Fred_Funk v NatWest

[Fred_Funk]

Okay guys, how about this for the 'Brief details of claim' section?

 

Claimant has had a contract with the Defendant, which is conducted according to its standard terms and conditions, since 1986. Claimant is claiming the return of money taken by the defendant in the way of charges over the last six years, plus the interest it has levied on these charges. The Defendant's charges are a disproportionate penalty and therefore unenforceable as they are contrary to common law. Further, as a disproportionate penalty they are invalid under the Unfair (Contracts) Terms Act 1977 s.4 and under the Unfair Terms in Consumer Contract Regulations 1999. Para.8 and sch.2(1)(e). In the event that the charges are not a penalty then they are unreasonable within the meaning of the Supply of Goods and Services Act 1982 s.15. Claimant has repeatedly asked the defendant to justify its charges but it has declined to do so. The claimant claims contractual interest (compounded) at a rate of 29.5% per anum from March 2001 to June 2007 under the principal of mutuality and reciprocity and also interest at the same rate up to the date of judgement or earlier payment at a daily rate of £7.58.

 

Clearly, that's all pretty bog standard up until the point at which I mention compound interest. My question, then, is whether my final sentence is okay? Moreover, is it satisfactory to give a numerical figure rather than a percentage rate for any further interest which may accumulate?

 

Thanks in anticipation

 

Fred_Funk

[neilwoods]

The problem I see here is that you say "plus the interest it has levied on these charges".

 

Are you actually able to calculate that interest?

 

If you are not then you should say something like: "plus interest on those charges at the bank's unarranged borrowing rate".

 

That is to say that if you have been o/d and know the interest rate for every month since you became overdrawn and calculate that rate applied to the penalty charges and accrued interest, you would be correct in using that wording.

 

It is, however, extremely unlikely that you could accurately calculate such a figure and if you cannot do so I would have thought you would be on dodgy ground saying that is what you were doing.

 

To give you an idea of the complexity of the calculation, it would require, each month, that you (using the banks actual rate for the month), calculated the daily compounded interest on the outstanding sum of charges and accrued interest at the start of the month and added it to a sum of each charge for that month multiplied by the compounded daily rate for the month for the appropriate number of days that the charge existed during the month.

 

Not impossible, but by no means an easy task, and one that would require some skill at producing a spreadsheet of other programatic means of doing the calculation.

 

This is, of course, just my opinion. But I intend to use the 'principal of mutuality and reciprocity' to assert that the bank should pay compound interest at its own unarranged borrowing rate for each day each illegal charge was taken by them since that is exactly what they would charge you.

[Fred_Funk]

The problem I see here is that you say "plus the interest it has levied on these charges".

 

Are you actually able to calculate that interest?.

 

Yes, I've used Mindzai's spreadsheet which calculates the interest that has arisen as a direct result of the charges unlawfully levied.

 

If you are not then you should say something like: "plus interest on those charges at the bank's unarranged borrowing rate".

 

I think you're misunderstanding. This sentence, 'Claimant is claiming the return of money taken by the defendant in the way of charges over the last six years, plus the interest it has levied on these charges', refers not to the contractual interest (compounded) I'm asking for under the principles of mutuality and reciprocity but the interest I have incurred as a direct result of the unlawful charges.

 

That is to say that if you have been o/d and know the interest rate for every month since you became overdrawn and calculate that rate applied to the penalty charges and accrued interest, you would be correct in using that wording.

 

It is, however, extremely unlikely that you could accurately calculate such a figure and if you cannot do so I would have thought you would be on dodgy ground saying that is what you were doing.

 

To give you an idea of the complexity of the calculation, it would require, each month, that you (using the banks actual rate for the month), calculated the daily compounded interest on the outstanding sum of charges and accrued interest at the start of the month and added it to a sum of each charge for that month multiplied by the compounded daily rate for the month for the appropriate number of days that the charge existed during the month.

 

Not impossible, but by no means an easy task, and one that would require some skill at producing a spreadsheet of other programatic means of doing the calculation.".

