Memnoch vs Lloyds TSB (inc. Contractual Interest)

[Memnoch]

Hello, I have decided to go for contractual interest as well as bank penalties rom Lloyds TSB.

 

I have sent off the the Prelim on 18th Jan so am waiting the 2 weeks before letter before action.

 

I did not include the contractual interest on the prelim letter as it is a decision I have come to since posting it. I will be sending the Contractual Interest charges spreadsheet with the LBA.

 

Will update on 1st Feb (14 days after posting Prelim).

[donbracho]

hey there am thinking about claiming contractual interest in the lba too how do you word it in your letter ?

[donbracho]

hey ther just seen your other post ! lol would be a good idea to keep all your posts in this thread though mate so others can help you etc

[Memnoch]

This is how I plan to write my letter, obviously if Lloyds TSB do get back to me within the 14 days then I will have to slightly alter it.

[your address]

 

 

[their address]

 

[date]

 

LETTER BEFORE ACTION

 

Dear Sir/Madam,

 

ACCOUNT NUMBER: xxxxxxxxx

 

I am very disappointed that you have failed to respond to my letter of the 18th January 2007.

 

In the time that has elapsed, I have reconsidered my position in relation to the extent of my claim for unlawful charges, and I would ask you to note that I am adjusting my claim to include compound interest at Lloyds TSB Bank Plc’s standard overdraft rate of 29.8% EAR. I am applying this rate of interest to the monies that Lloyds TSB Bank Plc has unlawfully deducted from my account over the years, on the principles of implied mutuality and reciprocity, and unjust enrichment.

 

I now understand that the regime of 'fees' which you have been applying to my account in relation to direct debit refusals, exceeding overdraft limits and so forth are unlawful at Common Law, Statute and recent Consumer regulations.

 

I would draw your attention to the terms of the contract which you agreed to at the time that I opened my account. It is an implied term of that contract that you would conduct yourselves lawfully and in a manner which complies with UK law.

 

I am frankly shocked that you have operated my account in this way as I had always reposed confidence in your integrity and expertise as my fiduciary.

 

I calculate that, as at today’s date, you have taken a total of £xxx-xxx in charges plus £xxx-xxx which you have charged me in overdraft interest for the sum which you have taken – a total of £xxx-xxx. In addition, I also claim Contractual Interest (compounded) under the principle of mutuality and reciprocity in our contract. As Lloyds TSB has taken unlawful charges from my account, this constitutes unauthorised borrowing – thus, the rate of Contractual Interest used is the bank’s unauthorised borrowing rate. The standard rate of unauthorised borrowing set by Lloyds TSB is 29.8% (see Lloyds TSB: Current Accounts - Rates & charges), therefore this rate is added to the above amounts and the breakdown is shown on the enclosed schedule. I calculate the Contractual Interest element (to 2nd January 2007) at £XXX-XXX. I am enclosing a revised copy of the schedule of the charges which I am claiming.

 

Additionally if you have entered a default notice against my credit record, this default occurred merely in respect of unlawful charges levied by you or was the result of impecuniosity caused directly by the taking by you of penalty charges which you had applied unlawfully to my account.

 

In addition to full payment of the sum mentioned above I require that you remove any default entry from the register. Please note that mere correction or amendment to the entry will not be acceptable.

 

I require repayment in full of this money and removal of the default notice. If you do not comply fully within 14 days then I shall begin a claim against you for the full amount plus interest plus a claim under ss.7 and 13 of the Data Protection Act 1998 plus my costs and without further notice.

 

Yours faithfully,

 

 

 

 

[name]

 

Mods what do you think about the letter, obviously mine is revised because I only sent the basic charges with my preliminary letter.

 

Would appreciate any feedback/advise.

[Movingon]

I would remove the bit about reconsidering your position etc it makes you look weak. Simply send the LBA as if this is the amount you had always been claiming, and point out that you are claiming interest at their unauthorised O/D rate in accordance with the principle of reciprocity. They are not going to pay you until you go to court anyway so you are free to recalculate correct and revise your figures right up until court day. (Although if the figures changed between N1 day and Court day you would have to have an explanation ready for the Judge; one which would wash - like "Sir they have added these additional charges since my claim was entered and I would be grateful if you would consider them also").

 

One last thing; please take note of the red text in my signature. Normally PM's asking for support are utterly ignored however you asked me to look at your thread. Good move and thank you for respecting my wishes.

 

/me adds reputation points to Memnoch for being observant...

[Memnoch]

Yay, my first reputation point, I hope to add more.

