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© 2007 Consumer Credit Support

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STALKED BY MY BANK

Mum's win on harassment by letter and phone

By Richard Smith 23/05/2007

A MUM has won a settlement for harassment after being hounded by her bank for money she did not owe.

Battling Alison Turner, 31, was reduced to a tearful wreck after being bombarded by Halifax Bank with 33 phone calls and letters.

She brought a legal action under the Protection from Harassment Act.

The single mum-of-two is now expected to receive a cash payment after the bank agreed to settle out of court.

Alison, from Plymouth, was pestered by staff for £775 in overdraft charges the bank had already agreed to wipe out.

Halifax said yesterday: "We have no comment other than it's settled."

Alison's troubles began after she successfully forced the bank to wipe out £775, made up of a string of unjustified £30 charges imposed for going overdrawn.

Amazingly, it took six weeks to clear the debt. But though Halifax had agreed not to contact her, in that time Alison was bombarded with 33 phone calls and letters demanding the money she no longer owed.

The persistent calls flooded in at night and weekends. Sometimes Alison's two children answered the phone and were asked to provide security details.

As the relentless hounding continued Alison, 31, suffered anxiety, stress and emotional problems and was frequently reduced to tears.

Eventually she brought a landmark legal action under the Protection from Harassment Act 1997 seeking an injunction against the bank and "substantial damages".

She has now won an out-of-court settlement in a triumph for consumers against the might of big banks.

Last night Alison said: "I've been told by my solicitors not to say anything."

But a neighbour in Devonport, Plymouth, said: "She's a lovely woman.

"She was being bullied but decided to fight back. Whatever she has won she really deserves."

Eddie Weatherall, of the Independent Banking Advisory Service, said: "This is a step in the right direction. People still get rung late at night and repeatedly phoned on their home number.

"But making three or four calls on the same day is harassment.

"People are now more aware that banks shouldn't be doing it and are telling them to p**s off. If you say to a bank 'You're harassing me', they'll take it quite seriously."

Consumer group Which? added: "This is a different case than most because it's based on a bank's behaviour. Most actions against banks are based on financial matters rather than the way someone feels they've been treated.

"It's another example of how people can keep challenging banks. If they feel they have a case they should seek advice. It takes time and patience - but it can be done."

When Alison was first hit by the bank charges she was so desperate she was about to approach a loan shark. Then she spoke to lawyers.

She said earlier this year: "There was a lot on the news about banks not being allowed to charge excessive overdraft penalties to customers. It made me think and I took advice."

When she launched her action for harassment, she said: "I was bullied by the bank and made to feel a failure for getting into debt.

"If customers are having problems, banks should try to get them back into the black not make their position worse by harassing them on the phone.

"I got calls at 6.20pm on a Friday and early on Saturday morning. The constant calling reduced me to tears."

Solicitor Neil Mercer said at the time: "She was constantly harangued for money she no longer owed.

"It caused sleepless nights and great concern. There's no question it amounted to harassment."

The Financial Ombudsman Service said customers taking action against banks have jumped by 50 per cent to more than 100,000.

It added: "There are now clear channels on how to go about challenging the banks. There's very little case law history, so banks are wary of going to court.

"They don't know what will happen. Even if a bank wins, it will be portrayed as the bad guy. So more and more are settling out of court."

Halifax Bank said: "We have no comment to make about the case other than to say it's settled. There's no court hearing."

 

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THE INDEPENDENT

Banks making illegal charges will pay the price in court
Thousands of bank customers are winning their fight for compensation, reports David Prosser
Published: 02 December 2006

Stephen Hone, a 30-year-old law student, struck a blow for millions of bank customers earlier this year. He may not have known it at the time, but his victory in winning £5,000 compensation from Abbey after taking the bank to court over two £35 charges he incurred for bounced cheques, paved the way for every other customer hit with similar penalties to challenge their banks.

Mr Hone told a Plymouth court that the charges breached the 1999 Consumer Contracts Regulations, because they were substantially in excess of the costs Abbey could have incurred dealing with the problem. "The money may not seem a big deal to Abbey, but when it charged me £70, the only earnings I had to support my children were £70 a week from a part-time job, which was completely wiped out," he says.

Several months later, thousands more customers are now filing similar claims against their banks. The consumer group Which? says 100,000 people have consulted its website, which gives advice on how to challenge unfair overdraft charges, and complainants have also won support from regulators.

In May, the Office of Fair Trading announced it had decided that credit card companies that charged borrowers more than £12 for paying bills late or exceeding borrowing limits were breaking the law. It also said it would investigate the same question in the banking sector - a review now expected to conclude next year.

The issue is that under British law, lenders are not allowed to charge more than the costs they have actually incurred when processing late payments or credit limit breaches. They can't make a profit out of charges that are supposed to simply reflect the cost of a customer's mistake.

Yet this is what banks have been doing for years. Which? estimates that Britain's biggest banks earned £4.7bn from unauthorised overdraft charges last year alone. Lloyds TSB, for example, charges £30 a day for unauthorised overdrafts, while Halifax charges £30 every time a customer tries to process a transaction for which he does not have sufficient funds.

"The banks have traded on their reputation for integrity to foist their penalty charges onto an acquiescent public," says a spokesman for the Consumer Action Group, an online campaign set up to persuade people to challenge late penalty fees. "The truth is that these penalty charges are unlawful."

