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A Norfolk businessman has received a cheque for £35,987.94 from NatWest after challenging the bank over charges levied for bouncing his cheques, The Telegraph reports. The anonymous entrepreneur suffered cash flow problems after starting up his window and conservatory business eight years ago. Over 28 months between 2000 and …
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Oh for heavensake, the whole point in bank charges and fines are to stop people taking the p**s and not balancing their finaces correctly. Like most people, this guy knew the rules of his bank account and what he would be charged if he broken those rules. If he doesn't like it, then change bank account instead of crying to the small claims court to get the whole lot back plus a small kiss off as well. It's idiots like this that will soon cause normal people who don't abuse over-draft limits etc. etc. to have to pay for the priviledge of having a bank account.
If I get a speeding fine and points, do I claim the punishment doesn't fit the crime and refuse to pay? What's next, can I claim that the bank's interest rate on my mortgage has been too high, or that I'm unfairly charged an extra days interest in a leap year?!
The banks are doing nothing wrong as far as i see it. So long as the rules are there and you've signed up to it, then the only person to blame here is the account holder.
Stop whinging and join the real world!!
I really cannot agree with people claiming fees back. This isn't some hidden small print fee problem, this is people who continually use banks money without an authorised overdraft.
I can't believe that people are acting so hard done by when it's quite obviously their own fault. You knew the charges and still continued to run them up, you can't blame the bank for not giving you an overdraft. Absolute mug.
I'm glad he got his money back. Although I wonder why he didn't have an overdraft in for the first place?
To Stephen and Ian:
When you start your own business, it is almost impossible not to go overdrawn from time to time. Not because of poorly balanced finance or taking the piss, but rather debitors who are slow in paying. You can send out bills, but if they don't pay on time, then cash flow becomes a problem and you will go overdrawn. As I said above, I don't understand why the bank didn't give him an overdraft in the first place.
The charges themselves are also not the entire issue, rather that they charge too much for a bounced cheque. In fact it is illegal for the banks to charge more for the bounced cheque, than it cost them to process it. So the reason they settle out of court is that if they were forced into court and had to reveal the administrative costs, they would be liable big time. The banks have been asked by a parliamentary select committee about the charges, and have so far refused to give details.
Maybe they have something to hide....?
The point here is that these charges break the law. The key rule here is, where these is a breach of contract, any charge should not exceed the cost of the breach. Put another way : banks can only impose charges which are in proportion to their costs.
Banks have been applying costs that are disproportionate to the costs they had to bear. They have broken the law.
Are those posters above me, who are clearly not in favour of people reclaiming costs, suggesting that banks should be allowed to break the law with impunity?
OK, so it's im the small print that these charges apply, but just because someone tells you there are going to rip you off before they do it doesn't make it OK.
I agree, small business and start ups should be shield from such over inflated charges (I never said the charges fitted the "crime", just that they were aware of them in the first place).
However this guy, to put it bluntly, was a spotty nosed student who WAS taking the piss and was probably necking beer paid for by a number of dodgy cheques ;o)
Yes the charges are over and above what shopuld be charged, but there shoudl be a charge and any compensation should only be the differnce between what was charged and what should have been charged plus standard interest, not the grossly overly inflated amount to someone who doesn't deserve it.
@Simon Painter: I think you'll find he did have a choice. He could have arranged a suitable loan to start his business up and made monthly payments which he could handle or he could have ensured he had sufficient funds in the first place. Or after running up a reasonable debt he could have realised that things obviously weren't going right and sorted something out.
Can you imagine where this is going to end? Soon everyone will be claiming money back from companies like Argos because they're putting too much profit on top of the prices for items they sell...
"I paid £100 for that chair and it only cost Argos £40 and £10 staff costs, I want to get my £50 back!!!!". Banks are there to make money, just like any other business.
The bottom line is that people are aware of the charges and they make a conscious decision to continue running up debt.
Why should banks not be allowed to earn money if they have specified the exact charges that will apply if you do XYZ.. People say they should only be allowed to charge what it has cost them to administer these bounced cheques and such like... why? We don't put limits on how much profit people are allowed to make on items they sell.
This whole thing is a joke.
Why didn't he have an overdraft someone asked ? You tried to get a bank to lend you money ? This guy clearly needed it so therefore wasn't eligable. There's an old joke that a bank is someone who will lend you an umbrella when it's fine, but demand it back when it rains - or put another way, will lend you loads of money as long as you don't need it.