 

As I've intimated above, I think you're getting the wrong end of the proverbial stick. Firstly, the only part of my 'Brief details of claim' which has anything to do with contractual interest (compounded) is the final sentence. Moreover, that aside, the bank's contractual rate of interest at the particular time a specific charge was levied is irrelevant. I've taken NatWest's unauthorised borrowing rate as of the day I submitted my preliminary letter. Under the principle of mutuality and reciprocity, I'm charging them at that rate for, in effect, borrowing from me without my authorisation because that's what they've done to me.

 

This is, of course, just my opinion. But I intend to use the 'principal of mutuality and reciprocity' to assert that the bank should pay compound interest at its own unarranged borrowing rate for each day each illegal charge was taken by them since that is exactly what they would charge you.

 

This makes sense though, with respect, most of what you wrote before didn't. I'd like to think I'm fairly well versed in all of this - I've spent many months reading through the forums - and unless I've got completely the wrong end of the stick some of your comments, above, are misinformed.

 

Be that as it may, thanks for your contribution - it's only through this kind of dialogue that we each improve our understanding of the process. Moreover, it may be that it's me who's barking up the wrong tree though I'm 99.9 per cent sure that in this instance it's not the case.

[neilwoods]

Yes, I had got hold of the wrong end of the stick. I did not realise that you were claiming two entirely seperate amounts of interest.

 

Whilst that does not strike me as logical, I'm by no means certain it won't work

 

Perhaps you would be kind enough to add your thoughts to the thread "Why is no one claiming the contractual rate of interest???" since if you are correct in your approach, my comments (and implied advice) there are wrong.

[Fred_Funk]

neilwoods

 

Glad you got the wrong end of the stick as I thought I'd just about got my head around all this and your post made me fear I was horribly mistaken.

 

I don't know if you've had an opportunity to look at either Vampiress' or Mindzai's spreadsheets but both are widely acclaimed and produce two seperate figures for interest:

 

(1) The interest incurred as a result of the unlawful charges;

 

(2) The interest you are now charging the bank - either the 8% allowed by section 69 of the County Courts Act or, alternatively, your bank's unauthorised borrowing rate - as recompense for taking your money unlawfully.

 

I shan't post on the 'Why is no-one claiming the contractual rate of interest?' thread as, I'm fairly certain, this has already been established as the thing to do and I don't want to cause any more confusion.

 

Hope this clarifies things a bit?!

 

Fred_Funk

[Stornoway]

My claim comprises;

1. charges

2. interest I have paid on those charges

3. contractual interest on the charges only) at the same rate that i have been charges or in the alternative statutory interest on the charges at 8%.

 

Re 2, I'm not convinced that you could argue the unauthorised rate is appropriate for the full period since the charge was levied - for this to be the case you would presumably have had to have been overdrawn in excess of your limit for the full period. For 2 you are seeking restitution of your actual losses so on a current account you need to be confident that you werent in credit at any time and therefore the interest loss may only be at a rate of 0.1% (ie. the rate payable on credit balances). Its a mch easier process for credit cards !

[Samuel2222]

Neilwoods,

 

I can understand your logical reasoning in what you were saying regarding the calculation of interest on the charges. Of course, as you say, if an account is fluctuating between it's overdraft interest rate and in-credit rate it would be extremely pedantic to calculate the interest charged or lost as a result. However this sum might be easier to calculate in the instance of credit cards where the claimant is always in debt to the provider and paying a constant rate of interest for the privalige.

 

 

The point in question, i believe, was using a rate to claim contractual interest on all of those charges until the current date.

 

Those spreadsheets are superb and make the whole process very simple.

[Fred_Funk]

Stornoway

 

So, in essence, you're agreeing with me, yeah?!

 

When you refer to (2), I'm not clear, are you referring to my (2) or your (2)?! ;-)

 

Whatver, I don't think whether or not you've been overdrawn in excess of your limit for the entire period is of any relevance.

 

As I understand it, the argument, according to the principle of mutuality and reciprocity, is that the bank have seen fit to charge you interest at their unauthorsied borrowing rate when you've borrowed from them without permission. Now, you're asking for the same treatment when they've taken your money unlawfully or, in effect, without permission.

