading had led to a hearing about charges at the Supreme Court in November 2009. It said: ‘We consider our unarranged overdraft fees to be fair and don’t believe there is any basis on which they could be successfully challenged.

‘As a result we won’t be upholding your complaint or be providing a refund of these fees.’


But a spokesman for the bank said: ‘We are sorry for the distress that this has caused and we are working with Miss Hannibal to resolve this.


'We always work closely with any customer who is facing financial difficulty. We have been in close contact with Miss Hannibal to help her manage her finances, including waiving a number of fees.


'Where additional charges have accrued on the account it has been as a result of continued use of the unplanned overdraft facility. We are making contact with Miss Hannibal again to discuss her situation, what steps can be taken to resolve it and how we can work together.’




Read more: http://www.dailymail.co.uk/news/article-1323847/Bank-charges-new-parents-1-700-fees-going-8p-overdrawn.html?ito=feeds-newsxml#ixzz13YkLvp8e

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This dosen't surprise me.


£170 charges per month for 8p! That's 212500% Well done LTSB.


By saying this is charges rather than interest they get away with murder.


They get a lot of this by being late sending out letters telling you about the unauthorised overdraft, probably second class, so they get the maximum per month. (if they had deposited 8p the next day the charges would have been much less)


This is in due to the bank helping itself to funds when the money isn't there. Was that type of bank account appropriate & best for an 18 year old? Did she get the best advice at that stage?


I'm sure that this is LTSB's current operating model - apply massive charges, anyone who can't clear them gets caught for a fortune, then having milked them for as much as they can, send in debt collectors / courts


Presumably LTSB had them so frightened by the escalating charges they were paying the bank rather than their rent

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