Unarranged overdraft fees

[Grantyb82]

Good morning,

I had a bank account with natwest bank. I have recently noticed on my credit file that the account defaulted on the 31/10/2011 for £831. I have now spoken with natwest and they informed that i was £1.41 in credit and a payment of £20 tried to leave my account. Because there was not enough funds i have accumulated this £831 in unarranged overdraft fees. They have offered me an offer of £332 to settle the balance. Now i am at a crossroad as this is affecting me getting a mortgage but i do not want to pay this amount.

[AndyOrch]

Hi Grantyb82 and Welcome to CAG

 

I would wait it out until 2017 when it will drop off your file...I wouldn't pay them a penny when they have created the debt and default.

 

Andy

[BankFodder]

I think that there is more radical action that you could take. However, it would be rather experimental.

 

The Supreme Court ruling which basically put an end to claims for excessive charges in 2009, did produce one comment from the court and that was that the Unfair Terms in Consumer Contracts Regulations was not the only route if people wanted to challenge their bank charges.

 

This suggestion/hint has never been taken up by any consumer. However, I'm convinced that the court was referring to the FCA BCOBS regulations which require fair treatment of customers by banks.

 

Although the banks may have some kind of argument for levying charges for a "service" where they have permitted an overdraft/unarranged borrowing to occur, there is no such service where all that has happened is that the banks of bounced a direct debit or bounced a cheque. I'm convinced that in this case, the banks are limited to recovering any administrative losses incurred as a result of their customers action.

 

Although there are no recorded BCOBS actions against the banks, we have had two amazing results on this forum. One is where a user – madpriest – took an action against Santander under BCOBS for bouncing cheques on a dormant bank account. The second is an action by nellyj99 who sued the NatWest after they had mistakenly entered a marker against his credit file. In Nelly's case, the bank offered him £200 as a gesture of goodwill. He then sued them for £5000. I advised him why the bank offered him increasing amounts up to £4500 and then amazingly when (against my advice) he refused, they offered him £7500 on conditions of confidentiality. After that, the case disappeared from view and I heard nothing more about it and I am forced to conclude that he took the money – and you can hardly blame him either.

 

In the Santander case, madpriest turned down an offer of (against my advice) £2000 and eventually the bank offered him £4000 plus various costs which came in all up to about £6500.

 

I'm very rarely described as being overcautious on this forum, but I was astonished at what was happening here. The only common denominator between the cases was that the actions were brought under BCOBS.

 

The events which I've just described should not be taken as meaning that every BCOBS action will produce the results. However, BCOBS is a serious piece of law and the impact on a bank which has a BCOBS judgement against it would be quite grave.

 

In your situation, it seems to me that you have been treated extremely unfairly. If you wanted to go to the trouble, we would be pleased to help you if you want to think about going a BCOBS route for a complete discharge of their so-called "debt" and removal of markers from your credit file. Frankly, I would also be looking for compensation.

[Grantyb82]

That was my thought too. But then when i think about it i have 2 small children and this is holding me up getting a mortgage. But thank you for your response Andy.

[Grantyb82]

I think that there is more radical action that you could take. However, it would be rather experimental.

 

The Supreme Court ruling which basically put an end to claims for excessive charges in 2009, did produce one comment from the court and that was that the Unfair Terms in Consumer Contracts Regulations was not the only route if people wanted to challenge their bank charges.

 

This suggestion/hint has never been taken up by any consumer. However, I'm convinced that the court was referring to the FCA BCOBS regulations which require fair treatment of customers by banks.

 

Although the banks may have some kind of argument for levying charges for a "service" where they have permitted an overdraft/unarranged borrowing to occur, there is no such service where all that has happened is that the banks of bounced a direct debit or bounced a cheque. I'm convinced that in this case, the banks are limited to recovering any administrative losses incurred as a result of their customers action.

 

Although there are no recorded BCOBS actions against the banks, we have had two amazing results on this forum. One is where a user – madpriest – took an action against Santander under BCOBS for bouncing cheques on a dormant bank account. The second is an action by nellyj99 who sued the NatWest after they had mistakenly entered a marker against his credit file. In Nelly's case, the bank offered him £200 as a gesture of goodwill. He then sued them for £5000. I advised him why the bank offered him increasing amounts up to £4500 and then amazingly when (against my advice) he refused, they offered him £7500 on conditions of confidentiality. After that, the case disappeared from view and I heard nothing more about it and I am forced to conclude that he took the money – and you can hardly blame him either.