[GaryH]

Memnoch,

 

You say you have never had an overdraft, yet you are claiming contractual interest? Contractual interest is claimed on the basis that the contractual interest rate they charge you on overdraft borrowings should be reciprical. If you haven't got an overdraft then you haven't got a rate of interest stipulated in your contract, which means you cannot claim for contractual interest! Your interest claim is invalid. Have you filed a court claim yet?

[Movingon]

"Never had an Overdraft" does not mean "have no overdraft facility". It simply means "I have never withdrawn enough money from my account to use my overdraft facility". I don't know of a single current account available today that "Has no" overdraft facility, and "has no" unauthorised borrowing interest rate.

 

His claim is valid.

[GaryH]

Apologies if I misread, but from another post it seemed like Memnoch said his account did not have an OD facility. I had the very basic 'cash' account from Lloyds (the one where you can only use their cashpoints!) which had no facility for overdraft whatsoever. I assumed - wrongly perhaps - Memnoch's to be the same. Probably a good idea to check the account T&C's to find out if there is a rate stipulated and if there is, that it concurs with what you've claimed for.

[Memnoch]

Gary, thanks for the reply, I have not yet sent my N1 off as I am still looking for feedback and ideas.

 

I am trying to look into what an 'Unauthorised Overdraft' is. I believe that it is in effect, a rate that the Bank charges the Customer when he draws funds from the Bank when he has no right for doing so.

 

I am just trying to figure out whether or not the illegal charges/penalties that the bank have taken from me over the years without my permission fall under what could effectively be an Unauthorised Overdraft taken from myself by the Bank.

 

With regards to the actual contract, I intend to add the following to the N1 dependant on advise:

 

If no express contract exists between the parties hereto then the Claimant contends that an implied and/or imposed contract exists between the parties hereto relating solely to the Claimant’s right to charge interest to the Defendant at the rate which it reserves for itself in relation to similar circumstances.

 

What does everyone think of this idea ?

 

It is at this stage just an idea that I would like feedback on, however if my claim is, in fact, valid then that could open up a whole new way of claiming interest for people who have never used an overdraft facility.

[GuidoT]

For what it is worth, I do not see how that 29.8% could be justified if Memnoch has never been overdrawn. I can see no basis for advancing the 29.8% (the unauthorised borrowing rate). That percentage is irrelevant.

 

Simply put, the argument for obtaining a rate higher than statutory is that this is the rate Lloyds would have charged for going overdrawn and therefore this is the rate the customers would charge back. That argument has merits.

 

If you have never been overdrawn, in my view it is going just one step too far to claim interest at the unauthorised rate. The point regarding the authorised rate has not even been tested yet.

 

I would strike a bit of a balance and claim the authorised borrowing rate of around 18%. As if Memnoch had been overdrawn then this is rate Lloyds would have charged.

 

I do not believe there is any wrong or right answer, you just have to go with what you are comfortable with.

[Memnoch]

Simply put, the argument for obtaining a rate higher than statutory is that this is the rate Lloyds would have charged for going overdrawn and therefore this is the rate the customers would charge back. That argument has merits.

 

This is currently the argument that I am trying to look into, whether or not it is justified for me to ask for the bank to pay me back for taking money without my authority (unauthorised), what it would have effectively been charged to me if the shoe were on the other foot so to speak.

[lucid]

I think it's fairly unlikely, but not necessarily impossible, that people will be claiming charges back that don't consist of any overdraft excess fees (which can only be gained by exceeding your overdraft limit).

 

I suppose there could be claims made up of only returned item fees but I would think that's very rare. After all it only takes one charge to completely mess up your financial situation and can create problems in going overdrawn in the future.

 

Lucid

[Memnoch]

I have approximately 21 O/Draft Excess Fee's or O/Draft Usage Fees, the others are all Unpaid D/D's or Unpaid Cheques.

 

To clarify I do not have an overdraft facility on my account as I never asked for one when I opened my account or since then.

 

My question is how can I have O/Draft fee's with never having an O/Draft facility.

 

Also should I split my claim to deal with these O/Draft penalties using Contractual and the Unpaid Penalties using Statuary ?

 

Obviously the bank may attempt to defend stating that there is no contract with the Unauthorised O/Draft interest rate between myself and themselves. If this is the case I will again bring their attention to this comment:

 

If no express contract exists between the parties hereto then the Claimant contends that an implied and/or imposed contract exists between the parties hereto relating solely to the Claimant’s right to charge interest to the Defendant at the rate which it reserves for itself in relation to similar circumstances.

