Closing an account after fee dispute (advice please)

[Jake the snake]

Hi

 

Over the Christmas period I was charged by Santander £25 for DD failure, 2x £25 for two standing order failures and £20 for an unarranged overdraft request (which I didnt request or receive).

 

I have spoken to the bank who refuse to withdraw the charges so I have withdrawn my money and arranged for my pay to go into another bank prior to the charges being applied.

 

Now they have applied charges to the empty account and written to me saying I can write to the Ombudsman etc and that the Supreme Court ruled charges fair.

 

Any positive advice? Thanks

[BankFodder]

Well the Supreme Court accepted the argument firstly that by going over your overdraft and the bank having to deal with it, the bank was in fact supplying you with a service for which they were entitled to make a charge.

 

The Supreme Court also accepted that the charge could include an element of profit the bank because they accepted that overdraft charges comprised up to 30% of current account revenue for the banks and therefore it was part of their mainstream revenue. This was all mainly rubbish of course and the truth is that overdraft charges once upon a time were not mainstream revenue, they were simply incidental to the banks normal revenue but then when the banks started to increase the level of charges and the number of charges, the revenue then started to produce significant income and it was on this basis that the banks argued that it was call revenue.

 

It's rather like a burglar claiming that he steals so much and so often that if he is made to stop, he will become unemployed and therefore he is entitled to benefits for giving up burglary.

 

There's not much we can do about the Supreme Court decision – although we now understand that some of the banks are announcing overdraft charges for basic accounts. This probably doesn't apply to you.

 

What interests me is situations where the bank refuses to pay a sum and yet still imposes a charge. I think that this is fundamentally unfair and it would be nice to find somebody who is prepared to do something about it.

 

Let me tell you that most people – pretty well everyone – is too frightened or too underconfident or simply can't be arsed to do anything about it and this is why it has gone on, and on, and on, and on.

 

I understand that you were charged for a direct debit failure and twice for two standing order failures and that they did not pay the direct debits or standing orders, they simply apply the charges. Is this correct?

 

I then understand that somehow or other you requested an unarranged overdraft – you will need to explain this – and they charge you £20 for that as well.

 

What kind of account you have. Do you have an overdraft limit at all? Please give us a few more details

[Jake the snake]

I have a basic bank account (no overdraft). I didnt actually request an overdraft - this must have been an automatic thing.

 

My complaint revolves around the fact the Standing Orders are little more than reminders or automated transactions. I could, for example, pay my bills electronically by making an online payment - the cost of that is zero. Yet if i tried to make an online payment and had no money in the bank it would simply fail and no charge to me, but no product/service either. Why should a Standing Order failure cost £25? It doesn't. There is no cost to it at all.

[BankFodder]

Thank you, so I take it that your overdraft is comprised completely of charges which have been levied simply because they refuse to give you the overdraft and they bounced your automatic payments. Is that correct?

 

How much does the overdraft amount to now?

 

Your basic account is definitely an account which carries no overdraft facility. Is that correct?

[Jake the snake]

It does say here the charges are for three SO failures, which looking at other documents is probably correct. However, on the Pending Charges page prior to the charges, it said one of the charges was for Unauthorised O/D request as I had stated.

 

Edited February 10, 2016 by Jake the snake

[BankFodder]

Well you could do one of three things.

 

You could complain to the Financial Ombudsman Service – anything up to 12 to 18 months and probably won't get any help because for this kind of thing they are next to useless.

 

You can start a County Court action under BCOBS for unfair treatment – with a fair chance of success and in particular a likelihood that the bank will want to put their hands up simply to avoid the expense and the risk of having a judgement against them. We would be pleased to help you.

 

You can just suck it up and move on.

 

If you decide to forget all about it then at least you don't have to worry about it anymore and you're not liable to any further expense.

 

If you decided to go the FOS route then it also won't cost you anything and there will be no risk but it is unlikely that you get your money back and you probably won't get a decision for a long time.

 

If you decided to start a County Court action then you would have to pay the claim fee and maybe a hearing fee. If you are short of money then you could apply for a waiver of fees. You don't need to be on benefits for this. The reaction of the bank would be fairly quick – within two or three months. If the bank decided to put their hands up, they would repay the money as "a gesture of goodwill" and you would have your money and feel better about it. If they decided to resist the claim then you would have to pay a hearing fee and then go to court and argue your corner. The bank would probably try to come in with some heavy guns because a judgement against them on this issue would be very serious for them – and for the rest of the banking industry. You would be a hero

[Jake the snake]

and the 'unfair treatment' would be the excessive and disproportionate charges I presume? Hey I'm all for fighting the good fight if I can afford it. It's only £25 to start with isn't it?

 

So would I approach it as though I am claiming money back... even though I haven't paid them?

[Jake the snake]

Oh and I presume I can't just forget about it... because the bank will note it on my credit file and I presume come chasing me for it at some point. Are they likely to chase charges in cases like this do you know?

[BankFodder]

The unfair treatment would be firstly

 

 

1. That the bank has a duty to treat you fairly
   
2. That the bank has a duty to have regard to your interests when making decisions
   
3. That you have a bank account which carries no overdraft yet despite this the bank has been prepared to grant you an overdraft facility for their own purposes in order to apply the charges
   
4. That the bank has simply bounced your payment orders and not provided you with any discernible benefit but despite this they have levy charges against you
   
5. That in any event, the charges applied by the bank are disproportionate and unfair
   

[Jake the snake]

And the SO payments were for £15.64, £10, and £12.12. - Way less than the charges themselves.

The DD was for £69.

 

Thank you very much. It's just knowing how to approach this issue and you have been very helpful.

