Can sole traders reclaim disproportionate penalty charges on business accounts?

[SampleX]

Hello.

 

Totally new to this.

 

Heard on Radio 2.

 

Looking it up sounds too good to be true.

 

I've got large debt problems as a result of taking a business loan to buy my business which was, at the time, a going concern. Tragically, as a result of DVD piracy and supermarket competition, my independent DVD store is now, finally, about to go down the chute, leaving me with massive debts. I took £30k loan for the business, which was very kindly secured for me by my parents (hence I cannot simply bankrupt and must find a way to keep going so I can keep everything paid) and for the first couple of years I made the mistake of using credit cards to fund Christmas stock, thinking I'd be able to pay it back after Christmas. It never happened, but I couldn't just quit either. I ended up with consolidation loans and the like, and bad credit card debts getting even worse.

 

Basically, about 18 months ago I wrote to all creditors and told them my circumstances and that I was probably going to go bust and needed a bit of understanding. I've had a couple of different banks and ended up having all of them pull the rug out from under me just when I needed the most help.

 

At present I estimate the total value of all my debt must be around £38,000.

 

I do have some interesting stories.

 

When I opened my business loan account, I had the usual sales pitch from the business banker, and the ego-tickling schpiel. I was told by a certain RBS that I needed a 'Royalties Gold' account for my personal account. SInce I already had a Cahoot account, I politely refused, several times, before being told that it was free, so what did I have to lose, and really the implication that without having this account, I couldn't have the loan either. So I agreed. Never used the account. And so I only ever filed the statements in my appropriate folder when they came. Didn't even read them... until 4 years later. When RBS effectively froze my business account, having chastised me for having falling turnover and operating on tighter and tighter margins. They cited my failure to pay my Royalties Gold account overdraft as their reasoning. I said 'what overdraft', and then they showed me...

 

After 1 year, they charged my account around £150 account fee just to get a book of vouchers toward elite hotels and bloody Bollinger. This put me overdrawn. But instead of writing to me to say 'there's a problem', they had sneakily put an authorised overdraft of a grand on the account. So I just accrued late charges, and overdue payment charges, and interest, etc. and this continued year on year. They only contacted me when I went over £1000... And even then, when I hit the roof, they said 'it's only a little overdrawn over your limit... just pay a bit of money in, and we can continue your account.' I told them where to shove their account, and demanded it be cleared and ceased. I had a muppet 'business relationship account manager' in a call centre who repeatedly promised to reach a solution and get back to me, to freeze the account, to end interest while a solution was found. He repeatedly failed. Finally I spoke to him, and everything he'd told me earlier he denied, and started to get very 'final' about things. At this point I realised what insidious !!!!!!!s the banks were, and how conniving and deceitful they are. So I proposed a solution...

 

I told him he could put the personal account where the sun never shines.

 

So he froze my business account.

 

I was immediately unable to trade, I lost my credit card facilities, since it was my only account, I couldn't spend money I'd just paid in, and they 'immediately' called in my business overdraft of £2000.

 

I tried to demand some accountability, and was told to shove off, basically. So I agreed that what I would do was cancel all direct debits EXCEPT my loan payment, and that I would learn to deal in cash until I could clear the debts and start resuming the business banking facilities, and would pay my loan amount into the account every month.

 

This I did, struggle though it was, for about 5 months.

 

Until the bank sent me a letter from their debt recovery division at Nat West. And told me that I was 5 months in default on my loan, and they were demanding legal action against my parent's security. So I rang them. And cried on the phone. I have to add here that I've had serious emotional problems over the past 2 years as a result of what's been happening to me. The stress has been unbelieveable. I explained my history with RBS and that I'd been making the payments to my bank account. The lady who worked there was lovely, and very helpful, Helen Jones... She basically said that what had happened to me wasn't right, but that it wasn't final either, and that the accounts being passed to them was the beginning of a new solution, and that the old loan agreement was effectively torn up, and I could renegotiate a payment solution (which I did at a lower rate). Then she saw that I had been paying into the account for the loan, and noted that the bank had actually, instead of passing the money on, been using it to pay overdraft. So she 'launched an investigation'.