 

I have evidence of an imposed contract simply using all of my statements that mention O/Draft fees.

 

Any comments ?

[lucid]

Just because you don't have an overdraft facility it doesn't mean they won't let you go overdrawn. By letting you go overdrawn they get to charge you £30 a time in overdraft excess fees and charge you interest at the unauthorised borrowing rate.

 

I'd say it's a definite no to splitting your claim, it's far too complicated and I think it would be unnecessary to do it.

 

Lucid

[Memnoch]

Just because you don't have an overdraft facility it doesn't mean they won't let you go overdrawn. By letting you go overdrawn they get to charge you £30 a time in overdraft excess fees and charge you interest at the unauthorised borrowing rate.

 

Would this 'Unauthorised borrowing rate' effectively be exactly the same as an Unauthorised Overdraft Rate ? Therefore validating my claim to contractual interest for all of the 'borrowings' they have taken from me over the claim time without my authority ?

[lucid]

Yes that's what I'm referring to. I think, as Gary advised you in our thread, you need to double check your own account's T&Cs. Is yours a classic account? If it is then I think (my own opinion of course) that you would be entitled to charge them the unauthorised borrowing rate. But if, for example, you have a basic cash account then you need to check whether the T&Cs or rates are different.

 

Lucid

[Memnoch]

I dont have a Cash Account I have a Select Plus Account. This gives me an ability to apply for a O/Draft should I wish to, I never have.

 

However I have previously been charged for Unauthrised O/Drafts and have been charged O/Draft interest on top of those charges.

 

I believe that my application for Contractual Interest is justified due to this.

[lucid]

You can check out Lloyds current interest rates here. The authorised borrowing rate for the select plus is 16.8%. The unauthorised borrowing rate is the same for all accounts at 29.8%.

 

I'm sure anytime you have gone overdrawn they ahve charged you interest at the unauthorised rate, so yes you would be justified in charging them that rate. But you have to be sure of the argument you would present if it did go to court.

 

Good luck whatever you decide to do. Lucid

[Movingon]

The Law on reciprocity is clear. If a contract term applies to one party in detriment to the other, then it also applies in opposite circumstances. I.e. if the contract with the bank says that their rate for unauthorised borrowing is 29.8%, then if they borrow money from you without asking, you can charge them 29.8%, regardless whether YOU ever used the facility or not.

 

An "Unauthorised Borrowing Rate" is charged when you go into the "unauthorised" portion of your overdraft facility - i.e. if you have an overdraft facility of £250 and you overdraw by £300, then the last £50 is charged at the unauthorised rate.

 

I contend that when they levied unlawful charges which you are now claiming back, they have borrowed money from you without authorisation. You can charge them their own unauthorised borrowing rate, because their contract SAYS you can. Again - the Case Law establishing reciprocity is clear.

[GaryH]

With regards to the case law Tom, any chance of a link or reference to the case/s you refer to?

[podgydad]

Its debatable though if it constitutes unarranged borrowing by the banks, it may be deemed as unlawful arranged borrowing as the bank have said that they will charge you in the terms and conditions. We currently have 4 claims at the court stage with contractual interest at the unarranged borrowing rate. We are also waiting for feedback from our solicitors as the the likelihood of the court awarding this.

[GaryH]

Again - the Case Law establishing reciprocity is clear.

 

Hi Tom,

 

Any chance of some details of the case law you refer to? It could be extreamly useful for myself, the OP and anyone else claiming contractual interest. As far as I'm aware, cases which back up the reciprocity principle's have been hard to come by thus far, dispite extensive research.

 

Cheers

[Mad Nick]

Memnoch, just to lob in a thought which, from a quick skim of your thread, doesn't appear to have come up : what about using Vampiress' spreadsheet which works out exactly what interest (in £) which they took as a result of the charges ? It just involves you entering the balance at the time of each charge. That way, there's nothing to argue about - you would just be claiming back the amount to put you back to where you would have been had the charges (and interest) not been levied. Regards, Mad Nick

[Memnoch]

Simple answer, because I dont have all my statements.

 

Lloyds TSB replied to my SAR by sending me a list of all charges levied to my account in the last 6 years, they did not bother with the rest of the stuff on my statements just a breakdown of charges.

 

Therefore I have got no idea what the balance was on these occasions

 

I think I have grasped what I am doing, I will re send my prelim letter off including contractual telling them to ignore the previous one.

 

I hope there is a test case that I can refer to somewhere but so far it seems both me and GaryH are having trouble finding it.