Martin Lewis, of the Moneysavingexpert.com website, which has also taken up the campaign, says many banks still try to hide behind the fact that they set out overdraft charges in their terms and conditions. "But if someone told you they were about to punch you before smacking you, it wouldn't make it legal," says Lewis. "The same is true with bank charges."

For now, at least, there is no standard procedure that enables bank customers to win compensation. The Financial Ombudsman Service can consider certain types of complaint but has yet to hear any cases that could pave the way for automatic refunds for all.

That means people have to take on the banks themselves. But doing so is worthwhile. Doug Taylor, a personal finance campaigner at Which?, says most successful complainants have won several hundred pounds, with some winning thousands.

The story below explains how to build your case for a refund, but, in practice, most customers have found their banks have caved in well before reaching the courts. The banks are very worried that a court ruling could set a legal precedent for compensation payments, so for now - particularly in advance of the OFT's ruling - they are keen to settle cases out of court.

In the few cases that have made it before a judge, consumers have won some interesting victories. Two weeks ago, one court ruled that the cost for credit card company Egg of processing a late payment was just £5 - less than half the limit set by the OFT.

OFT  Newsroom  Press releases 2006
Following success on credit card default charges - OFT turns attention to bank current accounts

130/06    7 September 2006

In response to the OFT's statement of principles on the calculation of credit card default charges, credit card issuers have agreed to reduce their default charges - the majority by almost half.

In April, the OFT stated that credit card default charges had been generally set at a significantly higher level than was considered fair and set a £12 threshold for OFT intervention unless there were exceptional business factors. Many card issuers have stated that they do not agree with the OFT's view of the law and that they believe that their default charges were fair but, in view of the reduction in charges across the market, the OFT is satisfied that no further intervention is warranted in this area at this time and that this change has brought about substantial benefits for consumers.

The April statement also indicated that the OFT considers that the broad principles in relation to default charges are likely to be relevant to other standard agreements with consumers such as those for bank current accounts. The responses received from the banking industry have generally challenged this belief but the OFT remains of the view that the broad principles do read across to the retail banking area and has decided to undertake further work on the application of these principles to bank current accounts. In the course of this work the OFT will liaise closely with the Financial Services Authority (FSA) and hold discussions with the British Bankers' Association (BBA) to ensure that distinctive features of retail banking and the circumstances in which default charges are applied are identified and taken into account. The OFT has also been made aware of concerns about the personal current account market in Northern Ireland by the General Consumer Council (GCC) and will consider its report as part of this exercise. This fact-finding exercise is expected to take between three to six months, at which stage the OFT will consider whether a further detailed investigation of the fairness of individual bank default charges is needed.
 
John Fingleton, Chief Executive of the OFT said:
'The reduction of default charges on credit cards is great news for consumers. By taking an innovative approach to this issue, the OFT has brought about a significant change in one area of the financial services sector. We are now extending that work to inform ourselves about account default charges. We welcome the willingness of organisations such as the BBA to work with us in looking at the application of the principles we set out in the April to this area.'

NOTES
1. More information on the OFT's statement of principles in relation to credit card default charges can be found on press release
68/06.

2. The OFT will be working closely with the FSA and the BBA during the course of this study.

3. A fair credit card default charge should not exceed a reasonable estimate of certain limited administrative costs which the credit card issuer reasonably expects to incur as a result of default.

4. The OFT is not proposing that credit card default charges should be equivalent to the threshold, and a court will certainly not consider that such a charge is fair just because it is below the threshold. Where there are exceptional business factors, so that the presumption that a credit card default charge over £12 is unfair is not applicable, this does not necessarily mean that the current level of the charge is consistent with the OFT's interpretation of the requirements of unfair contract terms legislation. But for example, where a card issuer has a policy of requiring customers to pay minimum monthly repayments by direct debits, such as that operated by Egg, and offers credit cards only to customers that satisfy a relatively high scoring requirement it may be able to set a fair default charge at a level above the threshold.

5. Whilst the principles applicable to credit card default charges are applicable to bank account default charges, the threshold figure of £12 is not. The OFT will not consider whether a further detailed investigation of the fairness or level of individual bank default charges is needed, or what solution might be required, until the end of this fact finding exercise.

6. The OFT has published a short guide for consumers and consumer advice agencies setting out the principles on which credit card default charges should be calculated.

 

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BANKS WARNED OVER CHARGES  

Date : 30.01.07  

 

A Judge has asked banks to prove they will go to court in bank charge rows, otherwise he will ignore their defences.

District Judge Richard Toombs, who sits at Lincoln County Court, believes some banks abuse the legal system.

Even though banks begin legal proceedings against customers refusing to pay charges, no case has ever reached court.

Now Judge Toombs has told Lloyds TSB it has 14 days to list details of every claim pursued and whether each was settled.

The bank questioned the judge's right to strike out defences.

"The judge made his order without a hearing so we were not given a chance to make representations. We believe the order was legally flawed," a Lloyds TSB spokesman said.

Thousands of customers have used the county courts to reclaim bank fees, but there is no legal precedent because settlements are always reached out of court.

Businesses are not allowed to profit from penalty charges, the law says.

The top six High Street banks received £5.4bn in penalty charges last year, it is estimated.