Query Re Grounds For Unfair Treatment Under BCOBS

[Surferdan]

Would it be considered unfair treatment under BCOBS if a bank always acted and made decisions that were in favour of the bank?

[fkofilee]

Depends on what you mean, we need more info to help

[Surferdan]

My son has been with the same bank for longer than I care to remember.

In all that time he has never had a debit card transaction that took him over his overdraft limit

ie an "unauthorised" overdraft request, refused either for a cash or purchases.

The bank have always acted in their interests and allowed the transaction and then charged him for going overdrawn.

If on a few occasions the request had been refused then I wouldn't be asking this question, but it does seem very one sided.

At one time they allowed him to exceed his overdraft by seven yes SEVEN times his limit and just kept piling on the charges.

In one 2 year period he was charged over £3000.

[citizenB]

Have a read of the highlighted links to BCOBs in my signature, see if there is anything there that can help.

[Surferdan]

Thanks for your replies citizenB,

I have read the BCOBS information and at the moment the only avenue I can see is to use BCOB rule 5.1.1 and claim that the bank are being unfair in always deciding to allow the "unauthorised overdraft".

This decision will always result in the bank applying charges, therefore they are acting in the banks interest and not the customers.

I have read (on this forum I think) and totally agree with the point of view that the unauthorised overdraft only exists and therefore the opportunity to impose charges only exists if the bank agrees to the overdraft. They don't have to agree but by doing so increase their income.

Whilst not the same scenario I would expect that if I tossed a coin sometimes it would come down heads up sometimes tails up but this is totally skewed in the banks favour.

I would really like to challenge the bank about this.

Edited August 20, 2013 by Surferdan
grammer

[citizenB]

In the links provided, I think there was a draft letter that you might be able to adapt to your situation.. I will have a look and see how it can be done.

[Surferdan]

Thank you citizenB I await your posting

By the way I see no reason not to say that the bank in question is HSBC

[citizenB]

http://www.consumeractiongroup.co.uk/forum/showthread.php?353102-Santander-given-lesson-on-BCOBs-and-inwardly-digest&highlight=BCOBs

 

http://www.consumeractiongroup.co.uk/forum/content.php?829-Charges-successfuly-reclaimed-from-RBS-last-year

 

The 2nd link is the one I was thinking might be of value to you.

 

 

What the letter is about :-

The RBS permitted a cheque to be paid against the account even though the account was unused for a considerable period of time and had no pattern of fund going into it.

The paid cheque took the account balance into overdraft incurring a succession of regular fees.

 

The unfairness arguments were:-

 

• that it was irresponsible for the RBS to pay a cheque out against what was essentially a dormant account when there were insufficient funds to pay

• That the RBS had an alternative choice- to bounce the cheque but instead chose the option which was the most expensive for their customer - and the most profitable for them

• That the RBS then treated the charge as unauthorised borrowing despite the fact that these charges are part of their business plan are intended by the bank to generate up to one third of their core revenue - and so they clearly are approved by the bank

• That there is no contractual term which allows the RBS to treat their own charges as unauthorised borrowing and therefore by treating charges as unauthorised the RBS chose to resolve the contractual loophole in their own favour, thereby causing maximum expense for their customer

• That in any event, the RBS system and level of charges is excessive and unfair.

There was a further argument in respect of RBS clear intention to breach Information Commissioner guidelines by defaulting an account in legitimate dispute.

(This threat by the RBS was also unfair under BCOBS although this point was not raised by the customer.)

 

 

 

 

Dear Sir/Madam

 

I am in receipt of your letter of XXXXX 2011 and also your letters of xxxxxxxxdate which you say have been sent under section 76(1) of the Consumer Credit Act1974. I believe that these letters were sent to me by way of a default notice, although this is not at all clear to me.

 

As you well know the account in respect of which you have issued this notice is the subject of a very clear dispute between us. As you also well know I telephoned you the xxxxxxxdate raising the entire issues with your call centre and made it very clear as to the basis of my objection to the charges which you have levied against my account.

