For those of you interested in reclaiming bank charges

I'm afraid you are wrong

Unless we have misunderstood each other..

The Unfair contract terms Act 1977 clearly states that charges made against someone acting as a consumer can not be punitive. They can not punish someone and can only cover administrative charges. Ie if it costs a bank, or any other service provider £2.50 then they can not charge £28.00

Because it is statutory then you can not contract out of it, just as you would not be able to sell someone unsatisfactory goods, even if you stated in a contract that the customer has no right to the goods being of satisfactory quality. The sale of goods act 1979 protects the customer in that scenario and UCTA 1977 should protect the consumer in this scenario.


I am not talking about interest rates on overdrafts (which is how banks make their money). What I am talking about are punitive charges.

 

No. chef - I think we are on the same wave-length (almost)!

You are right - it's unlawful to impose punitive charges - but the whole issue here is that it's not yet been tested in a court of
law as to whether the Banks ARE imposing punitive costs when customers go overdrawn without prior authority.

The Banks certainly aren't helping themselves because they take the view they would rather treat each case individually and settle
the issue direct with the customer without resorting to the courts. IF it actually costs the bank £20 say, to send out an overdraft
letter and they are charging £35 for it - then it could be argued that it is acting unfairly and punitively. In the majority of publicised
cases though, customers are, for instance, demanding refund of the entire charge - effectively saying the Banks' should pay for sending
out the letters. Why should the banks do that? - it's fair for them to recover their costs when customers break the terms of their
agreement (contract) with the Bank.

Overdraft interest is a standard part of the account's terms and conditions and is not in dispute as far as I am aware. I suspect
that when all this eventually gets to court, as surely it must - the judgement will come out 50/50, that the banks are excessive in
their costs but that they are entitled to recover reasonable costs. So instead of charging £35 it would be reduced to say, £20. I
don't think any court of law would rule that the Banks can't charge at all.

The thing at present is that customers are attempting to recover ALL the costs charged to them - which in the circumstances is
unreasonable action by those customers. The sooner the Banks dip their toes in the courts of law the better in my view, because
then it will be resolved for once and for all. As I said before, if the Banks lose - then everybody will suffer because they will simply
abolish free-banking and charge everyone for their services.

 

I see your point, yep we are on same wavelength then (as you say, almost!)

I suppose the banks arguments will consist of them trying to show the cost of the overdrafts are absorbed into the business somehow.

I don't think it will result in free banking however as I don't imagine that these charges form the majority of their turnover, but thats a complete guess like.