[Sussex] Bank charges, important court case

[Andy Smith]

On Sat, Apr 07, 2007 at 12:27:00PM +0100, Nico Kadel-Garcia wrote:
> Andy Smith wrote:
> >The article says he ran up £2,500 of charges on an unauthorised
> >overdraft.  I'm sure that did not happen overnight, so why did he
> >not speak to the bank and tell them he had no way of clearing it?
> >At which point I would hope they would close his account and he
> >could have gone through a process to repay over time, and operate a
> >reduced facilities account (i.e. no overdraft facility) in the
> >meantime.  If you ignore things then yes the charges mount up.
> >  
> What makes you think he didn't? Have you every *tried* to get such a 
> charge dropped?

I'm not suggesting he should have asked them to write it off,
although it appears they have already offered him £4,000.  What I
said was, if he had £2,500 of charges then they were clearly just
mounting up with no ability to clear them so why did he not tell the
bank this?  Once you tell a creditor that you can't afford to pay
them you are supposed to come to a mutual arrangement whereby no
more charges or interest are applied.

As I said, some years ago I found myself in financial difficulty
through my own carelessness and that's what I did, closing a bank
account with a large overdraft, entering into an arrangement to pay
it off eventually and having to make do with a limited facilities
account in the mean time.  It was hard, and my credit rating was
damaged for a few years, but I escaped without a CCJ and today it
does not even appear on my credit report at all.  I would never
dream of going through my statements from that time to find the bank
charges and claim them back.  I screwed up, and the bank profited
eventually.

> >Of course we don't know the full story and maybe he did speak to
> >them, I don't know.  I just worry that somewhere along the line
> >personal responsibility is going out of the window.  If he wins this
> >case then banks will not dare to apply charges in case someone else
> >says they are unfair.  What then will they do?  Make it very hard to
> >get overdrafts?  Close accounts as soon as they start attracting
> >charges?
> >
> >What other agreements will later be considered unfair?
> >  
> Whoah. I don't know why you think this.

I think it because if the charges have to be equal to the cost of
refusing the transaction and generating a nasty letter then will
they actually provide any detriment to going massively overdrawn?
In which case other punishments would have to be used, like not
giving out overdrafts in the first place, or closing accounts.

> It's not the existence of overdraft charges he's upset about, it's
> the *amount*. The overdraft charges right now are pretty serious:
> they're one of the major profit sources for so-called "free
> checking".

Yes I realise this and personally think that the banks were silly to
ever let the banking code contain text saying the charges had to be
only to cover the cost of refusing the transaction.  Now that it
does I think they are silly to apply such charges because they don't
appear to have a leg to stand on.

My problem is with people who are now routinely claiming these
charges back when they could have easily prevented themselves going
overdrawn in the first place.  I am confident that accounts for the
majority of such claims, because I have seen forums full of people
(not just MSE, but elsewhere too) who were getting on quite
comfortably suddenly hear they can claim back charges and go through
years of statements to add it all up.  And they do get it all back.

Cheers,
Andy
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