 

I understand that this call was recorded by you, and I hope that the contents of my call were properly logged by your call centre operative.

 

You have made it clear that you intend to file a ‘Default’ with all three credit reference agencies. You will be aware that the Information Commissioner has stated that defaults recorded in this way are likely to constitute a breach of the Data Protection Act 1998. He articulated this position in his “Data Protection Technical Guidance - Filing defaults with credit reference agencies” guidance to the credit industry of 2nd August 2007 where he stated the following:

 

“If we conclude that there is a genuine, reasonable and unresolved dispute between the borrower and lender, then we are likely to find that personal data have been processed unfairly if a default has been filed”

 

The fact that your immediate response to my phone call was to issue a default notice and to make clear your intention to record a default at the credit reference agencies regardless of our dispute is the subject of my complaint to the Financial Ombudsman.

 

Your are in breach of your obligations to Treat Customers Fairly as required under the Banking Conduct Of Business (BCOBS) regulations 2009 which have been introduced by the FSA under the Financial Service and Markets Act 2000.

 

Accordingly, I must inform you that you must withdraw your default notice and that you must engage with me meaningfully to resolve this dispute in order to avoid any further serious breaches.

 

The subject of our dispute

When my cheque (no. 0005678) for £43 was presented for payment you had two options. In the first instance, you were entitled to treat it as a request for an informal overdraft and to refuse my request, or alternatively, you were entitled to treat my cheque as a request for an informal overdraft, and to accede to that request.

 

In the event, you chose to do the latter. However, I say that it was entirely irresponsible of you to do so. There had been no activity on this account for a considerable time. The account was barely in credit. There had been no input of funds in the recent history of the account. The proper course of action would have been to decline the cheque and levy your £5 unpaid item fee. In this way you would have received your charge, which my account had sufficient credit to pay without going into overdraft, and the huge issue and problem which you have now caused would not have occurred.

 

I would point out to you that under BCOBS you have a statutory duty to treat me fairly and have regard to my interests. It is clear that by deciding to pursue the course of action which you did you acted completely against my interests and completely in your own interests, in order to maximise your opportunity to apply unfair charges against me, in order to maximise your revenue stream.

 

This is an illegal act because it is contrary to your statutory duty under the Financial Service and Markets Act 2000.

 

Since May 2010 you have sought to impose a series of charges upon me of £20 per month. There is no explanation on my statement as to why these charges have been applied. I have examined the terms and conditions of my contract with you and the only possible explanation is that you have imposed the charges by way of ‘maintenance’ charges.

 

Although the recent test case did hold that un-arranged overdraft fees did not fall to be assessed for fairness by the OFT - and this is all that the test case held - there was no reference at all made by the Supreme Court to maintenance charges, which one can only be taken to mean charges which have been levied to maintain the cost of keeping an individuals account in the red. Clearly, a maintenance charge has nothing whatsoever to do with a fee for a service, and is intended to exceed actual costs so as to provide a revenue stream for the purpose of cross subsidising so-called ’free banking’ for other customers.

 

I see that on the XXX date you applied an un-arranged overdraft fee of £143 to my account and I understand that you are preparing to levy a further £109 un-arranged overdraft fee at some time in the near future. I object to these fees because it is your own charges which you have levied against me which have put me into overdraft. It is your charging scheme, it was designed by you, and it is intended to provide revenue for all parts of your personal account operation. Therefore your imposition of these charges on me can not be said to be ‘un-arranged’. You have imposed these charges upon me deliberately, in full knowledge of the state of my account and for your own purposes. It can never be said that the overdraft on my account was in any way unauthorised or un-arranged.