 

This took AGES. A good two to three months. And oddly, I was never allowed to speak to Helen Jones again, even though I commended her work in writing. I started to get letters defending that what the bank did in all circumstances was legal, and was their entitlement, although it may not have been 'helpful' to me as a consumer. After a written argument about this they finally confirmed that the Royalties Gold balance of £1434 was cleared as a 'gesture of goodwill which in no way should be construed as an admission of wrongdoing or liability' and the account closed.

 

The worst creditor has been MBNA with Credit Cards. Their loan division was one of the first to respond to my letters 18 months ago with a reduced payment arrangement. But credit card refused to deal. It was a Sony Card that they had 'taken over', and it had a £3300 limit which I maxed out. I repeatedly insisted that they conduct their business with me in writing, so that there was no confusions, but they repeatedly refused, and had their call centres chase me sometimes several times a day with persistent, rude and pushy little Indians many times demanding that if I do not have a credit or debit card to make a payment with today, that I should go find family 'right now (I'll stay on the phone)' and borrow their card, or go ask my neighbours to lend me their card. I've always been a bit of a self-diagnosis, self-help person, but looking back at how much my personality and emotional state and values have changed in the last 2 years, I'd actually say that their constant hounding caused me to have a nervous breakdown. I spent weeks as a gibbering, fatalist, pessimistic, paranoid, cowering wreck dodging phone calls and, sadly, literally wanting to end my own life because I couldn't see a way out...

 

In speaking to them on the phone, they'd craftily get payments or part payments out of me, and then say 'see... you're up to date... so we've no need to go to drastic measures like freezing your account... you can manage your account... we'll just ring you every month for a payment.' So, and I know it's not the right way, but I drew a conclusion that demanded a risk.

 

I decided that if they wouldn't freeze the accounts they'd only get bigger, and I really would have to bankrupt. They don't want that. And I don't want it either. I've never tried to deny or shirk my actual debt spend, or the fact that due to circumstances beyond my control I ended up being bad at managing (and bad at making) money. So I decided to stop paying them.

 

At all.

 

And force them to go to recovery.

 

I did this at the same time with all the card companies I hadn't already got arrangements with.

 

You'd be surprised at how quickly some reached arrangements. And you'd be surprised at how long MBNA took.

 

They continued having the call centres ring me to 'discuss my letters' in spite of my demands that they deal in writing, and at every opportunity I was lied to, conned by MBNA debt counsellors and customer service agents, and made to make payments I couldn't afford. From a £3300 balance, my account spiralled in just a year to £4800, and that in spite of having paid them a total of around £800 in the same year...

 

Never once have I had a letter responded to in writing. Then a few months later they write those snotty arrogant letters about 'you're clearly in trouble and we want to help you but we don't think you want to help yourself.' I still dodge call centres to this day. If I ever get caught out I let them get as far as asking for me by name, and then saying 'can you confirm for me your address, postcode and date of birth for security verification' at which point I say 'no.' They then quote the Data Protection Act at me and repeat the request. So I just say 'you rang me... if you've got something to say, say it... but you cannot prove who YOU are or that you're in legitimate ownership of my details, so in the interests of MY security, please address all discussions in writing using official MBNA paper and I'll consider your comments.' They usually continue protesting, but by the time I've added that I have no intention of discussing my personal details over the phone, or confirming or denying anything, they know the conversation is over, and the wonderful Data Protection Law that we all hate is actually working in reverse and forcing them to address in writing.

 

Anyway... They wrote to me last week, 18 months on from my original letters. They finally recognise I have a major problem, and they want to help. The account is about to go to debt recovery firms where I will have, they say, no choice but to pay in full and no arrangements can then be offered. They've said I have this large balance to pay off... but if I can raise around £1800 they'll consider accepting it as full and final settlement of the account and write the rest off without any further action being taken.

 

I'm doing my best to take them up on it. As with many businesses in this time I have outstanding invoices with clients, and the total of these invoices if I can get my customers to pay me, should just about cover what MBNA are asking. That will be quite a chunk off my debt, and while I was going to follow the Credit Card charges reclaimation concept profiled on this forum with them, I figure that even with the charges taken off, I'll still be left with a balance around this amount, so accepting this settlement is more or less the best I can hope for.

