A New Way of Looking at Interest- 1st successful Claim - N'wide

[meagain]

a relvitvley new phenomena

 

A "relatively new phenomenon", surely?

 

However, bearing in mind the numbers of claiminats vs the profits the banks make, i dont see it changing much because the totals being claimed will still be a drop in the ocean for them.

 

All the more reason why we should be trying to squeeze as much money out of them as we can legally justify (careful with this), and get someone with a large case sufficient support to take a test case all the way (including valid justifications for refusing settlements in the full amount, such as that it requires them to accept the bank's wrongdoing as accidental, or that they have not done any wrong at all). More importantly, we need to do it before they can try and recover the money from other sources.

[caro]

Many hours of work have gone into the sites spreadsheets, and it would be great if someone has the time, knowledge and ability to calculate the interest with 100% accuracy. As this thread shows, the issue of interest is far from straightforward, and another consideration has to be that many of our members are unfamiliar with spreadsheets and so they need to be kept as simple as possible for 2 reasons.

 

1. So that they can be used by novices to provide a schedule of charges.

 

2. If the issue of accuracy of interest was raised either by the banks, or more importantly the courts, they would be able to provide an explanation of how they arrived at the figures provided. A judge would not expect 100% accuracy from Joe Public, but a reasonable estimate would be acceptable. If the banks want to argue the point, they can always use their extensive resources to provide an accurate calculation if they wish.

 

I am not trying to say that everyone should use the site spreadsheets, or indeed that others should not be used. Everyone must do what is right for them. I am just advising caution and careful thought before embarking on court claims that they should understand exactly what they are doing. If people need an explanation of the sites sheets, then there are mods, site helpers and many members too who could explain the methodology fairly simply. For those using other more complex methods this help may not be available.

[pelham9]

Meagan.

 

I need to know how to put quotes in those classy boxes!

 

Calculators. All you need to calculate interest rates is an x/y function a memory capacity and sufficiemt precision in the maths chip/ processor. All scientific calculators have this and this is by no means new. Three weeks ago my 15 year old sci calculator gave up the ghost. It certainly had the precision to do these calculations and cost >£60. The replacement with exactly the same functionality cost £4.96 - some things do go down in price!

 

Yes I suppose that there was some nonsense about my remarks on chips. I was making a point. My son who is a Master of Computer Engineering was astounded by the cheapness of my new calculator. His remark was that the maths functions of computers has not changed in years and that the 'chip' in my calculator was the equivalent of much more expensive processors fitted in modern computers though perhaps a little slower.

 

I am worried about all this estimating - why the need. It is easy with the right tools to be as 'accurate' as the banks and that is not saying much. It seems that nobody has got to grips with the fact that banks calculate interest on daily balances and compound monthly. All that needs to be done is to enter the changes to the daily balance as they occur and of course the unfair charges and then the computer programmme/spreadsheet should do the rest. Apart from unfair charges would it not be a boon to be able to check that the monthly and yearly interest charges/payments by banks corresond to their advertised rates - they frequently do not - 'oh sorry someone has put the wrong interest rate into our system.'

[Glenn UK]

A "relatively new phenomenon", surely?

 

i think youre right about that, its a phenominal phenomenon not phenomena!

 

 

 

All the more reason why we should be trying to squeeze as much money out of them as we can legally justify (careful with this), and get someone with a large case sufficient support to take a test case all the way (including valid justifications for refusing settlements in the full amount, such as that it requires them to accept the bank's wrongdoing as accidental, or that they have not done any wrong at all). More importantly, we need to do it before they can try and recover the money from other sources.

 

I agree we should claim back every last penny we are entitled to.

 

i just dont think it will make any difference to the banks willingness to settle unless we see a claim put in that comes to 100ks.

 

Could be wrong but when you have profits in the billion pound mark a few tens of thousands is the money spent on bog rolls, so the staff will be using IZAL instead of the puppy paper!!

 

JMHO

 

Glenn

[caro]

If someone could write something accurate to use, that would be wonderful, but as it is we have to use the tools and resources at our disposal.