 

I need hardly point out to you that any reasonable person would regard treating unauthorised borrowing charges as themselves unauthorised as inherently unfair. Furthermore there is no contractual provision in your terms and conditions which allows you to treat your own charges as unauthorised borrowing. This means that there is an ambiguity in your terms and conditions which you have decided to interpret in your favour and against my interests. This is a violation of your statutory obligation under BCOBS, which require you to treat your customers fairly and to have regard to their interests. Clearly you have not done so here.

 

I understand very well the effects of the test case which was decided by the Supreme Court in November 2009. However, you should be aware that the test case decision applied only to historical charges.

 

On the 1st of November 2009 the Banking Code of Practice was replaced by BCOBS which require you to treat your customers fairly and to have regard to their interests.

 

In case you have not fully understood, BCOBS is a binding duty upon all institutions which are regulated by the FSA, and they have seen fit to levy very heavy fines upon institution which act in breach of their regulations. I am astonished that you should claim that the test case in the Supreme Court, in which RBS was an appellant, came to a decision that supports your position that your charges are fair. I am sure that you are aware that the Supreme Court did not make any pronouncement as to whether charges were unfair. The court merely said that for the purposes of the Unfair Terms in Consumer Contracts Regulation 1999 the fairness or otherwise of charges was not relevant. Specifically, in the Press summary that accompanied the Supreme Court judgement, Lord Phillips stated the following:

 

The Supreme Court had to decide not whether the banks’ charges for unauthorised overdrafts were fair but whether the OFT could launch an investigation into whether they were fair.

 

Furthermore, I would also draw your attention to the following quotation, also from Lord Phillips, as part of the judgement itself:

 

 

80. It may be open to question whether it is fair to subsidise some customers by levies on others who experience contingencies that they did not foresee when entering into their contracts.

 

It is very clear that the Supreme Court had grave doubts as to the fairness of overdraft charges.

 

In stating that the Supreme Court decision supports the fairness of your charges, you have misled me, which is a clear breach of the OFT’s debt collection guidance, which states the following:

 

 

False representation of authority and/or legal position

2.3 Those contacting debtors must not be deceitful by misrepresenting their authority and/or the correct legal position.

 

As I have already pointed out to you, on the 1st of November 2009 you became statutorily bound to treat your customers fairly in all matters and this includes in the matter of overdraft charges. It is clear, and furthermore it was acknowledged by your own representative, Mr Laurence Rabinowitz QC , before the Supreme Court, that your charges bear no relation to the actual costs incurred by going overdrawn, but in fact merely produce a revenue stream so that those in financial difficulty end up paying for the ‘free’ banking enjoyed by those of your customers in rather better financial shape. This is very much in line with the scheme outlined by Lord Phillips in the statement which I have quoted above.

 

Because of this your charges are unfair, and therefore you are operating this charging scheme in breach of your statutory duty.

In order to resolve this matter, you must remove your charges from my account. Failing that, I would invite you to take legal action against me to force me to pay. If a court determines that your charges are fair, and that you have not breached your statutory obligation under BCOBS, I will of course pay the full amount outstanding immediately.

 

I would further remind you that it will not be permissible for you to fail to engage with me to resolve our dispute and instead simply record a default with the credit reference agencies, without taking further legal action against me. Again, referring to the “Data Protection Technical Guidance - Filing defaults with credit reference agencies” guidance, in determining if personal data have been processed unfairly, the Information Commissioner will take into account the following:

 

If the dispute has not been before a court, is the lender prepared to test their claim by seeking a CCJ or decree against the customer? If not, why not?

 

I trust this clarifies my position. I have forwarded a copy of this letter to the Financial Ombudsman for inclusion in their open complaint file regarding our dispute.

 

Yours faithfully

 

 

A. Cagger

 

 

Have a read of the above and let me know if you think there is anything within the letter that we could use and I will help you draft a letter for consideration.

 

It doesn't surprise me one little bit that the bank you are locking horns with is the HSBC !!

[Surferdan]

Thank you citizen B.

That's my night time reading sorted then