Monday, December 18, 2006

Abbey National concedes on Excessive Charges

I have been in a legal battle with my bank, Abbey National, for some months now and was scheduled to attend a meeting at the Hull County Court next Tuesday, but was very pleased to receive a somewhat scrappy photocopied and fairly anonymous letter from them this weekend to say that in view of the potential costs of defending my claim they had decided, without any admission of liability, to refund the entire £500 I had claimed. (actually the letter said $500 so I will need to watch this carefully - might actually call them before I contact the court to withdraw the claim)

I am extremely grateful to for their invaluable advice in helping me to both complete the claim and not yield to the various steadily increasing offers to settle - Holding out was definitely the right course of action. What annoys me however is that this claim should not have had to take place in the first place.

Everything started back in February when a standing order payment was honoured for an amount £30 more than my available credit. For this transgression Abbey charged me £50, £20 for an unauthorised overdraft and £30 for making a payment when there were insufficient funds. They claim this is a realistic charge for their administrative costs, however I know from having worked for a financial services software house that all the charges are automated. The only manual intervention (if any happens) is a quick look at a computer screen to decide if the payment is going to be bounced - in which case the charge is then increased to £35 for the five minutes of clerical work.

Later that month I paid a cheque in and paid another out a smaller amount on the same day. The payment in cleared a day after the payment out and my cleared account balance was just short of payment out - Another £30 charge. I didn't check my next statement when it came in so was unaware I had been charged £80 and as a result of those charges being deducted the following month my account became overdrawn by £10 for a couple of days - another £50 charge. However before my payment in had cleared two direct debits for about £5 each were paid and another £60 in charges was incurred - Total £110 -

Being now almost £200 short my account became overdrawn again and in the two of weeks it took me discover what had happened and get cleared funds into my account another £310 in charges racked up. Total in three months £500 an all as a direct result of he first £50 charge.

Abbey National claims that these charges are to encourage account holders to stay in credit - yet it is the very changes they imposed that caused me to get into arrears. More importantly all the charges I incurred were essentially due to timing. If any of the charges or the direct debits applied when there was no credit in the account were deferred for a few days, none of the charges would have occurred - but the bank will not allow charges or direct debits to be deferred. Furthermore unlike all other creditors the bank insist on us giving them to right to deduct charges when they choose to.

The Office of Fair Trading has made it clear that they feel the level of bank charges to be penal - the banks don't agree, though the credit card companies have already reduced theirs. I suspect that in addition to the cost of defending my claim beginning to exceed the amount I was claiming, they are also concerned not to have any court find against them because in total the banking industry has made over £26 billion in penalty changes over the past 6 years which they would face having to refund.

If you have been unfairly charged by a bank - its worth checking out and follow their advice to reclaim the charges. It's certainly made my Christmas a happier occasion.

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