Related to "it's in the contract", well yes it is but the contracts are hardly reached by a "meeting of minds" are they ? Pretty well all the banks have broadly similar charges, so there isn't really any way to "vote with your feet" and not give your custom to a bank with such charges. They have been steadily increasing them on the basis that (just like speeding fines) "you don't have to pay them if you stay within your limit" and hoping that anyone complaining would be considered a social pariah. Quite simply, they've been cross subsidising other areas, most notably personal banking, so as to keep the 'headline charges' as low as possible. Now they've had their bluff called and the whole charging edifice is collapsing around them.
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On pay day this month, I'm going to withdraw all my money (including overdraft) out of my current account and stick it in a high interest ISA, then I can claim back the money, plus interest and a large wad on top of that, say in 12 months time.
I'll call it the double interest account, I'll make millions!
Can I claim on miss sold lottery tickets too? I've not won anything for months!
Finding it difficult to understand the people who are on the side of the banks. The banks have BROKEN THE LAW by imposing a 'fine' on people who go overdrawn. Only the government can 'fine' people, not banks. That's where the issue is, not that people are financially hopeless (should you be fined by banks for being forgetful, dyscalculaic, on holiday, paid late by your company..I think not)
Re your comment: "It's idiots like this that will soon cause normal people who don't abuse over-draft limits etc. etc. to have to pay for the priviledge of having a bank account."
I've never incurred any bank charges for unauthorised overdrafts etc., but I have to disagree with your point (and your spelling of "privilege").
It seems likely to me that the biggest victims of excessive bank charges are likely to be people on low incomes who are already struggling to make ends meet. It's difficult to "balance your finances correctly" when your income only just barely pays your regular bills. What happens if you need to pay for something unexpected?
Call me a bleeding-heart left-wing nutcase, but I'd be perfectly happy to pay, say, £5 a month for my current account if that's the price we need to pay in order for banks to stop abusing the poor.
They truly are. Or masochists who like being shafted up the ass.
It's not just overdraft people or bouncing checks that are being charged.
Banks charge BP35+ for Direct Debits that bounce, WITHOUT actually paying them. Even if they bounce for 2 quid (usually the case for most people, who don't actually have overdraft) .
So if someone miscalculates, or finds himself in a tight spot for a couple of days or a week, the Bank then fucks them up more, by charging 300%+ on a service they didn't even offer to them!
This then causes the people to be out of pocket, thus incurring them MORE bank charges.
But no, some people with either too much money or too little common sense or humanity, agree that banks should be allowed to go on practicing ILLEGAL methods and shafting their clients.
@Ian: A year or so ago, my employer had a problem with the BACS system which meant that wages were paid into employees accounts four days late. That combined with an unexpectedly expensive month meant that I had nothing left with which to cover bills being paid by direct debit. I had arranged my direct debits to come out of my account three days after I was normally paid each month, just in case of delays. So, I contacted my bank and let them know that my salary was going to be delayed, but they weren't interested. I asked whether they'd extend my overdraft to cover the outgoing costs - not interested.
Instead, they bounced each and every direct debit and standing order I had set up (all 15 of them) and charged me £30 per item for the privilege. That's £450 in charges in one day. And then charged me again for being over my overdraft limit due to the charges that had been levied on my account.
We were already struggling to make ends meet, and our bank made life significantly more difficult. It is for this reason that I'm currently taking them to task regarding unfair charges - hopefully the weight of such cases will get them to change their ways.
I'm currently involved in helping my 79 year old mum reclaim fraudulent monthly bank charges... Following my fathers death 5 years ago, all their joint cards were cancelled and a new account set up in her name.
Without her knowledge, the bank started taking monthly charges for a debit card she never received nor had ever requested... As the deduction was fairly anonymous it went unnoticed until last week when she asked for confirmation of all her outgoings... On questioning the charge, the bank offered her £190.
Having checked her statements the total owed (without interest) currently stands at around £500. Not earth-shattering, but a significant 'loss' to a pensioner and a blatant example of how banks are happy to rip off people and - when finally caught out - still try and short-change you !
You can perhaps see why I have little sympathy for the grasping, self-serving, global monsters the banks have now become and would urge anyone and everyone to check their statements with a fine-toothed comb and claim back what is rightfully theirs !
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Not everyone has an overdraft, moron. Im very happy for you that you have so much money you dont know what to do with it. Some of the rest of us struggle to make ends meet. Not because we're financially reckless, but because we simply dont have any money. If you want to continue living in that make believe world in your head, where everyone is loaded and debt is a sin commited only by the damned, feel free. But do us a favour and keep it in your head, hmm?