 

You can, therefore, argue that you expect contractual interest (compounded) on all the money they have taken from you - whether via unlawful charges or interest incurred as a result - regardless of the state of your account at the time.

 

Fred_Funk

[Fred_Funk]

I can understand your logical reasoning in what you were saying regarding the calculation of interest on the charges. Of course, as you say, if an account is fluctuating between it's overdraft interest rate and in-credit rate it would be extremely pedantic to calculate the interest charged or lost as a result. However this sum might be easier to calculate in the instance of credit cards where the claimant is always in debt to the provider and paying a constant rate of interest for the privalige.

 

Again, unless I'm missing something - and I don't think I am but stand to be corrected - it's completely irrelevant whether or not your account is being operated within your overdraft facility.

 

As far as I'm aware, all the spreadsheets provided via this site - and certainly this is true of Mindzai's and Vampiress' - calcualte the proportion of your overdraft that is attributable to unlawful charges and then, in turn, the proportion of the interest you've incurred that is attributable to those charges and can, therefore, be reclaimed.

 

Whether this interest was charged at 10%, 20% or 30% is, therfore, of no relevance whatsoever.

 

Fred_Funk

[Samuel2222]

There is confusion on this point, possibly on my part.

 

Just to confirm, as I took it, the point in question was not regarding contractual interest, but claiming back the actual interest that would have been charged (or lost if in credit) on a charge.

 

Simplified Example:

 

The banks overdraft interest rate if 10% APR.

Their in-credit rate is 1% APR.

 

July 31st 2006: Account balance 10GBP

 

August 1st 2006: 2 x 30GBP charges are applied to the account, causing it to go 50GBP into overdraft.

 

Lets assume there is no other activity on the account until 1st September 2006 at which point the client pays 60GBP to cancel out the charges.

 

The client has therefore suffered overdraft interest at 10% APR on 50GBP for one month. Was at a loss of 1% credit interest due on 10GBP.

 

-----

 

I think this was the chain of thought Neil had. Hope this has clarified it.

[Stornoway]

Stornoway

 

So, in essence, you're agreeing with me, yeah?!

 

When you refer to (2), I'm not clear, are you referring to my (2) or your (2)?! ;-)

 

Whatver, I don't think whether or not you've been overdrawn in excess of your limit for the entire period is of any relevance.

 

As I understand it, the argument, according to the principle of mutuality and reciprocity, is that the bank have seen fit to charge you interest at their unauthorsied borrowing rate when you've borrowed from them without permission. Now, you're asking for the same treatment when they've taken your money unlawfully or, in effect, without permission.

 

You can, therefore, argue that you expect contractual interest (compounded) on all the money they have taken from you - whether via unlawful charges or interest incurred as a result - regardless of the state of your account at the time.

 

Fred_Funk

Sorry i'm referring to my 2 throughout my post. My issue is that you are seeking repayment of your losses - so you should be claiming;

1. refund of your charges

2. refund of the interest actually applied to those charges (and the rate for this will be variable on a current account depending on whether or not you are in credit or overdrawn or overdrawn beyond your limit).

Over and above 1 and 2 you and I are also seeking "contractual interest" this is at the unauthorised rate because they have taken your money without your permission. If the court doesnt agree to pay contractual then we are claiming statutory 8% as an alternative.

 

Interestingly in a previous case the judge refused contractual because he felt it was a penalty. After the case he said he may have allowed it if the claimant could prove that he was entitled to it because he had suffered an actual loss - so in my case i'm claiming at the same 'standard' rate as i have been charged on the basis that i have been unable to use the relevant funds to repay borrowing elsewhere.

[Samuel2222]

I have read your last post and understand the reasoning. I will have a look at the spreadsheet in the meantime.

 

My train of thought relates to the fact that an account might fluctuate between being in-credit and overdrawn.

[Samuel2222]

Stornoway,

 

Point well made.

 

Quote: Over and above 1 and 2 you and I are also seeking "contractual interest" this is at the unauthorised rate because they have taken your money without your permission. If the court doesnt agree to pay contractual then we are claiming statutory 8% as an alternative.

