Thanks PPMAN, exactly my own thoughts re court, especially in light of the Consumer Credit Act 2006 angle, and the additional losses incurred due to the penalty charges. I'm rather interested in what the actual losses are, and I think that perhaps the Ombudsman would also be interested. Hi t2suggas, yes, please feel free to use any relevant parts for your own case, it's a different tactic, but you never know, it might work.

Well, the letter was sent by recorded delivery yesterday, it might not do any good, but it felt good writing it.

Hi Salty, you're welcome. It seems to me that you now have the necessary evidence to support your claim that you breached the contract, therefore the charges that were applied were penalty charges. If the Nationwide wanted to argue that you didn't breach the contract (an ironic turn of events) and those charges were merely service charges, then they'd have to prove that, and in light of the information you now have, they'd look pretty foolish attempting to argue that wouldn't they? Best wishes

Hi PPMan, thanks for the reply. I was in 2 minds when I was writing the letter about whether or not to write Mr Beale or "yourself" throughout the letter given as I am also sending copies to the legal compliance director and the customer "service" centre. I think I will change it though thinking again. Thanks

Any thoughts on the following letter? http://www.consumeractiongroup.co.uk/forum/nationwide/99140-letter-chief-executive.html#post924607

Hi all, I decided to write a letter to the Chief Executive, and their "Legal Compliance" director. Any thoughts? Mr Graham Beale, Chief Executive, Nationwide Building Society, Nationwide House, Pipers Way, Swindon, SN38 1NW Cc. Mr Russell Johnston, Divisional Director, Legal Compliance Cc. Member Service Department Re: Account Number ************** Dear Sirs, In respect of the above account, I wish to make it known that I felt it necessary to write to yourselves following unsatisfactory responses (and in some cases non responses) to letters of complaint, and secure messages through the online banking “service” (To which I believe I am supposed to receive a reply within 5 days) I’ve sent to the Nationwide Building Society regarding unlawful, and excessive penalty charges applied to the account. Firstly, I would refer you to the Unfair Terms in Consumer Contracts Regulations 1999 which very clearly state that the terms of a contract are unenforceable if they give disproportionate advantage to the supplier over the consumer; and where penalty charges are applied, they must not exceed the actual costs of the breach to the supplier. I believe Mr Graham Beale himself stated earlier this year that "It's not free to run an ATM or a branch, so what it means is that when you apply charges to delinquent accounts they bear the large proportion of that cost.” Mr Beale therefore admitted that the Nationwide’s penalty charging regime is in breach of the law. In addition to that, if there was any doubt whatsoever in your minds that your charges are “penalty charges”, rather than “service charges” which I believe many in the banking industry claim them to be, then I refer you to your leaflet titled “Important Information Changes to your FlexAccount” (Ref. P7850 March 2004) which states “From 1st June 2004, we are increasing the fees for using FlexAccount outside its terms and conditions". In Mr Beale’s candidate statement, available online, he stated that the Nationwide would “operate fairly, honestly and in a transparent way in all our dealings with our customers”. Mr Beale should be rather ashamed then in light of the above, in that he has not ensured fair, honest and transparent dealings between the Nationwide and its customers. Furthermore, I wish to refer you to the Consumer Credit Act 2006, specifically section 140A, which states the terms of an agreement or actions carried out by the creditor to the detriment of the debtor may be deemed as an “Unfair relationship between creditors and debtors”. A number of points arise in relation to this matter specifically in my own case: 1 - On the 5th June 2006, I made an application for a credit card through your online “service”, that application in hindsight was rightfully declined. However, after this date the Nationwide allowed me to simply log in and increase my authorised overdraft on several occasions up to its current limit of £***. (It must be said here that the reason I needed to extend my overdraft limit on the majority of occasions was because I knew that the unlawful penalty charges would be applied) 2 - Having been an accountant for many years prior to becoming the Nationwide’s Chief Executive, Mr Beale will be aware that when the unlawful, excessive penalty charges are applied, not only do you lose the amount you have been charged, but you also lose a further amount if you make a deposit which should have been added to the original account balance. (Any deposit made has a certain proportion taken because of the penalty charge, but then the account balance is still short of where it should have been had that penalty charge not been imposed, therefore, an additional deposit would be needed which you have effectively lost in addition to losing the amount taken by that penalty charge.) For example, I may have had an account balance of +£10 on day one, on day 2 a penalty charge of £30 is debited from my account (with no authorised overdraft) taking me £20 overdrawn. On day 3, I was unaware of the penalty charge, and deposited £50, instead of having a balance of +£60, I now have a balance of +£30. I would need to make a further deposit of £30 to bring my balance up to where it should have been, had the Nationwide not debited the £30 charge from my account. How exactly does this tie in with Mr Beale’s statement of ensuring fairness, honesty and transparency? The true cost of that charge to myself could be somewhere in the region of between 2 to 4 times the original charge, which is outrageous. The Nationwide may be “proud to be different” because it doesn’t have shareholders, but someone quite obviously is making a huge profit from its customers misfortune. 3 - Having quite rightly been denied the credit card in June 2006, then having been allowed to extend my authorised overdraft numerous times up to £***, the Nationwide then allows me to exceed that authorised overdraft limit, purely for the purpose of recovering the unlawful charges, while it returns direct debits and cheques unpaid, accruing additional charges to be debited on the following month. Allowing my overdraft to exceed its limit purely for these purposes appears to me to be imposing an unfair relationship according to the Consumer Credit Act 2006. I would like a full explanation of both how you can consider yourselves to be responsible lenders by allowing me to increase my overdraft on so many occasions, when you’d previously turned down my credit card application, then imposing additional debts on me in the form of an unauthorised overdraft. In addition to that, in accordance with Mr Beale’s statement of ensuring “fairness, honesty and transparency”, I’d like both a full breakdown of the actual costs of processing a returned direct debit or cheque, and costs of administering an unauthorised overdraft, and a breakdown showing how much I have actually lost from any credit balances, or the amounts I would have had to deposit to return my account balance to the position it would have been in had the penalty charges not took place in the first place. As your staff will inform you, I have notified the Financial Ombudsman of my concerns, and additionally, in light of the above, I will be requesting that they review the Nationwide’s consumer credit licence. Yours Sincerely

