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View Full Version : Unlawful “bank charges” continue apace despite court ruling



David Guyatt
12-04-2008, 05:24 PM
The Organized Grime Family of Banksters and Looters...

For over a decade now, UK banks have imposed charges on customers who’s account exceeds an agreed overdraft limit. It has not been unusual for a charge of between £30 - £40 to be imposed, even if the accounts exceeds the overdraft limit by £1.00. The routine is for the banks to send out a pro-forma letter, often unsigned, advising the customer that a payment has been refused because they have exceeded their overdraft limit and imposing a charge to cover the costs incurred by the bank to process the bounced payment and send out the pro-form letter.

It has been estimated that a sum in excess of £20 billion has been ‘earned’ by UK banks via this suspect charging mechanism.

A few years ago a small number of independently minded individuals began challenging the banks in the Small Claims Courts arguing that these ‘charges’ were unlawful because they were disproportionate to the actual cost incurred by the banks. They argued that the banks largely operate an automated process to bounce payments and that this actually costs them a few pennies --- maybe 10p at most. One bank “whisteblower” from a smaller bank has provided documentary evidence in support of this argument.

Even in those cases where a bank has to initiate a manual ‘bounce’, it is reliably estimated that the cost is somewhere between £2.00 and £4.00. Thus any charge in excess of £4.00 at any time, is therefore unlawful.

As more and more bank customers began fighting the banks in the small claims court, it became evident that the banks were unwilling to argue their corner and in the great bulk of cases capitulated when faced with a contested claim, and re-credited imposed charges. There are many, many cases where customers have won back charges worth thousands - and in some cases - tens of thousands of pounds.

The choking point for the banks has been in every case, the requirement that they provide evidence to demonstrate the fairness of their charges. Not one thus far have wished to do so. Overall, the number of contested claims is thought to be in excess of one million. Hundreds of millions of pounds have been refunded as a consequence. Yet against the accumulated profits of £22 billion plus the banks have made over the years this costs remain relatively small.

And despite being on decidedly shaky legal ground, all UK based banks continued to impose these charges no matter what was happening in the small claim court. And because of the increasing number of small claims being initiated as word reached more ears, the small claims court system began to fray at the edges due to the sheer volume of bank charges cases.

Then just over a year ago, in July 2007, the Office of Fair Trading and the banks agreed to commence a “test case” in the High Court to establish the underlying legal principles of fairness (amongst other technical issues). Once the test case began a “waiver” was placed on all existing and future small claims court bank charges proceedings.

In April 2008 the Judge rules that bank charges are subject to the fairness rule. This was great news for the millions of customers who’s pockets have been electronically emptied by the banks. However, the Judge gave eave for his “fairness ruling” to be appealed and the banks have done so, laying out their case in the Court of Appeals in October 2008.

The situation is that a decision is awaited by the Appeal Court whether to uphold the “fairness ruling”. At the same time the Office of Fair Trading have not made their position clear either and have not said whether they think bank charges are “fair” or not.

In the meantime the OFT “waiver” to the banks means that banks need not respond to existing or new small claims court applications until January 2009. The “waiver” may well be further extended by the OFT pending the outcome of the Court of Appeals. Even if the Appeals Court rules in favour of “fairness” the banks can continue to delay and frustrate for years to come by progressing the legal wrangling to the House of Lords and then onto the European Court.

In view of the banking crisis I anticipate that the OFT will extend the waiver. I further suspect that the banks will be rescued by the government from ever having to return their electronic looting and that the law will somehow be re-crafted to allow banks to loot their customers within (privately) agreed guidelines, because jaded bastard that I am, I just don’t see the organized bankster community handing back “their” loot.

For further reading the follow Consumer sites are truly exceptional in the level of information and advice provided:

http://www.consumeractiongroup.co.uk/forum/general/

http://www.moneysavingexpert.com/reclaim/oft-bank-charges#what

PS, the foregoing has largely been written from memory (a most dangerous and foolish thing at my age) and will undoubtedly have some errors in it. But I think it sets out the general picture reasonably.

Damien Lloyd
01-18-2009, 06:42 AM
Having decided today to embark on just such an endeavour I do find myself inclined to agree with your predictions as I canoot see how the Lords or the Eurpean court can find in favour of the banks. If Tony Blair had had his way this country would have lost it's judicial independance years ago which would have made it a lot easier for the government to carry out the banks bidding in this case. Here is just one example of what I mean: http://www.independent.co.uk/news/uk/home-news/asylum-laws-are-threat-to-judicial-independence-858323.html