 

Yes, of course we are seeking contractual interest on those amounts. It seems there might be confusion between 'interest on charges' and 'contractual interest'.

 

It could become extremelly 'fussy' at this point and the debate could ask whether interest that was charged or lost on those charges should be claimed in addition to the contratual interest that is being claimed.

[Stornoway]

Stornoway,

 

Point well made.

 

Quote: Over and above 1 and 2 you and I are also seeking "contractual interest" this is at the unauthorised rate because they have taken your money without your permission. If the court doesnt agree to pay contractual then we are claiming statutory 8% as an alternative.

 

Yes, of course we are seeking contractual interest on those amounts. It seems there might be confusion between 'interest on charges' and 'contractual interest'.

 

It could become extremelly 'fussy' at this point and the debate could ask whether interest that was charged or lost on those charges should be claimed in addition to the contratual interest that is being claimed.

Yeah its complicated for current accounts - much easier with credit cards. One mistake I know I've made in a claim I have on the go at the moment is that I am claiming refund of interest paid for the full period from date of charge to current date. In my case this is wrong because the account was closed 6 months ago so i should accordingly only claim contractual interest for this period.

[Stornoway]

My POC are here if you want a look.

 

http://www.consumeractiongroup.co.uk/forum/citicards/91232-stornoway-citicards-incl-contractual.html

[Fred_Funk]

There is confusion on this point, possibly on my part.

 

Just to confirm, as I took it, the point in question was not regarding contractual interest, but claiming back the actual interest that would have been charged (or lost if in credit) on a charge.

 

Simplified Example:

 

The banks overdraft interest rate if 10% APR.

Their in-credit rate is 1% APR.

 

July 31st 2006: Account balance 10GBP

 

August 1st 2006: 2 x 30GBP charges are applied to the account, causing it to go 50GBP into overdraft.

 

Lets assume there is no other activity on the account until 1st September 2006 at which point the client pays 60GBP to cancel out the charges.

 

The client has therefore suffered overdraft interest at 10% APR on 50GBP for one month. Was at a loss of 1% credit interest due on 10GBP.

 

-----

 

I think this was the chain of thought Neil had. Hope this has clarified it.

 

I understand, I think, what you're sying here though I'm not convinced it was what Neil was trying to say.

 

Be that as it may, isn't this just making things unnecessarily complicated. As I've said, if you use either Mindzai or Vamp's spreadsheet then it really doesn't matter wether the interest levied on your account is charged at an authorised or unathorised rate as the calculations are done on a pro rata basis.

 

That's to say, in the example you've given above, all the interest levied on the £50 you are overdrawn would be attributable to unlaful charges and, as such, reclaimable.

 

If your point is that you've also missed out on earning interest on the £10 you would otherwise have been in credit and that the spreadsheets fail to make provision for this then I do, at last, see where you're coming from.

 

Thanks in advance for some clarification.

 

Fred_Funk

[Samuel2222]

Pedantic, I know, and I realise that this type of interest would only generally be claimed on credit cards where the client always owes a debt.

 

I can also appriciate the point neilwoods was making and how complex the calcualtions would become in the context of my example.

[Fred_Funk]

My POC are here if you want a look.

 

http://www.consumeractiongroup.co.uk/forum/citicards/91232-stornoway-citicards-incl-contractual.html

 

 

Thanks for that, it's much appreciated.

 

It seems your POC are not dissimilar to Mindzai and Lucid's. I shall examine both more closely tomorrow and then set about preparing my own.

 

One further question, there is, it seems to me, plenty of discussion about POC but relatively little about the 'Brief details of claim' section of the N1 form. Why is this? Presumably it's important this too is correct?

 

That being the case, do you think my suggested wording - see sbove - is appropriate?!

 

Thanks again

 

Fred_Funk

[neilwoods]

Hi, Fred.

 

Having spent a lot of time poring over this question (claiming the return of actual interest as well as charging contractual interest), I still think that there is a problem with trying to claim back both.

 

The principle of mutuality and reciprocity (PMR) says that because the bank deprived you of the use of your money you are entitled to charge them interest in exactly the same way as they can charge you for depriving them of the use of their money (where that money is provided to you as an overdraft).

