Bank penalty charges for exceeding limits or returning direct debits etc are unenforceable at law and you can get them back

June 17, 2006 3:35 AM

Bank penalty charges are unenforceable at lawand you can get them back.
posted by sgt.serenity (29 comments total)

Gentlemen , start your pitchforks.
A site detailing how to get the banks to give you your money back is easily the most interesting thing i've seen on the web : )
posted by sgt.serenity at 3:42 AM on June 17, 2006

This is good for the subset of "you" who live in the UK. The rest of us are envious.
posted by Kirth Gerson at 3:43 AM on June 17, 2006

Unless you're a lawyer experienced in this area, I wouldn't be so quick to dismiss this if I lived in a jurisdiction whose laws are derived from the English system.

Do some research or wait until someone else can give you an authoritative answer but don't reject it out of hand.
posted by Jenga at 3:54 AM on June 17, 2006

Who's rejecting? Let's not derail this, but it's not going to happen in, for instance, the U.S. You can research the makeup of our government and Supreme Court, if that will help you.
posted by Kirth Gerson at 4:00 AM on June 17, 2006

offer not available outside of the uk , your home may be at risk if you do not keep up the payments needed to secure it.
posted by sgt.serenity at 4:09 AM on June 17, 2006

I wouldn't be so quick to dismiss this if I lived in a jurisdiction whose laws are derived from the English system.

Well, according to the article:

These charges have continued despite a ruling by the Office of Fair Trading (OFT) in April that any fee above £12 is unfair and unlawful, because it breaches the Unfair Terms in Consumer Contracts Regulations 1999.

So it looks like this is the result of a very specific piece of legislation. I doubt such a law would exist in the US (..Who ever heard of the government telling private enterprise what sort of fees they can charge?! Why... that's as good as communism! </sarcasm>). Whether such actions are possible in other places - Australia, Canada, New Zealand - would depend on whether laws similar to the "Unfair Terms in Consumer Contracts Regulations 1999" are on the books, right?
posted by Jimbob at 4:14 AM on June 17, 2006

Hmmm, IANAL and have no desire or interest in ever being one, but that act appears to be based on some general principal of common law - that penalty charges can't be out of proportion to the actual cost suffered by the business. The legislation seems to just aim to put a figure on what is a reasonal penalty charge, since the banks aren't ever going to own up to what your account being overdrawn really costs them. So, maybe there is scope for wider application, right?
posted by Jimbob at 4:17 AM on June 17, 2006

offer not available outside of the uk , your firstborn son may be at risk if you do not keep up the payments needed to secure it.
posted by sgt.serenity at 4:38 AM on June 17, 2006

IIRC, the Unfair Contract Terms Regulations are derived from European Union law, and apparently the US's EU membership form got lost in the post.
posted by athenian at 4:44 AM on June 17, 2006

When I lived in Scotland, my bank was deep inside my damp and saggy Portobello beach bedsit mattress.

Ah, who am I kidding. I didn't have any fucking money, and what I did have I spent immediately on deep-fried individual pizzas, cans of Tennant's Lager with the big-breasted women on them, and arcade games.
posted by stavrosthewonderchicken at 5:42 AM on June 17, 2006

I was what you'd call a Luxury Traveller.
posted by stavrosthewonderchicken at 5:43 AM on June 17, 2006

I get the impression that unless you at least pay off your overdraft before trying this, the banks will find little ways to make your finances less happy in retaliation (pressuring you to pay back the O/D, possibly giving your credit rating a little downward nudge, etc). That said, I may give this a go in the near future.
posted by Drexen at 5:49 AM on June 17, 2006

I happen to have an overdraft breach letter sitting beside me right now. But they're (Barclays) only charging me a 'fair and lawful' £10.

Bloody sneaky bank bastards.

*puts pitchfork away*
posted by Robot Rowboat at 6:30 AM on June 17, 2006

Since moving to the UK I've always been amazed by three things: how strongly pro-consumer the regulatory environment is, how ignorant folks here seem to be of these protections, and even when they do know how reluctant they seem to be to stick up for themselves. Let's take banks for example.

All banks in the UK are regulated by the Banking Ombudsman. It's your right to take any dispute before the Ombudsman, you're only obliged to give the bank an opportunity to resolve the matter before proceeding.

I've had several disputes with banks (and other service organisations here in the UK), and have always kept detailed notes regarding who I spoke with, when, what was discussed and any representations they might have made towards solving the problem.

If things are solved great, but if not after a few times when I decide a lack of organisational focus on the problem is allowing me to be jerked around I turn up the pressure and make sure they know I'm keeping detailed notes.

If the thing isn't resolved to my satisfaction within a resonable time I ask for monetary compensation. I let them know that I know I can put this before the Ombudsman, and I have no problem with doing so.

Almost any staff will either have direct authority to offer up cash, or can get approval pretty quickly. Most banks, especially if they know you are right, will NOT want this to go before the Ombudsman and will pay. I've been told that 200 pounds is the limit for these things, and I took money from my previous bank several times for "incidents". Banks will almost always pay off if you're in the right, as it will cost them at least 200 pounds to dispute this with the Ombudsman and they really, really don't want to lose and set a precedent.

You've just got to keep cool, always be friendly and never be abusive to the staff and maintain pressure on the institution.

This works with most vendors in the UK; recently I took sixty pounds from T-Mobile here due to double billing that I discovered and which took (IIRC, don't have my notes with me) some eighteen calls between April 26th and May 12th to resolve.

