Abandon All Fear

What nobody else seems to be saying…

Bank Charges: How I Did It – From The First LBA to Post-Account Closure

Posted by Lex Fear on July 21, 2007

 Your exclusive is finally here! I’ve been waiting for the final letter from the FOS before I blogged this one walkthrough for anyone who wants to do it but is worried about the repercussions.

Previous posts on excessive bank charges here: Its Time, Banks Behaving Badly, Everyone Should Do This, The Public 1 HSBC 0, Accountability Advice, Calls to Stop Illegal Activity are Unfair
What the MSM says here: £100,000 Will Help Customers Fight Unfair Charges, Claims Cost Banks £200m, The Latest on Bank Charges, FSA Faces Calls to Take On Retail Bank Regulation
Other rages against the machine? Fight the Fear!

Before I begin I must acknowledge that this would not have been possible without the information provided by the Consumer Action Group. They were one of the first, if not the first, groups to take on bank charges and offer comprehensive advice and templates in their forums.

To be honest, I did not get a lot of responses when I posted in the forums, so instead I had to search through other users posts myself and adapt the templates to my personal situation. This does not negate the hard work the CAG put in, I just hope that by offering a full walk-through of my own experience, it saves you the time of trying to piece together different experiences. Please feel free to email me if you have any questions.

Intro: Momma always said to save all my paperwork…

So I did. By 2006 I had suffered 3-4 years of unfair practices by the companies I banked with. The last bank I signed up with had already charged me over £400 for overdraft fees and direct debits. You see, I graduated with a Computer and Management Sciences degree in 2003, but the UK IT job market had effectively gone bust so the only job I managed to land for the first year was a customer services job answering a phone. I was not earning a graduate salary, but I had graduate size debts to pay off and was working under supervisors younger than me, who hadn’t gone to university, being paid more than me. To be honest, my bitterness was difficult to put off.

I was basically living beyond my means, and finding myself going over my overdraft limit constantly, then having to ask the bank for an extension each time so I could buy things like food. When the bank started to cut me off, I decided to switch. My credit rating was decimated so I wasn’t allowed to open another grad account, instead I had to settle for a basic. My previous bank did not like the idea of me leaving and so they switched my account from 0% interest to standard 15% interest without notice. I did not know how the law works or how it was supposed to protect people like me at the time so I didn’t do anything. I simply tried my best to pay off what I could, when I could.

Now I had my basic account, I was able to use all my wage at the end of the month, but I usually found myself with pennies left by the last week. Which meant, when an emergency came up, that tipped me over the edge and into red- for which the bank automatically slapped an extra £30 on top- thankyou very much. As the months went by, even when I managed to bring my spending back in line, an extra £30 from the previous month put the current month in the red and bang- another £30. So by the end of 3 months I could easily rack up £170 in charges (month 1= £30, month 2= £60, month 3 = £90).

So when I was finally sufficiently pissed off enough to search for some solution online- I found the CAG, and my eyes were opened. I had also been sufficiently screwed with my credit rating that I had nothing to lose- and pay attention anyone reading this who works for a bank – I was backed into a corner- when you back someone into a corner, then you leave them no option but to fight. The banks here have effectively dug their own grave by profiting off the back of the weakest in society.

Now, I had kept all my statements, so I went through them and totaled up all the charges. For those of you who don’t have your statements, you will need to file a Data Protection Act request with your bank, CAG supplies the details here. Once you have your statements, read on.

Step 1. Gimme back my money

First thing I did was take the CAG’s template and adapt it slightly for my own circumstance, then sent it to my bank.

Preliminary Letter (pdf) | (odt)

They simply ignored the letter or lost it, so after 14 days had timed out, it was time to fire a warning shot across the bow.

Step 2. Letter Before Action

Letter Before Action (pdf) | (odt)

This provoked a swift worded response 7 days later:

“I am writing in response to your recent communication and was very sorry to learn of your disappointment with the service you have received.

Thankyou for taking the time to highlight your concerns, we are currently looking into the situation and will be writing to you with a more detailed response.

In the meantime, I am enclosing a leaflet which explains the steps we will take to handle your complaint.”

Meaning, we are not going to give you back your money, however give us a bit more time to make up an excuse.

To which I sent the following reply:

Response Letter (pdf) | (odt)

I then got a second letter from the bank 11 days after that:

“Thank you for your letter dated 26 May, please may I apologise for the delay in replying.