 

However, in the case where the unlawful fees caused you to become, or become more, overdrawn, you were NOT deprived of the use of the money since they had lent it to you.

 

 

Whilst it's true that you are undoubtedly entitled to the return of any fees levied in interest on that money, I don't see how you can also expect contractual interest on any part of the penalty that was loaned to you by the bank.

 

On that basis I am only claiming contractual interest, relying on the fact that although the bank lent me some of the unlawul fees for some of the period, the interest charged on that overdraft would (apart from minor rate fluctuations) be exactly offset by contractual interest, to avoid the all but impossible calculation of actual interest charged.

 

It really is a most unsatisfactory situation that despite the amount of time these claims have been being processed not one of the 'powers that be' has managed to provide a proper guide to how to handle these matters.

 

It seems to me that the best solution would be for one of the organising sites (such as this or MSE), who are building a fighting fund, to select a sample case and pay for advice from a specialist solicitor which could then be published.

 

At the moment we are in a very tricky situation because, even though for example, Mindzai suceeded in his claim, we have no way of knowing whether that was because the bank agreed with his figures or just thought the case would be unwinnable because of the complete hash they'd made of dealing with it.

[TANZARELLI]

A simple way to clear things up here is to refer to it like this:

 

a) Charges applied to the account (Penalty and therefore reclaimable)

b) Debited Interest applied to the charges (Penalty and therefore reclaimable)

 

You therefore should be claiming:

 

a) Charges

b) Debited interest on charges

c) Contractual Interest applied to Chagres

d) Contractual Interest applied to Debited Interest

[Gez]

Another couple of points worth throwing in is that you have been denied the economic benefit of funds unlawfully seized, and denied the the opportunity to invest them.

Anyone who has had a mortgage for the last 6 years can show how well money can be invested. Similarly the bank themselves can show what can be made from these funds having been unjustly enriched by re-lending money that rightfully belonged to you, at the rate you are applying many times over.

To be honest though, I have done quite a few claims now for myself, family & friends all using CI & they all just settled as usual.

One of them that I did for my brother against Abbey, they also paid the S.69 8% on top. I didn't even ask for that.

[Fred_Funk]

Hi, Fred.

 

Having spent a lot of time poring over this question (claiming the return of actual interest as well as charging contractual interest), I still think that there is a problem with trying to claim back both.

 

The principle of mutuality and reciprocity (PMR) says that because the bank deprived you of the use of your money you are entitled to charge them interest in exactly the same way as they can charge you for depriving them of the use of their money (where that money is provided to you as an overdraft).

 

However, in the case where the unlawful fees caused you to become, or become more, overdrawn, you were NOT deprived of the use of the money since they had lent it to you.

 

Firstly, I appreciate the case for asking for contractual interest (compounded) is not clear cut. However, it seems to me, an argument can be made for it - under the principles of mutuality and reciprocity - and, this being the case, I'm determined to go down that route though I will, of course, ask for s.69 interest should the judge deem my request for contractual interest (compounded) inadmissible.

 

Of course, fingers crossed, it won't get as far as a courtroom. ;-)

 

I appreciate what you are saying about one not being deprived of the use of the money if its charging only caused you to become overdrawn or more overdrawn.

 

Now, I'm thinking aloud here - and ready to be shot down in flames - but could you not argue that the bank charged you at its unauthorised borrowing rate for going beyond what was mutually agreeable, ie staying within your overdraft facility, you are now doing the same by penalising it, at the same rate, for levying unlawful charges on you.

 

Tell me, does such an argument have any merit or does it have no basis in law?

 

Whilst it's true that you are undoubtedly entitled to the return of any fees levied in interest on that money, I don't see how you can also expect contractual interest on any part of the penalty that was loaned to you by the bank.

 

On that basis I am only claiming contractual interest, relying on the fact that although the bank lent me some of the unlawul fees for some of the period, the interest charged on that overdraft would (apart from minor rate fluctuations) be exactly offset by contractual interest, to avoid the all but impossible calculation of actual interest charged.