In this situation I had significant leverage because my contract had long been up, and to increase pressure on the vendor I asked for my PAC (transfer) code. When asked by the retention team rep why I was leaving T-Mobile I detailed the calls, the unresolved problem, and mentioned that I "liked everything about T-Mobile except for this recent experience", closing with "it's too bad we couldn't work this out", leaving her the opening. She took the bait.

So the rep that offered me the sixty pounds got to be a heroine for retaining me, and I got what I wanted - money for being jerked around.

Those that ask - get.
posted by Mutant at 6:31 AM on June 17, 2006

Oh sweet, sweet EU. First the Euro, then the anti-smoking directives, and now this. Best thing since sliced bread!
posted by meehawl at 6:44 AM on June 17, 2006

I've got a few mates going through this process right now - indeed one of them got a 30 quid charge because the previous 30 quid charge had taken him overdrawn. (They refunded the first charge but wanted to stand by the second one. Bonkers.)
posted by handee at 6:52 AM on June 17, 2006

For UK customers interested:

Money Saving Expert article plus forums discussion 1 and 2

but...

Bank bars overdraft charge rebels (BBC).
posted by ceri richard at 7:09 AM on June 17, 2006

What is the robbing of a bank compared to the founding of one? - Bertolt Brecht
posted by quonsar at 7:26 AM on June 17, 2006

Jenga, how about a single example of a recent novel legislation in the UK that has been a harbinger of a parallel in the US?

I think we can all feel free to reject out of hand. In San Francisco a few years ago, there was a referendum to the effect that ATM fees could not be charged on both sides of the transaction. It passed. You still pay ATM fees on both sides of the transaction in SF.
posted by mzurer at 8:23 AM on June 17, 2006

Are you kidding? In the US, bank penalties are called Pure Profit and banks (Wells Fargo is the worst in my opinion) will level whatever lame ass charges they can as often as they can.

That's why I bank with USAA, they have yet to screw me over in more than fifteen years of service AND they refund all third-party ATM charges.

Its not about the laws, its about choosing a bank that won't bend you over a penalty barrel at every opportunity.
posted by fenriq at 8:41 AM on June 17, 2006

Power to the people! Even if I can't benefit from this, living in NYC, it makes me happy for the people who did get their money back and pleased Martin Lewis put up that Money Saving site, way cool!
posted by nickyskye at 9:34 AM on June 17, 2006

Of course, the easiest thing is to not spend money you don't have. Sure mistakes get made and there should be recourse but I've never been charged an overdraft fee that wasn't due to my own fiscal incompetence and the fees were always disclosed at the time I chose to do business with the bank.

But I can see how banks charging you fees that they tell you they will charge for behaviors that you shouldn't be doing anyway would be a hassle.

That said, a banks favorite retail banking customer will be one who regularly overdraws their account but eventually stays current.
posted by obfusciatrist at 9:36 AM on June 17, 2006

Because of federal preemption, US states and localities will probably never be able to ban ATM fees and bank surcharges. The effort in San Francisco mentioned by mzurer was overturned because of preemption.

Preemption, in a nutshell, is the principle that where Congress has decided to regulate something nationwide (like national banks), the states may not also regulate in that area.

So if you want to fight bank fees in the US, you're going to have to get a federal law passed. Good luck on that!
posted by footnote at 10:45 AM on June 17, 2006

Thanks for that, footnote - I had never seen the actual case that overturned that referendum.
posted by mzurer at 12:37 PM on June 17, 2006

In San Francisco a few years ago, there was a referendum to the effect that ATM fees could not be charged on both sides of the transaction. It passed. You still pay ATM fees on both sides of the transaction in SF.

I'm not sure I'm understanding this correctly.

Is it really true that Americans get charged by both the bank and the ATM owner when they use a machine?

I can't remember the last time I payed any kind of ATM charge. I guess if I used an ATM in a bar I might get charged by the owner but most outdoor ATMs are free.
posted by Olli at 2:57 PM on June 17, 2006

If you're with the Alliance & Leicester, they'll close your account if you claim the money back. I'm doing it anyway.
posted by bonaldi at 6:09 PM on June 17, 2006

Olli: In my experience in the US, any ATM run by my bank is without fee, but other ATMs might have fees. ATMs owned by other banks often charge, but not always; non-bank ATMs in convenence stores pretty much always charge. And my bank has a confusing fee structure in which it charges for some other networks than its "home" network, and pretty much all transactions outside of the state my "home" branch is in. So if I get some cash at a convenience store in another state I'll gt dinged at both ends.

ATMs are required to tell you what fee they're charging you and give yu a chance to cancel the transaction; they weren't always so required, and I gather the fees were more abusive then.
posted by hattifattener at 8:35 PM on June 17, 2006

And I see it's time once again to shill for credit unions. Unlike banks, they are not (at least in the U.S.) designed for the sole purpose of enriching people who are not you. Mine returns ATM fees charged by other institutions, and does not charge such fees itself. All other charges are reasonable, and interest paid is roughly double what the banks pay. Everyone here would do well to stop paying bankers for holding on to your money (and investing it themselves).
posted by Kirth Gerson at 5:20 AM on June 18, 2006

Don't feel too bad. In South Africa, banks charge you for asking them your balance, and they charge for making deposits! You get charged for using your debit card at the grocery, too.
posted by Goofyy at 3:35 AM on June 19, 2006