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Contractural interest


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Hi all,


I am currently pursuing Lloyds and Capital one for my charges but I am helping one of my friends with her HSBC account.


She has just got her statements back. She does not have an overdraft facility but because of charges she has gone into a none existant overdraft (if thats the right terminology).


My question is, if any one can help, She has been charged interest for going into the red as well as charges. Obviously the whole of the interest is from the excess overdraft fee. So can she just add on to her claim all the interest that has been charged?


I didnt pursue any of the contractractual interest on mine as it was way over my head but to me it seems that if all the interest added is from the charges then there is no need to try and work it out just add it on to the claim. Or am I just being a bit dim (well It is Monday brain not kicked in yet) :roll:


I hope you can understand what I am saying and would be most greatful for any advice. :D




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hi gem

you may want to look through the link below and then see what you think's best after.


Contractual Interest

From Gary H

A quick note of caution to anyone intending to claim contractual interest.

Firstly, keep it reasonable - it has to be seen as that in the eyes of the court. Claiming five times in interest what the amount is in charges certainly won't endear you to the court, and in fact could well be seen as undue enrichment which would make you nearly as bad as the banks. If need be, claim the lower contractual rate if the unauthorised rate gives a ridiculously high amount.

Also, please understand the issues behind claiming the contractual rate. Its important to remember that there is no express term or provision that entitles you to it as such, as there is with the 8% statutory rate. You are arguing an implied principle, that the banks term of contract relating to interest should be reciprocal. You are perfectly entitled to claim it, whether you get it or not would ultimately be for a judge to decide. Obviously it's not likely to get that far, the banks on the evidence so far would rather pay the contractual rate than defend the claim (ie justify their charges!) in court. Which brings me to the next point....

IMHO accepting part-settlements is not a good idea. Halifax have recently been offering to settle the charges part plus their own estimate of the stat rate, whilst denying the contractual rate applies (obviously that’s not for them to decide!). If you accept the offer it lets them off the hook of having to defend the charges part of the claim. If you then tried to pursue just the contractual interest they would almost certainly try to get it struck out. IMO you need to present them with a stark choice - pay the full amount of the claim or see you in court!


From Karnevil

The contractual rate is not proven in court, some people have managed to negotiate it prior to court and many others (more) have accepted the 8% or pushed the contractual into the court room to a not great reception and gone on to stick with the 8%.

We have to take into account the pre-action protocols and note that the judge will take these into account when dealing with costs - and yes even in small claims.

Contractual interest can be requested in letters and taken to the court steps, but if an offer for the full amount, s.69 and costs is given prior to the hearing you should take it - unless you have worked out a very good argument for it. It is not a right.

With standard interest, not applicable till court at all, if you receive an offer to refund ALL your charges before taking court action you must accept it.

The important thing is to research the issues and understand the arguments and also the potential risks. If you’re confident, then go for it, if you’re not, then don't.


From Lucid

But I stand by my opinions on the matter in that anybody who doesn't understand contractual interest and who can't put their arguments forward regarding it, should not consider adding it to their claims. I believe that if you are confident enough to bring a thoroughly researched case together then the Judge would look upon you favourably - no matter what their opinion on contractual interest is, and even if it got to court and the Judge was against contractual interest, I don't think it would go as far as getting your claim struck out. But if you turn up to court and don't have a case prepared and you have basically added contractual interest because you thought it was an easy way to increase you claim amount then I don't think the Judge would appreciate this at all and they would probably be more inclined to take a harsh approach - and possibly award costs against you. That's the way I see it anyway, but obviously I could be completely wrong as I'm very far from being an expert.

If i've been helpful in any way....then tip my scales over there!

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