 

Again, I understand where you are coming from here, and I might be missing something, but would contractual interest exactly offset the interest charged on your overdraft? I'm not convinced it would; surely charging the bank contractual interest (compounded) now on the unlawful charges it has deducted from your account some years ago will yield a sum far in excess of the interest actually levied on the overdraft?!

 

Fred_Funk

[neilwoods]

Firstly, I appreciate the case for asking for contractual interest (compounded) is not clear cut. However, it seems to me, an argument can be made for it - under the principles of mutuality and reciprocity - and, this being the case, I'm determined to go down that route though I will, of course, ask for s.69 interest should the judge deem my request for contractual interest (compounded) inadmissible.

If these 'principles of mutuality and reciprocity' are a valid legal concept and applicable in this case, then I would have thought that CI (compounded) is perfectly valid.

 

Now, I'm thinking aloud here - and ready to be shot down in flames - but could you not argue that the bank charged you at its unauthorised borrowing rate for going beyond what was mutually agreeable, ie staying within your overdraft facility, you are now doing the same by penalising it, at the same rate, for levying unlawful charges on you.

Indeed. If the principles of mutuality and reciprocity are valid, then that is a perfectly logical thing to do.

 

Tell me, does such an argument have any merit or does it have no basis in law?

That, of course, is where the problem lies. It seems that no one here or at any similar site is (or is admiting to be) a legal professional, so we can, it seems, only rely on the musing of a lot of unqualified people.

 

What make matters worse is that the banks are carefully avoiding getting into a situation where a court that is able to set a precedent can hear a case.

 

Again, I understand where you are coming from here, and I might be missing something, but would contractual interest exactly offset the interest charged on your overdraft? I'm not convinced it would; surely charging the bank contractual interest (compounded) now on the unlawful charges it has deducted from your account some years ago will yield a sum far in excess of the interest actually levied on the overdraft?!

It is unlikely to exactly offset it. But if we assume that you can charge compound CI, then it should be the case that, apart from fluctuations in rates, the CI should at least offset any interest payed on unlawful fees, and since you were paying interest on them it is evident that the bank had lent you the amount of the fee so you were not deprived of the use of the money they took in this case.

 

I was all ready to send in my first claim letter, in my case simply asking for the return of fees and compound CI.

 

However, a moderator has now waded in saying that he or she does not agree with CI because he or she knows of no legal reason for it.

 

He or she then promptly went off line so questions as to whether this opinion should be lent any weight or whether it is just some personal prejuice born of ignorance remain unanswered.

[Fred_Funk]

I was all ready to send in my first claim letter, in my case simply asking for the return of fees and compound CI.

 

However, a moderator has now waded in saying that he or she does not agree with CI because he or she knows of no legal reason for it.

 

He or she then promptly went off line so questions as to whether this opinion should be lent any weight or whether it is just some personal prejuice born of ignorance remain unanswered.

 

neilwoods, I wouldn't allow you to deflect this from your intention. As you will see, I've been on this site for more than a year now and while one or two of the moderators may have an issue with the case for contractual interest (compounded), he/she would appear to be in the minority.

 

Dare I say it, perhaps the persone who PMd you is someone whose claim was settled before the case for requesting contractual interest (compounded) became prevalent. ;-)

 

In any case, at least one of the threads imploring people to ask for it was started by BankFodder who, as I'm sure you're aware, is the founder of this site.

 

I suggest you stick to your guns! ;-)

 

Fred_Funk

[neilwoods]

neilwoods, I wouldn't allow you to deflect this from your intention. As you will see, I've been on this site for more than a year now and while one or two of the moderators may have an issue with the case for contractual interest (compounded), he/she would appear to be in the minority.

 

Dare I say it, perhaps the persone who PMd you is someone whose claim was settled before the case for requesting contractual interest (compounded) became prevalent. ;-)

 

In any case, at least one of the threads imploring people to ask for it was started by BankFodder who, as I'm sure you're aware, is the founder of this site.

 

I suggest you stick to your guns! ;-)

 

Fred_Funk

Thanks, Fred.

 

I'm away to send the first letter by special delivery this very minute. :o