Banks and the Consumer Rights Act 2015

[JS3]

Does anyone have any thoughts on whether a bank's terms of business must be compliant with the Consumer Rights Act 2015?

 

I am in particular looking to see whether a bank can use a policy to exclude itself from liability when it acts of its own volition and causes a customer a loss.

[BankFodder]

Any term in a service contract which has the effect of excluding liability for breaches of the consumer rights act are void

[JS3]

I had a feeling that was the case. Here is the story.

 

We went on a jolly to Las Vegas and San Fran in February. On the 2nd day of our break, I was called back to the UK for a family emergency,

 

My flight was non-changeable and non-refundable, so I went straight to departures and bought another one-way ticket to London for £708.

 

When I paid for the ticket, my HSBC card responded: "Do not honour".

 

I tried again a few more times, and they refused my card each time. I knew I have over £6500 balance.

 

While standing at the booking desk, I phoned the bank, and they put me into a call centre queue with piped music for about 25 minutes.

 

Then a voice came over the phone telling me their call centre had closed and reopened at 8 am the next morning. London is an 8 hours’ difference. 

 

I returned to our hotel, and at midnight my time (8 am UK time), I phoned the bank they said there has been a disputed transaction of £55 on my account for an item I sold on Facebook, and they put an inhibition on my account which stoops me making transactions or logging into it.

 

I identified the disputed transaction and the bank call centre agent found the dispute in my favour by the bank over the telephone and released the inhibition.

 

An inhibition is freezing access to my money held by the bank. So an "inhibition" is freezing a bank account in banking terminology.

 

The bank released the freeze on my money and I returned to departures and booked a ticket to London.

 

This time the flight was nearly full, and the fare was an eye-watering £2309.

 

This is a difference of £1601 plus taxi expenses.

 

I made a formal complaint to the bank that it froze my entire balance when only £55 of that balance was in dispute.

 

The bank responded by giving a 31-page document called Personal Banking Terms and Conditions and Charges.

 

At clause 22 of the document, it states: When we aren't responsible for things that go wrong.

 

The document continues by saying:

 

If something goes wrong, please let us know straight away. We’ll try to help if we can. We’ll do all we can to carry out our side of this agreement. But there may be times that we can’t. We’re not responsible for any losses you may have if we aren’t able to carry out our responsibilities under this agreement in circumstances like the ones below.

 

• Where we can’t carry out our responsibilities for legal or regulatory reasons.

 

• Where something’s happened that we couldn’t predict or that isn’t normal. And where it’s outside our (or our agents’ and/or subcontractors’) control, and we couldn’t have avoided it even where we used all of our efforts to. For example, industrial action or mechanical failure.

 

I take this to mean the bank has excluded itself from liability when it acts of its own volition and causes a loss to a customer.

 

When I challenged this with the bank, their response was two-fold.

 

The first argument was that the Consumer Rights Act does not apply to a bank because they are not a "trader" and the relationship between a bank and its customers is that of a principal-agent and a customer that places money on trust with the bank.

 

The Consumer Rights Act 2015, section 61 gives a list of contracts not covered, and a bank and customer contract is not on that list.

 

At section  62(2) it says an unfair contract is not binding on the consumer.

 

I infer this to mean their 31-page policy document does not apply because it excluded the bank from liability when it acts under its own motion causing a loss to the customer.

 

The bank cannot tell me what legislation excludes them from the Consumer Rights Act 2015.

 

I am ready to escalate the complaint, but I'd like to hear some thoughts.

 

[dx100uk]

i find it very weird they froze the whole A/C simply over a disputed? facebook sale?

thats not something i've heard of before nor seen any bank do.

 

can you just expand upon that story please.

doesn't sit right with me.

 

dx

 

[unclebulgaria67]

Freezing of accounts does appear to be a current increasing trend. Spoken to a number of people who have had their accounts frozen or closed recently due to transactions.  The Banks do not appear to want become involved in people online trading, if there have been a number of other similar transactions previously, when the account is personal and not business.

Is there any business related activities going on in this case ?

[JS3]

The transaction was for the sale of a computer monitor. I tested the monitor and the buyer accepted and paid.

6 weeks later, the customer complained the monitor was faulty and wanted a refund.

I refused.

The customer made an APP fraud complaint against the transaction.

My bank froze my account without telling me by text phone or by email.

The bank found the £55 dispute in my favour.

There is no business-related activity on the account.

This was a private sale.

I appreciate you taking the time to ask for clarification.

 

My question is a) whether the bank is liable for my losses, and b) whether the bank is exempt from the Consumer Rights Act 2015.

If the answer to b, is "Yes", then can anyone state under what statute provides that exemption?

 

[JS3]

Anyone?

[unclebulgaria67]

You are referring to the buyer as a customer.

If there are previous sales transactions on a personal Bank account, the Bank may reasonably believe that there are business activities ongoing.  And they may make a decision to close the account. 

In regard to your question, the FCA website has information about CRA applying to financial products, but it is not very clear exactly what protection is offered. 

Generally for most financial products including Bank accounts, as they are regulated by the FCA and people have access to the FOS,  there is separate law that applies.  And this may be a better option than the CRA.

You need to exhaust the Banks complaints process first, by getting them to issue final letter of response. And then you could look to either go to the FOS or issue small Court claim asking for compensation for the amount of loss.