[thewifeandI]

I am worried about all this estimating - why the need. It is easy with the right tools to be as 'accurate' as the banks and that is not saying much. It seems that nobody has got to grips with the fact that banks calculate interest on daily balances and compound monthly. All that needs to be done is to enter the changes to the daily balance as they occur and of course the unfair charges and then the computer programmme/spreadsheet should do the rest. Apart from unfair charges would it not be a boon to be able to check that the monthly and yearly interest charges/payments by banks corresond to their advertised rates - they frequently do not - 'oh sorry someone has put the wrong interest rate into our system.'

You have to weigh the estimate errors against the time and effort to accurately key in six or more years worth of account transactions (or 11 and 13 years in my claims). 90% or more of people here would be put off by the effort (that's just an estimate by the way ).

[Mindzai]

As this thread shows, the issue of interest is far from straightforward, and another consideration has to be that many of our members are unfamiliar with spreadsheets and so they need to be kept as simple as possible for 2 reasons.

 

1. So that they can be used by novices to provide a schedule of charges.

 

2. If the issue of accuracy of interest was raised either by the banks, or more importantly the courts, they would be able to provide an explanation of how they arrived at the figures provided. A judge would not expect 100% accuracy from Joe Public, but a reasonable estimate would be acceptable. If the banks want to argue the point, they can always use their extensive resources to provide an accurate calculation if they wish.

 

 

Exactly. We have to remember that there are many people who have never used a spreadsheet at all. We are expected to make our figures as accurate as possible. For the vast majority of people this means using a pen, paper and a basic calculator. All of the spreadsheets available are more accurate than this, and more than accurate enough to satisfy the court that you have made a good attempt to get your figures right.

 

If people need an explanation of the sites sheets, then there are mods, site helpers and many members too who could explain the methodology fairly simply. For those using other more complex methods this help may not be available.

 

However, the site's sheets don't calculate compound interest. I think it's clear from this thread that there are enough people who have the necessary knowledge to help out anyone wanting to go down this route. I know (or at least get the impression) that you are defensive of a percieved dismissal of the excellent work gone into the site's spreadsheets, but they simply don't provide the level of functionality required by the topic of this thread. As for your comment that people should be sure which route they take before they make their claim, I couldn't agree more.

 

So the calculation of unfair interest by the latest spreadsheets is not accurate because the monthly calculation is done on one daily balance only each month - Right? Why cannot the spreadsheets do this accurately by entering daily balances and doing the assessment daily? Many more calculations but that is what computers do. Claimants would have to enter the unfair charges and the daily balances not an insuperable task - one would only have to transpose the balance from statements and enter charges as they occur.

 

i think as caro mentions, you have to define a point somewhere between accuracy and ease of use. The methods used by the spreadsheets provide a pretty accurate (in the eyes of a layperson which is what 99% of us are) estimate of the sum the bank has taken from you unlawfully. To get this any more accurate you'd have to start asking the user to provide much more information, which while not an enourmous task would be anough to put many off claiming interest at all. I accept what you're saying in that if such a program existed those who wanted to could use it, but I expect it would be more trouble that it's worth to create.

[caro]

I don't mean to be defensive, but I am concerned as we find more and more people starting the whole process of claiming bank charges without fully understanding what they are taking on. The process is relatively simple, but we increasingly find people have deviated from the tried and tested methods, and then expected help to bail them out if they encounter problems. I just don't want to see another area where people might jump in without understanding fully what they are doing, and then expect mods, helpers and more knowledgable members to sort it out if they get it wrong.

[Mindzai]

That's completely fair and understandable, but then this thread was started by BankFodder after all.

 

It would be good if we knew some more about the legal basis for claiming compound interest though as opposed to just discussing the technicalities of calculating compound interest. Maybe we should redirect the focus of this thread to ascertaining the legalities behind deciding to take this route?

[meagain]

The basic principle is that contracts are reciprocal, so anything the bank is allowed to do, you are allowed to do. The issue of compound interest is that the banks compound the interest on overdrawn balances, therefore you should too. More importantly, there could a question over whether failing to compound the interest on our claims (where not at statutory 8%) is enforceable, since it is not reflecting the contractual terms imposed by the bank.

[Mindzai]

The basic principle is that contracts are reciprocal, so anything the bank is allowed to do, you are allowed to do. The issue of compound interest is that the banks compound the interest on overdrawn balances, therefore you should too. More importantly, there could a question over whether failing to compound the interest on our claims (where not at statutory 8%) is enforceable, since it is not reflecting the contractual terms imposed by the bank.