 

In the Santander case, madpriest turned down an offer of (against my advice) £2000 and eventually the bank offered him £4000 plus various costs which came in all up to about £6500.

 

I'm very rarely described as being overcautious on this forum, but I was astonished at what was happening here. The only common denominator between the cases was that the actions were brought under BCOBS.

 

The events which I've just described should not be taken as meaning that every BCOBS action will produce the results. However, BCOBS is a serious piece of law and the impact on a bank which has a BCOBS judgement against it would be quite grave.

 

In your situation, it seems to me that you have been treated extremely unfairly. If you wanted to go to the trouble, we would be pleased to help you if you want to think about going a BCOBS route for a complete discharge of their so-called "debt" and removal of markers from your credit file. Frankly, I would also be looking for compensation.

 

Thank you for your swift response. I feel i have been treated unfairly and would love to take you up on your offer of getting this matter resolved following the bcobs route.

 

What do i need to do please.

 

Thanks

[Grantyb82]

Thank you for your swift response. I feel i have been treated unfairly and would love to take you up on your offer of getting this matter resolved following the bcobs route.

 

What do i need to do please.

 

Thanks

[Grantyb82]

Thank you for your swift response i feel i have been treated unfairly and would like to challenge the matter following the bcobs so if you could help me that would be.

 

What do i need to do to assist.

 

Thanks

Grantyb82

[martin2006]

Search for the two cases referred to above in our search bar and have a good read for the pointers, this is a self help site and while the team will assist in any way we can, its as much for you to be proactive and learn your way through the process

 

Martin

[BankFodder]

Start off by reading up about BCOBS. You can find a fair bit discussed on this website but also look at the FCA sourcebook – business standards – Banking: Conduct of Business regulations

 

Let me warn you that taking action under BCOBS is probably not going to be terribly easy. It has not particularly been tried before and the bank will probably go to great lengths to defend against you – at least to begin with. We will help you all the way, of course. However, at the end of the day it is your case and you have to make the final decisions at every step.

 

Don't forget also that if you lose, you will lose your claim fee and a hearing fee which is currently about £150, I think. This means that you could lose as much as 250 or £300. This is not a lot of money in litigation terms and you can be certain that the banks will spend a lot more than that trying to go against you. I think that the solicitors they used in the nellyj99 case were Shoosmiths and I suppose they may decide to use the same once again.

 

If you want to take this line of action, then you will have to be persistent, well-prepared, and eventually prepared to go to court if it goes that far. On previous experience of this (which is not very much) and also at the facts of your case as you have presented them here, I think that once they realise that you're prepared to go the distance they will prefer to put their hands up under conditions of confidentiality rather than go to court and risk adjustment. I could be wrong of course.

 

A likely intermediate step would be that they would agree to refund the charges and give you some element of compensation – but they would stick their heels in on the issue of cleaning up your credit file. This would be a sticking point which you would have to overcome – eventually by going to court. However, there is a good chance that they would prefer to call it a day and offered clean up your credit file as well in order to avoid BCOBS judgement. All of this of course would be under an umbrella of confidentiality.

 

If any of this interests you then let us know. I would suggest that the first thing to do would be to write to the bank and make it clear to them that you consider that they are treating you unfairly and that the charges are unfair and that they are in breach of their BCOBS obligations. This won't have much effect on the bank you need to get this in in writing.

 

You would then send them a letter before action and then eventually you would issue the claim.

 

You could avoid all of this of course by going to the Financial Ombudsman – but I can almost guarantee you now that the ombudsman will not help you and maybe the best that will happen be the bank will give you a gesture of goodwill – but no action will be taken on the credit file. Going to the ombudsman could take as long as 12 months.

 

You should realise here the question of the charges and some compensation means nothing to the bank. They chucked money away all over the place. However, on the matter of cleaning up your credit file, they would rather bite off their own legs then interfere with the marker that they had placed on your credit file and so this will be the particular obstacle for you to overcome.

 

Let us know what you would like to do. You would find it very interesting.

[AndyOrch]

https://www.gov.uk/government/publications/fees-for-civil-and-family-courts/court-fees-for-the-high-court-county-court-and-family-court#non-money-claims

 

Claim fee and hearing fee contained in the above link