[AndyOrch]

They wont close the account...not with a negative balance.....they will trash your credit files and possibly chase for the debt ...even though they created it (overdraft content)...they may even issue a claim against you

[ThedaBara]

I know someone who ended up with £4k worth of bank charges... most of which were levied whilst they were in receipt of housing benefit.. they complaned to the bank (Barclays) which quoted the Supreme Court decision. They were too afraid to go to court as they had no money. You mentioned a waiver of fees... how does that work unless you are in recipt of benefits? TB

[AndyOrch]

If the balance now consists of purely unfair charges applied...and you have isolated the account (walked away) and walked away from the charges...then in effect they owe you nothing...and they will presumably default and chase you or even issue a claim...I personally would not do anything until a claim is received ...far easier to defend than to instigate.

 

Its the banks debt...not yours....but your credit reputation that may suffer.

 

Andy

[Jake the snake]

This is what I was tempted to do. But we all know deep down the bank will eventually come calling.

 

My credit isnt great anyway so im not worried about that

[AndyOrch]

Well they may not come calling...but a third party DCA who buys the debt for 10p in the £ might...Banks do not tend to litigate themselves..particularly on overdrafts..I wonder why ?

[Jake the snake]

Ok so theyve sent me a letter asking me to contact them to discuss etc....

 

BUT - amazingly.... I have found TWO Santander documents on the internet and in date, that state their charges.

 

It also says there are no charges for Basic Bank Accounts. So from what I read, they shouldn't have charged me in the first place!!!

 

Edited March 22, 2016 by Andyorch
edited

[AndyOrch]

Check the dates of the above and when it came into force......there has been recent changes to current accounts by all the Banks (free banking)...if yours are historic charges..the above may not be applicable.(n force when the charges were applied)

[Jake the snake]

One is July 2014, one is July 2015.

[BankFodder]

Those documents are very useful in. Make sure that you have copies.

 

If you are going to contact and to discuss – and it it is on the telephone, then make sure that you read our customer services guide first and implement the advice there.

 

The people will say all sorts of things on the telephone and then denied later.

 

If you are going to speak to them on the phone then don't agree to anything. Say that you want time to decide. You want anything confirmed in writing. Come here and tell us what it's all about before you make any decisions.

[ThedaBara]

I know someone who had a basic Barclays account about 10 years ago and he ended up owing nearly £4k in bank charges…He recently tried to challenge them as he was on housing benefit when the charges were levied.. all he got was a letter from Barclays saying he knew about their charges when he opened the account and that the charges were therefore not unfair… TB

[BankFodder]

I know someone who had a basic Barclays account about 10 years ago and he ended up owing nearly £4k in bank charges…He recently tried to challenge them as he was on housing benefit when the charges were levied.. all he got was a letter from Barclays saying he knew about their charges when he opened the account and that the charges were therefore not unfair… TB

 

You don't need to pay attention to what they say. Pay attention to what the law is. These banks have no interest in letting you know what your rights actually are

[ThedaBara]

You don't need to pay attention to what they say. Pay attention to what the law is. These banks have no interest in letting you know what your rights actually are

But there was a test case which allowed them to carry on charging huge fees on unpaid DDs etc., wasn't there?

[BankFodder]

The test case was not specifically about that issue. In particular, the test case did not specifically examine bank accounts which promised not to permit any kind of overdraft – basic bank accounts – and yet which, when it suited the banks, they put those accounts in overdraft in order to accommodate charges which they applied for bouncing direct debits.

 

At the time of the test case, the Supreme Court did actually say that there were other ways in which the charges could be challenged – but after that hint, no other information was given and nobody has since taken them up on it.

 

At about the date of the test case – 2009 – the new FSA regulations (now FCA) were introduced. These are known as BCOBS.

 

They impose a legal duty upon banks to treat their customers fairly and also to have their customers interests in mind when they are making decisions.

 

To my mind, BCOBS is an ideal set of regulations to apply to the business of basic bank accounts which have been put into overdraft by banks merely to accommodate their charges – in particular where over limit payments have not been allowed.

 

I know of only two cases so far where BCOBS has been tried. Both of them have had spectacular results. One of them was against Santander for bouncing cheques when the money was in the bank – and they paid a settlement of £4000.

 

The second one was the NatWest in which a Cagger sued them for – I think, about £400. The last offer I saw from NatWest to drop the case was £7500!! (Seven thousand five hundred) and then the Cagger stopped posting on this forum about it and we haven't seen him since. I'm almost certain that he accepted the payment on very strict conditions of confidentiality.

We also didn't get a donation even though we put an awful lot of work into it for him.

 

To my mind, a BCOBS judgement is a frightening prospect for the banks but despite this, it has almost never ever been used.

 

BCOBS replaced the banking code of practice. When the banking code was in place, the banks used to trumpet it all over the place. In every letter to any customer they used to say that they abided by the banking code. The ombudsman website used to have the banking code all over it. The banking code is now been abolished and replaced by BCOBS. Suddenly, the banks are completely silent. You never hear them refer to it. Even more interesting is the ombudsman who doesn't refer to it and there is no reference to it or explanation of it on the ombudsman website.

 

This is the Regulations Which Dares Not Speak Their Name.

 

It needs some people with some bottle to start taking BCOBS actions and to start showing others what can be done.

[ThedaBara]

Bankfodder… many thanks for that very interesting post… I am sure many people are afraid to go to court as they could be left paying damages if they lose… it's whether you have the money, or the courage to make a claim… I am sure my friend would have pursued it had he not been in such dire financial straights… TB

[Jake the snake]

So they've phoned me today regarding an email I sent and copied into the Financial Ombudsman and they say I dont have a Basic Account but an Instant Plus account which is chargeable (but still not eligible for an overdraft). I told them on the phone I wont be paying it and they either need to get rid of it or take me to court - either way this needs to stop - and any more contact for payment will be treated as harrassment.