+6 years and contractual interest

[dj59]

I have found all my statements since opening my current account in 1985 (wife is a hoarder thankfully).

 

I have had a quick look and so far I have found £1042.29 taken in charges from June 1985 to December 1993 there are more but I have only entered the above charges into Vampiress contractual interest spreadsheet so far.

 

What has come as a very big suprise is that according to the spreadsheet it has calculated that the contractual intrest (29.8%) comes to a staggering £171,098.25 and I still have another 7 years of statements to go through yet.:o

 

Im was sure I must have done something wrong but I have checked the spreadsheet and all my dates and charges are correct.

 

Not sure how the bank would react to a claim for this amount, if I can claim that far back and add contractual interest at the unauthorised overdraft rate.

[CrispDust]

Suspect that you may be pushing the envelope a tad there, espcially with that rate of interest.

Other problem is the size of the calim rules out Small Claims.

At an interest rate of 10%, the claim falls well within the SMC limit but still provides a substantial amount of additional refund.

[Glenn UK]

ROFL

 

Well all i can say is go for it.

 

Re small claims, funny thing is we cannot find a definitive answer about what impact interest has on the claim value.

 

There is a CPR which says interest is ignored for claim value and allocation pruposes in which case this would be a small claim (notwithstanding the other more recent charges of course) and this might be considered definitve.

 

However, i was told by a judge that my claim, not quite 200K i hasten to add, was multi track based on the interest plus charges.

 

I have also been given the same advice from a retired solicitor, the reasoning is that the CPR was intended to take account of Sec 69 interest, not contractual interest. Contractual interest is part of the claim because you are, in general at least, only applying the terms of the agreement between the two parties. I know this isnt quite the same for us but thats the reasoning.

 

Anyway the point is theres an argument to explore, and i have an allocation hearing in respect of two claims both include contractual interest, one is like yours where the charges are a lot less than the interest, oh how i wish my charges were as old as yours, so you never know we might find out whether the interest is part of the value or not. It might also be possible that it gets to court and we find out whether a court would award contractual interest too at the unauthorised rate.

 

'Not' would be very good for you.

 

Re the rate, the argument for the contractual rate shouldnt be dependant on the resulting value in any way shape or form. The argument is about applying the logic of the contract, if you wish to use the argument for reciprocity and mutuality then imho you should use the argument for unauthorised overdraft rate.

 

As much as it might seem surreal, the point is you have to apply some kind of logic to the claim and resulting figures are in effect incidental and have no bearing on the logic.

 

IMHO there is no point in restricting the rate simply because the interest is so high.

 

Being pragmatic, if it ever got to court i doubt the court would award that amount of interest. But consider this, the money the bank took from you could well have been loaned to other customers at the rate you are using, it may have loaned the money at a lower rate of course and it would be difficult for the bank to show otherwise.

 

Whats clear is that if the charges are ruled unlawful which is of course entirely feasible, then it could be argued that the bank have unjustly enriched themselves and that the money they have made should be rightly yours.

 

I wouldnt get too excited just yet, but i would progress my claim based on applied logic rather than by any sense that the sums are too big or something.

 

I would suggest you process your claim in the normal way with the figures you want to use, as an aside, despite the value of your interest based on contractual, the banks will fight any claim with contractual interest, even a few quid, i argued with a bank over £80 contractual interest as an example.

 

So the value is not the issue per se, they will fight all claims for contractual interest.

 

Finally i would also check my figures several times and maybe check it again.

 

ALL JMHO

 

GLenn

 

PS can i deliver your claim from in personf for you please?

[Mad Nick]

dj, I've done some sums and I think your calculation is probably right. I just assumed the £1042 was spread equally through the period you mention. At 29.8% APR, I got £116,056.11. Your £171K is in the same ball park, so the difference will probably just be because your charges weren't spread equally (you would have had more earlier, hence more interest). FWIW at 16.9% (current authorised rate) the interest would be £15,749.55. Still a very high figure, but we are talking an average of 18 years of interest. Surprising how much difference compounding makes.