I am unable to comply with your request to reimburse the charges applied to your account as they were debited correctly in accordance with our published charging tariff… blahcakes”

Step2A. This is where I went wrong

I had every intention of filing a claim with the Small Claims Court. But as I mentioned above, money was tight, I lived hand to mouth, and it was going to cost at least £50 to file the claim, which a the time I couldn’t afford (I had already fi
led one that month against my first bank for the overdraft change- an entirely different legal matter still with the courts).

I’m not proud of myself for it, but I just decided it could stay on the back-burner. Besides they had refunded all the charges from screwing up my account switch-over, and reinstated my direct debits.

I strongly suggest that you don’t let the initial cost of the claim deter you, but if you did fail to follow up your legal threat, read on, be encouraged.

Step 3. 9 months later

A new job, a double income and some good financial management later, I pondered the legal threat I had made 9 months ago, and whether I’d have to start fresh, or be able to pick up where I left off.

I read back through my letters, then did a quick check online and in the forums, then I thought what the heck, go for it. So here’s my second LBA, this time I was determined to follow it through, but they didn’t know that:

LBA 2007 (pdf) | (odt)

This time I got a much more detailed and wordier reply which can be downloaded below:

Bank response to LBA (pdf)

Step 4. Small claims online

Since this was a LBA, not a fresh start with a simple preliminary, I waited for the 14 days to time out and did not give the bank any further warnings before filing my claim online which came to £80.

I basically used Money Saving Experts statutory interest calculator, to calculate my total charges plus 8% interest which came to £611.24. When you file your claim online your fee will be added to this automatically (£611.24 + £80 = £691.24).

HMCS MoneyClaim is easy enough to understand and the fields hardly need explaining, just go through and fill in your details, defendants (your bank). Then you will come to the ‘Particulars of Claim’ which is the difficult part, especially since you are limited to 500 characters. Again, I took the example provided by the CAG in their template library and edited the wording slightly to fit:

Between 01/12/04 and 28/12/06 the Defendant applied numerous default charges to the Claimants bank account. The defendant contends the charges were debited in accordance with its contract with the Claimant. The charges applied are an unfair penalty under the Unfair Terms in Consumer Contracts Regulations, which state: ‘A term is unfair if it requires any consumer who fails his obligation to pay a disproportionately high sum in compensation’.

The amount charged does not reflect the cost of the breach. The charges are an unlawful ‘extravagant’ penalty. A charge is a penalty if it does not reflect an items true cost. Under the County Courts Act 1984, the claimant is entitled to interest at a rate of 8% per annum from the date they were first deprived of the money. This totals £61.24, continuing to accrue at the statutory daily rate of 0.021% until judgment or earlier payment. The Claimant therefore asks the court to enter judgment in their favour for £550.00 plus interest, totaling £611.24.

Please note that this is an old wording and CAG currently provide a new one in their template library (registration needed) which they ask not to be printed outside of the private forum.

HMCS Claim Form (pdf)

Step 4A. Be prepared to go to court

I have published the steps I took so far, under the assumption you already have researched claiming back bank charges. If not, I should warn you before you get to this stage that if you are going to file with the small claims court you should be prepared to actually go to court. You are not defending yourself so you don’t need a solicitor or lawyer- it is the bank who decides if they want to defend themselves against your claim.

If your bank decides to defend in court, it is best to seek advice from a website such as the CAG, MoneySavingExpert or ThisIsMoney forums- don’t pay for the advice- there is no need! The charges are illegal and unfair but if you don’t state your claim properly you could end up like this man. It’s completely wrong, but remember the banks have a whole legal team working for them.

Step 5. Wait…

A few days after filing online I got a Notice of Issue through the door, it felt good to hold in my hand…

Then the next day, a short (disgruntled) note from my bank with Acknowledgement of Service. Yessssssss. This was followed by the AoS from the court. Interestingly you will note bottom left of the AoS the bank ticked “I intend to defend all of this claim”.

Acknowledgement of Service (pdf)

Step 6. Bank Owned!

Bank Settlement Letter (pdf)

£700 of my money, stolen from my account returned!

Ooh I don’t like the sound of this:

“As it is clear that you do not accept the terms and conditions for the operation of your account we will shortly be contacting you to discuss its future operation.”

Step 7. The Empire Strikes Back!