 

I know I write a lot, but I shared this in the hope that maybe as I join this forum I'll be able to get some help in dealing with my problems, but also I might be able to encourage others that there is some light at the end of the tunnel too.

 

Though I now have a pathological hatred of banks and finance companies, which is, I think, a healthy thing. I've been in debt before, very young, and didn't learn really - it all got paid off eventually, and just seemed like it was all part of life. My experiences of the last few years have opened my eyes to a very organised, hateful and depraved system of deliberacy in inspiring debt, maintaining debt, and profiting from misery, and I've now got a new ethic that I never had before - to deal pain to these people, and get myself out of the mire in the process.

 

So...

 

Now that I've bored you all (and I'm very sorry), I DO have a question...

 

I'm looking at this bank charges refund thing, and I've had a few accounts in the last 6 years which all ran up significant charges in 'penalties' which I recognise are not so legal...

 

BUT

 

the most significant of those accounts are business accounts where I as a sole trader was trading as another entity...

 

Does this exempt me from being able to take part in the class action movement against the bank charges, or are my rights as a consumer just the same.

 

I'm a little worried that as is the case with insurance, if I'm a home consumer, I'm protected, but if I'm a business, I'm not.

 

I got taken for a ride by an insurance company who missold my insurance policy, took my money, then voided it when I needed a claim, and then refused liability in supplying the wrong policy, but because I was a business user the FSO could do nothing, and the GISC would do nothing, and I was left high and dry and a few grand down.

 

Do I still have these rights as a 'business account customer.'

 

Can anyone please direct me to the right information and the right procedure. There's so much information here that its all very confusing.

[c_allen]

wow that must have taken ages to type.

yes you can still claim but leave out anything to do with consumer regulations/law.

there are templates in the library for business users here http://www.consumeractiongroup.co.uk/forum/bank-templates-library/486-sample-letter-your-bank.html

hope this helps, and sorry if i've not answered all your questions but really busy myself and thats some essay you've wrote LOL

[SampleX]

Hey, thanks for getting back at all...

 

Previous experience on forums tells me that on complicated subjects, sooner or later I'm going to be asked for all the information - better to get it out of the way in case any of it is pertinent.

 

I guess by leaving out consumer regulations/law you're suggesting that dealing in such a currency invokes a response from the bank of 'but you're a business customer, not a naive innocent little consumer...' Presumably you mean that I should deal strictly in the currency of what is proportionate and fair, in other words rather than focus on what I think is legal or illegal, I should focus on £35 in charges not being remotely proportionate to an automated decision made by a computer etc.

 

Is there a precedent/letter by which I can make my business banks disclose and summarise all their charges and the interest or however it works, that they've charged in 6 years, like there is with the consumer banks? It would take me months to surf through all the bank statements... far easier to make the bank come back with a figure and then charge it back to them.

 

That's not to say that I won't go the harder route in order to get pennies back. I suspect once some of these pennies come back, I'll have the chance to clear some more of my debts off.

[PhantomReclaimer]

Short answer to a long question; Yes, you can claim for all your unlawful charges. There are loads of letters in the bank templates section. Also, have a look at the threads concerning claiming back further than 6 years. Several people here have ben successful with it. The worst that could happen is that that part of the claim get's thrown out by the judge but it won't affect the rest of it.

 

Don't forget to add interst to each charge - I used this calculator for mine Compound interest calculator

 

Have you ever paid an mortgage redemption penalties? If so go after them as well.

 

I'm not at all surprised by MBNA - they are incompetant in the extreme. I've had letter after letter to them and promises of details that would be forthcoming soon that took weeks. I've posted an LBA to them after having no response to my Prelim letter so it's Court in 13 days, I'm afraid.

 

Don't listen to the crap about your debt going to a debt management company and there then being no chance top reduce it. These companies almost always accept lower figures for full and final settlement.

 

It could be worth your while calling a meeting of your creditors and thrashing out a payment plan between them. I'm not an insolvency expert but I believe if you can get a certain percentage of your creditors (by value) to agree then the rest have no choice.

 

Chase those invoices that are owed to you. Write to everyone who owes you money staing that you will apply 8% interest to everything that isn't paid in 7 days.

 

P.