 

As far as I'm aware The basic principle of contracts is that they are FAIR not necessarily reciprocal. A bank could argue that they cannot pay you interest at the rate they charge as they would not have money to operate their branches if they did for example. If there is legal basis for mutuality of terms in contracts, I think we need the specifics made known to us

[caro]

Which neatly takes us back to the beginning of this thread.

 

However it seems to me to be quite arguable that there is an implied term in the bank contract based on the principle of "mutuality" or "reciprocity" -- in other words what is sauce for the goose is also sauce for the gander.

 

If this is correct then I think it is entirely reasonable to argue that where penalties have been unlawfully taken that this is the equivalent of borrowing by the bank and therefore the sum borrowed should attract a contractual rate of interest e.g. 16% - or if one wanted to say that the levying of penalties was unauthorised -- which of course it is -- then one could say that the contractual rate of interest was the unauthorised borrowing rate.

 

Maybe this latter rate is going a bit too far for the moment. However it seems to me that the bank's ordinary overdraft rate is entirely reasonable way to excercies mutuality.

 

 

An advantage of charging the contractual interest rate is that you can apply this even if the case does not go to court. The 8% is only available once the money is being claimed.

 

I can't see that this approach creates any risks for anyone unless it brings the amount claimed over the £5,000 limit. But if it doesn't then there is no problem. If the matter went to court then I would suggest that the N1 was worded to claim the contractual rate of interest or in the alternative, 8% pursuant to section 69 blah blah blah.

 

Of course if a claimant is attempting to recover the contractual rate of interest then the term (the implied term) has to be alleged in the particulars of claim.

 

 

 

Anyway there's the idea. Anyone got any comments?

[Mindzai]

Yes but my point is, is it enough to say it is an implied term? What is the legal basis for doing so? It seems like quite a flimsy argument without any justification.

[pelham9]

TheWifeandI

 

Thank you.

 

In the end what I would like to see happen is that banks make lawful charges only and that fair interest rates are calculated and applied fairly and accurately both for savers and borrowers. I fear that this will only happen with independent regulation - the self regulating system we have at the moment is a disaster. Hopefully the furore over unfair charges as it snowballs will convince our fearful of banks governments to act.

 

Clearly all the various breeches of contract do cost them something. They will not come clean over these costs and so we get away with the refund of the whole of the charges. Whilst they are intransigent about their costs we can only assume thay have none and this is in my view fair at present, There is some justice in suggesting as you do that if unfair interest is underestimated this 'makes up' for the just fees that they do not now get because they will not quantify their costs.

 

However estimates and a sort of rough justice is not my final goal as stated above and eventually if a fair and accurate system is finally forced on the banks the tools to police it must be in the hands of at least some customers. Vamps spreadsheet is clever and delightfully elegant but it is not accurate. It has the advantage that it is easy to use. It does for now. It is possible that an accurate system would only be used by a few of us - though I think we underestimate the understanding of the majority if we say that. It is however a worthwhile project in its own right.

 

To get the banks to do the work for us as you suggest is just not going to happen unless they are forced. It is logical and sensible but we are dealing with banks! I also do not see them doing the calculations for the cost of depriving us of our money - they will attempt to ignore this..

 

Caro

 

 

I am well aware of the many little tricks used to manipulate daily balances to increase /decrease the interest attributed to borrowers / lenders. This is mainly because the banks are allowed to get away with their tricks because we do not have the tools in place to spot them. We need to be sure that only end day balances (at aparticular time of day) and that 'overdrafts' often for a few minutes are not charged- there are many more similar instances. We should insist on this now and we should have the tools to check their calculations. These tricks should be ignored in any programme. I would predict that a judge would uphold an end of day balance approach and would be surprised how some banks manipulate balances throughout the day to 'justify' charges.

[tim2718281]

The process is relatively simple, but we increasingly find people have deviated from the tried and tested methods, and then expected help to bail them out if they encounter problems. I just don't want to see another area where people might jump in without understanding fully what they are doing, and then expect mods, helpers and more knowledgable members to sort it out if they get it wrong.

Yes, anyone claiming contractual interest should do so in the knowledge of Bankfodder's caveats.