As a struggling mature student (loan + job = not much, but didn't matter because job + studying = 72 hours per week), I got a credit card with my bank. I know the things are evil, but figured that having food was better than the results of my first year as a student.
The card had a limit of £200, which I reached after about a year of constantly making minimum payments. At which time I had to move house (Landlord converting shared house into two flats). Not knowing where I would be moving to, I set up a standing order to pay an amount equal to the last minimum payment I had made.
My own fault - I wasn't checking those statements, mainly because I was preoccupied with finding somewhere else to live that wasn't friend's floors.
However, it turned out that I was off by ~100p, and so charges of around £30 were made. This continued, naturally, each month. My 'minimum payments' weren't doing the trick.
Fortunately, the bank contacted me. Once the balance on the account had gotten to ~£400. I was somewhat annoyed that they had not gotten in touch sooner - an extra £200+ out of my finances was going to hurt.
I called them to arrange that I would pay the charges provided they did not apply any more charges between then and my next loan installment clearing. They agreed. Then charged me. Then told me they did not have any record of any call.
I'm starting to sound like a whiny swine, so I'll stop - that's not the point of this. The point is, that extra £200 was a lot of money to me, but it was about the largest amount that I could say "meh, I guess I screwed up, still, it could be worse" and then pay it.
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Barclays profits were £4.6bn HSBC were £11bn - is this reasonable ?
There seems to be a lot of people from the banking sector in this discussion - at least I assume that's where they work because they seem as out of touch with financial realities as the banks themselves.
The banks operate a cartel - there is no real competition, their charges are all similar - and they use this position to enforce unreal charges. They operate outside the law, and defy the government when they are questioned.
Mr Strickley, this is quite a simple matter, the banks are making illegal charges, and they've been found out. Now they are defying the courts and trying to safeguard their profits. I don't think anyone objects to reasonable charges if they over-reach their finances, but is a £20 charge for exceeding your overdraft by £5 reasonable ? Is there any real cost to the bank in this ?
It is not the people claiming back the money that was stolen from them that is going to make banks charge for current accounts, it is the banks' own desire for excessive profits.
I bet you're one of these people who moan about petrol prices and the profits BP make as well (BP makes it's money on refining NOT at the pumps where the Government take about 75% of the cut)
Banks make the majority of their money investing and not by charging people who don't understand the concept on money management.
If you break the rules you pay the cost, it's the same in everything else in life, so why are the banks getting stick for charging people who have broken the rules?
Rules, financial mgmt decision, etc... aside there is an easy solution to dealing with banks. Pay cash. Not only does this remove the woes of dealing with bank fees; you actually save ~18% annually by paying for everything in cash. It is absolutely legal and there are no services denied to you by paying cash; it's just sort of inconvenient.
While I don't like "unfair" bank fees either, it is still the customers decision to use the banks services and agree to their terms; you are paying for convenience and just like any other convenience service, it costs extra.
I'm surprised at some of the responses here - primarily from Ian 'Barclays' Strickley ;-) (no offence intended there, just being facetious)
The point here is not the why or how someone exceeded their AGREED limit with their bank, rather that the bank has charged them a fee which is not in proportion to the cost to the bank.
The fee is not a service or product, nor is it a commodity, it is not sold to a client so you can't use the "they need to make profit" point. It is merely a charge to cover their cost of informing you and your creditor that the transaction has failed due to lack of funds. The cost to them is NOT £30.
They are only legally allowed to cover their costs on these fees, otherwise they have an obvious incentive to make things difficult for people, in order to get more charges levied.
It's not supposed to be a deterrent - stupid example, but imagine Ian, if your heavenly bank changed their charges to £50,000 for a bounced transaction and something happened to you that meant you were caught short. The fear of the £50,000 charge hasn't made any difference to you, you didn't EXPECT to be paying it.
Nobody sane opens a bank account and thinks that they'll soon be bouncing stuff all over the place, it doesn't get them anything, it COSTS them.
Lets pay attention to the real issue at hand.
Have read comments so far. I initially accepted charges, although I did try to have them reduced by means of appointments, letters, phone calls, etc. No joy. Did have an agreed personal account overdraft and all ran reasonably well until RBOS decided to foreclose the overdraft (without warning) and started refusing direct debits, bouncing cheques, etc, and took the money from my business account with them (sole trader).
The trouble really started when they refused a direct debit which would have resulted in the account being overdrawn by 30p and charged £30 for their "trouble". Complaining resulted in them paying the direct debit and charging another £30 for "approving" the payment. during that month, and following the same procedure, managed to appropriate£1200 (that I didn't have) and exceeding the overdraft they closed by £200.