 

The big question is what you do next because these sorts of figures would get laughed out of court - probably literally. Obvious question is could you really justify 29.8% because that's the unauthorised overdraft rate ? Did your balance change in and out of unauthorised/authorised/credit over time? To take this claim forward, I think you're going to need to take account of your changing balance and therefore different interest rates over time. I haven't gone down that road but I know that Vampiress, Bill-K and Mindzai eat problems like that for breakfast !

 

An alternative would be to go for Statutory (simple) interest (£3206.91 by my calcs).

 

Actually, I think your bigger problem will be the basic principle of claim >6 years issue (although I believe you are correct to try), but then you'd already worked that out for yourself. Regards, Mad Nick

[Glenn UK]

 

The big question is what you do next because these sorts of figures would get laughed out of court - probably literally.

 

Why?

 

I cannot see any logic to this, if contractual interest is reasonable then the amounts reasonable because thats what it comes to.

 

If the amount gets laughed out it will be because contractual interest is unreasonable, irrespective of the amount.

 

This is the reason why the banks are worried about a) the limitations act and b) contractual interest, because it opens them up to claims of this magnitude.

 

This is also the reason why they don't want to get into court, not because of all the six year or less claims which with the best will in the world are small beer, even all of them together will be relatively small bear.

 

We have to remember the amount of money is not the issue, its the legal logic behind the claim which is either accepted by the court or not, if its accepted the final sum is a consequence of that argument.

 

The argument in law has nothing to do with the final sum.

 

Whether the court would award it, will not be based on the amount, but on the principles argued successfully or not.

 

JMHO.

 

Glenn

[Mad Nick]

Glenn, I agree with the principle of what you're saying, but the application of a flat 28.9% is inappropriate if DJ's balance was in/out of unauthorised/authorised/credit. If I was Abbey, I'd have a field day if it was. I think the line to take is :

• they took the charges
  
• they levied interest on the charges
  
• claim back exactly what charges + interest they took (unlawfully) [especially if the amount is bound to be conspiciously high calculated accurately or otherwise]

Others are clearly successfully claiming interest using flat rate % ("mutuality & reciprocity"), but I didn't think DJ would succeed doing that in these particular circumstances. Personally, I prefer to claim back exactly what they took. "Laughed out of court" was just a euphemism. Hope you see what I was trying to say.

 

Regards, Mad Nick

[Glenn UK]

s'ok nick

 

thats one of the problems with communication on the net, sometimes you cant see the other persons tongue in their cheek or whatever.

 

I think that there are undeniably problems and for me it has nothing to do with the sums, it really is making a convincing argumentent about the reciprocity and mutuality argument and the rate you choose to apply.

 

I am not confident that if any of my claims go to court that the court will agree, but i do think that it is this principle not the rate that is the problem.

 

Anyway, i hope that no one thinks that i am suggesting that a claim for charges older than six years is a foregone conclusion and neither is contractual interest.

 

But on the other hand whats the worse that could happen if the claim is well constructed?

 

The claimant could claim interest and limit the amount to keep it in fast track ie up to £15K, i suspect the charges will be half or so and interest of seven k wouldn't be bad result.

 

Of course the other issue is that between the OP working all this out and submitting a claim we are talking at least a month possibly more, a lot can happen between now and then or not as the case may be.

 

It may be that something crops up which makes this a goer or not, between now and the claimant getting the claim in.

 

JMHO

 

Glenn

[MilkTrayMan]

Hi dj59!

This is SERIOUS money U R talking about here!!!

IMHO

I would seek the advice of a Professional Financial Advisor/Solicitor if I was U.

This is NO disrespect to the CAG Membership.

...But for this amount of money it would need extremely careful handling throughout the Claiming process to ensure success.

No doubt the Bank would pull out ALL the stops.

If the Bank defended and lost...

It could end up being a proven TEST CASE for Bank Charges...Contractual Interest...+ Claiming for more than 6yrs!

If the Bank didn't defend...

dj59 would be quids in and with the possibility of the HUGE publicity the Claim would attract, people would be scouring their Grannies attics for copies of any old Bank Statement!!!

[dj59]

Thank you all for your responses, some interesting points have been raised. For the time being I will hang fire and watch with interest the pending cases as already mentioned.

 

Glen uk I wait with interest the outcome of your allocation hearing.