 

It's a good idea to have a spreadsheet for contractual interest, so everyone claiming contractual interest does so the same way. Then, if anyone using it gets told by a judge their interest claims are unacceptable, the contractual interest spreadsheet can be changed. (I'd say it's not valid to claim contractual interest by using the statutory interest method with a different interest rate; surely contractual interest *has* to be calculated the way the contract says, or it's not "contractual interest".)

 

And it's a good idea to keep the contractual interest spreadsheet separate from the existing spreadsheet, so that anyone not claiming contractual interest will not have to deal with it.

 

It might be worthwhile if anyone claiming contractual interest notes that on their claim and settlement details.

 

Tim

[pelham9]

This has been said on CAG before. Having taken out and added unfair interest charges (which are compunded because the banks do that) we have to decide on the statutory rate that can be applied at settlement. It is at present 8% simple. The judge if involved would look what rate the claimant would have been able to command if he had the money to invest in a safe non speculative investment i.e. what the average prudent man would do. He would seek to put the claimant back to the position he would have been in if the unlawful charges had not been made. 8% simple is I think adequate on this view. To ask for the contractual rate compounded is extortionate - we repeatedly complain of the extortionate rates that banks charge. I do not think that the principal of reciprocity will wash in court. By all means ask for it. If the banks pay up before any hearing they are so keen not to go to court (or so incompetent) that they will pay anything. But in court if contractual rates are contested it would be wise to withraw to the 8% simple with as much grace as you can muster.

[Glenn UK]

Clearly all the various breeches of contract do cost them something. They will not come clean over these costs and so we get away with the refund of the whole of the charges. Whilst they are intransigent about their costs we can only assume thay have none and this is in my view fair at present, There is some justice in suggesting as you do that if unfair interest is underestimated this 'makes up' for the just fees that they do not now get because they will not quantify their costs.

 

 

Im not sure i agree with this even as a concept.

 

If you exceed the banks agreed overdraft limit they charge a high rate of interest for the amount and period in question. This in my view compensates them for any small costs incurred to generate the letters they send you.

 

If they didnt charge interest I could concede the cost of producing the correspondence plus the loss of the opportunity to earn money.

 

What is certain is that the banks wont lose money out of bank accounts however they decide they should be run.

 

Interesated in your view about the application of compounded interest vs the CCA interest. Its my understanding that the primary purposae of CCA interest is to allow a claimant to claim compensation where a claim doersnt have a contractual rate associated with it. An example might be where a consuimer sues a retailer over faulty goods, there is no interest rate from the contract so the claimant can ask for CCA interest to be added.

 

However, the contracts we hold do have contractual rates associted with them. You may argue that the interest corate selected by the claimant is excessive and youre entitled to your view, but as I understand it it is well established law that contracts that are one sided when a consumer is involved are unfair. If the banks wish to continue with the contracts and interest rates the way they are currently then they should not expect the claimant not to reply in kind.

 

I can of course be entriely wrong and if you have any references to support your view id be glad of a pointer. But this is how i see it based on my admitedly limited knowledge of such matters.

 

JMHO

 

Glenn

 

Edit FWIW i spoke to the listings clerk this morning and he didnt express any surprise when I discussed the application of the contractual rate on interest in relation to my claim, I dont know if he mentioned it to the judge when he discussed my question but he may well have done since it was key to my question. I do realise this doenst mean jot.

[tim2718281]

"... we have to decide on the statutory rate that can be applied at settlement."

 

No, we don't. If we're claiming statutory interest, we claim it at the statutory rate of 8% simple interest. There is no decision on the rate.

 

And if we're claiming contractual interest, we claim it at the contractual rate, which will be stated in the contract.

 

"The judge if involved would look what rate the claimant would have been able to command if he had the money to invest in a safe non speculative investment ..>"

 

What makes you think that? If we're claiming contractual interest, and the judge agrees that the contractual rate is claimable, surely all the judge will do is look at the contract to see what rate it specifies. The judge can't make up some other rate based on the principles you suggest.

 

"To ask for the contractual rate compounded is extortionate - "

 

No it's not. The contractual rate is what the contract says.

 

Aside: I disagree with your argument about the rates a person can get anyway. If a bank takes away £100 from a person, the person cannot pay their credit card with it. And so they may incur interest on their credit card, at a rate which may be even higher than the bank's contractual rate. The value of the money to the person is not the highest rate they could have got by investing it, but the highest rate they could have avoided by paying off debt with the money the bank appropriated.