I had arranged a temporary loan for the business of £6000 to cover the purchase of hardware for a client (the deal was confirmed by the client's bank's Business Assett Finance division, but the BAF division were late in paying. My bank took the £4000 left in the business account, closed the account and started taking payments from the joint personal account. My books showed orders for £15000 pending and confirmed for the quarter.
I have opened new accounts and am in the process of starting action to recover what looks to be in excess of £27000.
Can those supporting the banks justify this for them please?
Posted Tuesday 17th April 2007 13:42 GMT
"Banks are there to make money, just like any other business."
Banks have always and will continue to make their money on loans. These fees are just icing on the cake. The bank is not doing me a favor by holding my money, I am doing them one, by providing the capital they need to back these loans, however flawed the system may be. This is why banks pay you interest on monies on deposit; to compensate you for the time that you have spent separated from your money.
"Why should banks not be allowed to earn money if they have specified the exact charges that will apply if you do XYZ.. People say they should only be allowed to charge what it has cost them to administer these bounced cheques and such like... why?"
Because banks do get it wrong sometimes. Here's the deal where I live:
Many of the local banks are just now getting online. Obviously there are going to be bugs in those systems, so there will be inconsistencies in amount stated as your account balance, especially when you consider the ATMs are not on this network, and the tellers seem to be on a network of their own. All in all, you have 3 different sources of information on your balance, all saying three different amounts. Throw in the policy taken by ALL banks, that you are always wrong and they are always right when there is a balance discrepancy (though which of the 3 systems is right depends entirely on who you're talking to.), and you are left without the teeth of your own calculations. On top of all that, there are some mysterious processes at work here. I can start a month with 100$ in my account, and spend 99$ on one transaction, leaving 1$ left. This will show as the balance as well in most cases, but then again, sometimes the balance will show more or less, as if it's somehow possible to get anything other than 1 dollar when you remove 99 of them from 100.
This problem has become so widespread here, that most of the banks have had to put up signs saying they will not refund fees, so the tellers don't have to waste so much time telling people that. Have you ever seen software that was 100% bug-free from day one? Why are we supposed to believe banks have this , but no one else in the world can seem to produce it?
This is just the basics of it. We could go even further by talking about the wide variation in number of days/weeks it takes for supposedly instant transactions to take place, on top of the entire cashless society being pushed on us by banks (restrictive teller hours + minimal ATM locations + fees for using competitors ATM = I can't choose to use just cash anymore, unless I choose to never use a bank account, in which case I will never be able to obtain fair credit to buy a house or drive a car to work). This results in people having to keep track of many small transactions over the course of the already busy day, plus the addition of any fees they may have been charged by their bank AND any competing organizations which just happen to handle said transactions/withdrawals/deposits (but this is already moot, because the bank is right, not you), and still tell me with absolute certainty you know what is in your account without looking. Then tell me all these transactions were posted today, and not a month later when you have forgotten.
Makes me miss the days where I could tell how much money I had by adding the cash in my hand to the amount I was told was leftover when I withdrew it.
Keeping your own ledger works out very nice, but don't forget to check for fees that you may not have been aware of, and don't expect a bank to take your ledger seriously either.
Of course, this is all assuming we're not talking about fraudulent transactions.
I think the banks are fully justified in charging you £30 for going even a penny over your overdraft limit. The rules and fines associated are clearly there on their websites and documents that are sent to you when you first open the account and when ever these charges change.
I agree that if the bank is at fault then you shouldn't be charged ANY fees, that I don't agree with.
Overdrafts are an interest free loan, the banks don't even have to give you that, and surely an overdraft should only be used in emergencies and not as a matter of course. A number rapidly falling towards zero means you're spending too much, and one that's negative means you're in trouble.
It's basic maths people!!
What really annoys me is that not only do these cases return the fee charged, but also interest on those charges! How can you get interest on what was already a negative number!
Ian S seems to have missed the point of my posting (What's fair). The bank did all of this WITHOUT prior notification and while there was still money available for transfer - by agreement - and, with respect to the business account, started taking money from a joint account THAT HAD NOTHING TO DO WITH THE BUSINESS!
I can only assume that they were fed up paying me interest on a Guaranteed Interest Account that I held with them (five figures) and wanted to offset my gains by clawing some back.
I am troubled by his use of the word "fines". I understood that only courts could apply fines so he seems to have accepted that, in his mind at least, banks are free to act as judge, jury and executioner - worrying.
Can I have the "interest free" overdraft he refers to please. Since when was this free?
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