And sure enough…

1st Notice of Account Closure (pdf)

“The decision should not be regarded as an admission of liability on the part of the Company, nor should it be regarded as any sign of weakness…”

Ooh they must have taken it personally.

“Therefore as it is clear that you do not accept certain aspects of our terms and conditions for the operation of your account we regret that we are unable to continue to offer you banking facilities…”

Err… which certain aspects of the T&Cs were those… the ones that were unlawful? The ones you were unwilling to defend in court?

Of course it was an attempt to piss on my victory parade, and if I’m honest I was not only annoyed but slightly nervous. The last account switch-over didn’t go to well (see above) and I actually did get good service from A&L.

A brief check in the CAG forums and other online places only seemed to return results for people going through a similar thing, but no resolution or some brief mentions but no details.. how.. what.. when?

Step 7A. Pulling the cord

Most guides you read will advise you on the first step to open your parachute account. I haven’t mentioned this yet because I still had my f
ormer account with HSBC which was currently dormant, so I knew I’d be able to do a quick transfer myself into it.

Nevertheless, I had got my first taste of blood, I wasn’t going to let them get away with retaliation and forcing inconvenience and further stress on my person.

Step 8. Go ahead, bank, make my day

I wrote a strongly worded letter right back to them asking things like: “If you felt that your charges were ‘fair’ and not unlawful, why did you offer full payment and not proceed to defend them in a court of law and prove my particular case wrong?”

I then mentioned I’d spoken to someone in customer services who had confirmed that other customers were having their accounts closed after claiming back charges. This was true, and it was important for establishing it as a retaliatory measure, not just a vague “breakdown of the relationship”.

Finally I used some of my own initiative and creativity to issue a further warning about closing my account:

If you go ahead with the closure of my account I will be forced to complain to the Financial Ombudsman Service myself and be claiming further compensation. I take this opportunity to remind you the FOS is ruling in favour of customers who have had accounts closed in retaliation for claiming back charges. (See attached adjudications ‘Mr A’ and ‘Mr L’).

In order to make my point, I enclosed print-outs of an article from ThisIsMoney and both adjudications from the FOS website. I did this to make it clear I knew my favourable legal standing.

Warning Letter on Account Closure (pdf) | (odt)

You will be advised that it is the banks discretion who they do business with, so even if they are wrong to close an account, it can’t be stopped in anyway legally.

The bank did take notice of this letter. I received a shortly drafted letter from them advising they were “currently looking into the issue you have raised and will let you have our response as soon as possible.”

I then got another letter 7 days after that to advise that “the issue you have raised concerning the closure of your account has been forwarded to the relevant department who will contact you direct.” That got their attention didn’t it?

Step 9. We’re gonna do it anyway and risk the consequences…

… because it’s all about risk isn’t it? If we keep this customer, we can’t make any money off him anymore, if we close the account, we’ll only lose a couple of hundred pounds.. you do the math.

2nd Notice of Account Closure (pdf)

But they extended the the closure date… can’t really think why, they already decided they were going to close it. I suppose they expect I should be thankful for this gesture?

So I get online and transfer all my standing orders over from one account to the other. Let the HR girl know at work (thankfully I work in a small company), and write a letter to companies I direct debit. Those I missed, got in touch with me- Ha!

Step 10. The last laugh

Next stop FOS website to download their complaint form. It took about 15-20 minutes to complete. Mostly cut-paste-edit job and photocopying a bunch of letters. Print then send.

Had a response by 12th June from the FOS:

“Thankyou for sending your complaint form. Unfortunately, I have to return this as you need to sign it.”

DOH!

2nd Response from the FOS (pdf)

The 3rd response from the FOS on 16th July  was just to inform me of the guy who had my case dumped on him, and to inform me they have a heavy workload so it may be sometime before they can progress my case.

Well, I think they’re doing a great job BTW but I immediately had an idea of how they could reduce their workload. Stop writing letters to inform clients you have a heavy workload! I think that will probably reduce it by a quarter at least.

banker4th Response from the FOS – The Gold! (pdf)

“A&L has now told us it would be prepared to pay £200 compensation to cover the distress and inconvenience the closure of your account may have caused…”

-///-

And that folks, is how I did it, it only took me 12 months, but I did have a rather long and unadvised break in between. Like a surgical procedure, unpleasant, but you get to take time off afterwards and eat cookies. Anyone can do it.

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