 

Tim

[tinyman]

A big hello for the first time and hope the info here will help to recover charges from Abbey,Halifax,Capital One,Abbey Credit Card and Barclaycard.

Battled with the above to refund charges now got all details and about to do spreadsheet but become even more confused by which rate to apply.8% seemed straight forward to add but after reading about 16% i am unsure which rate to use and it all now looks much more complex.

 

Any suggestions PLEASE.

[Mindzai]

If the issue seems complex and you don't intend to researched it in detail, I would suggest you stick to claiming 8% statutory interest as described in the FAQ section. If you do want to look into contractual interest I'd do so thoroughly before making your final decision as to which route you take.

[lucid]

A big hello for the first time and hope the info here will help to recover charges from Abbey,Halifax,Capital One,Abbey Credit Card and Barclaycard.

Battled with the above to refund charges now got all details and about to do spreadsheet but become even more confused by which rate to apply.8% seemed straight forward to add but after reading about 16% i am unsure which rate to use and it all now looks much more complex.

 

Any suggestions PLEASE.

Hi tinyman.

 

The 8% interest is statuory interest which you are entitled to apply to your claim once you file it at court or online on Moneyclaim. This interest is 'simple' and is applied to your total amount by using a daily rate.

 

The reason you will have read posts where people are suggesting claiming rates such as 16% is because they are considering adding contractual interest to their claim - instead of statuory interest. Contracutal interest can either be claimed at the authorised or unauthorised borrowing rate of your bank and should be calculated in the same way as the bank does in your contract - so for bank accounts this is compounded.

 

At the moment contractual interest is untested, although it seems that there are a number of claims that have been filed with the claimant claiming contractual interest so we should be finding out results soon. You are right it is very confusing and there seems to be a fair bit of conflicting information on this topic at the moment.

 

The important thing to remember is that you can't claim both types of interest and that it is the statuory interest (always 8%) that people have successfully claimed and that you are entitled to claim under s69 County Courts Act 1984. If you are interested in the idea of claiming higher interest then it would be worth you reading through this thread and these threads, Contractual Interest - are banks paying it?, 8% Interest vs Compound Interest, and Why is no one claiming the contractual rate of interest?. They are all long reads but if you do read them it will become clear that contractual interest is a very confused subject at the moment, but it is important that you fully research what it is before you attempt to claim for it. As Mindzai said, if you think it is too complicated then use the statutory interest method as you know that you are entitled to claim for this.

 

Good luck. Lucid

[caro]

Keep reading the FAQ's, look at the spreadsheets in the bank template library, and threads like this so that you can get to grips with all the issues. These organisations have had your money for a while now, so a few more days won't make a difference while you spend time gaining an understanding of the discussions and debates about interest, and deciding which course of action is best for you.

 

If you have several claims start with one or two, and keep it as simple as possible until you gain more understanding and confidence.

 

Also start threads in the relevant forums so people can advise you there.

 

Good to have you on board.

[pelham9]

Glenn

 

You am sure that you are right. The banks are entitled if they justify on a cost basis to make a charge for breech of contract. They should not in addition be entitled to charge a penalty rate of interest One or the other. I believe it is true that in some other countries the banks do not make charges but get there recompense for the breech by charging a higher interest rate. This does at least have the merit of being tied to the length in time and the amount of the breech though it is pretty likely that the rates they do charge would on examination be penal rates.

 

I hear all your arguments and they have merit. I just do not think that a judge will acept them. Hopefully I am wrong. My post was really to point out how a judge is likely to look at it. Before you go to court ask for as much as seems to reasonable to you - the banks will very likely cough up to aviod a court hearing but should they challenge the interest element in court be ready to full back to the statutory 8% simple.

[Glenn UK]

Pelham

 

I do agree with your sentiments in that it matters not a jot what i or you think, it only matters what the court thinks should it get that far.

 

I also agree that for most of us our day in court will never come, but to work on that basis is deluding oneself, we must be prepared to appear and present our case.

 

I also agree that should a fall back positon is always worthwhile considering.

 

Glenn

[Mindzai]

Might it be better to claim interest using the argument of loss of amenity? In this case contractual interest rate is an extremely reasonable amount to place on loss of amenity, plus you have the advantage of using the mutuality argument as a basis for your selection of a figure to place on this loss? Or is this just complicating things further?