Hi indebtstudent, thought that this page might be useful: About Nationwide - Corporate Governance - Management I presume that any correspondence addressed to Mr Graham Beale, Chief Executive, should be addressed to their head office at: NATIONWIDE BUILDING SOCIETY NATIONWIDE HOUSE PIPERS WAY SWINDON SN38 1NW And, seemingly, as there are legal issues here, that a copy should be sent to their "Divisional Director, legal compliance", Mr Russell Johnston. I've mentioned on another thread, I think it's in the General section that I think in these instances, the banks and building societies may well be in breach of the Consumer Credit Act 2006 regarding "Unfair Relationships between Creditors and Debtors", as well as in breach of the Unfair Terms in Consumer Contracts Regulations 1999. Do you think it may assist our case, and make them take a little more notice when writing to both gentlemen, that I shall be requesting the Ombudsman to additionally review their Consumer Credit licence as I feel they have acted unlawfully?

Hi Salty, as far as I understand it, a judge would want to look at the original terms and conditions if the Nationwide are relying on them to insist you agreed to them in the first place, and you are relying on them to say that you breached those terms and conditions and therefore, the charges they've applied are penalty charges. However, I hope I can help you out here, as I have a copy of a Nationwide leaflet from March 2004 which states quite clearly "we are increasing the fees for using FlexAccount outside its terms and conditions", and then goes on to say how they're using those charges to subsidise "an excellent range of benefits and competitive interest rates". So, with the above leaflet, they've acknowledged that the charges applied to you have been penalty charges due to a breach of contract, and that they are unlawfully charging in excess of what it is costing to process returned direct debits, cheques, etc... Their terms and conditions have to abide by the law, if not, then they are unenforceable. They've acknowledged that they are not abiding by the law. If you'd like me to email you the scans of the leaflet, please PM me with your email address, and i'll be happy to send them to you.

I've been thinking about that myself Vital Spark. I know that a benefit fraud hotline was set up, I wonder if a mass phone call campaign to snitch on banks grabbing benefits would be useful?

Apparently, the Consumer Credit Act does cover overdrafts, according to Which. Just thought i'd update on this as I wanted to make sure overdrafts were covered, I think i'm going to use this Act now in my argument to reclaim those amounts the Nationwide allowed me to exceed my authorised overdraft by. I haven't seen anyone else using this so far on here, but if anyone has, their thoughts would be appreciated. Thanks.

Well done Mars, it's great to hear about wins against Nationwide.

It's scandalous really isn't it Kez. Anyway, keep up the good fight, will keep updated. Best wishes.

Hi Vital Spark, thanks for the reply. Yes, we were talking about contacting the benefits section on Monday when they reopen, we didn't really talk about what sort of interest they could claim, but I did say to take a look at this site after we'd worked everything out to get some ideas and useful information to go forward with - after all it's in their hands now, and they've got to decide which specific paths to take, I don't want to influence their decisions. It's cases like this that make me so angry, after all if someone is fraudulently claiming benefits, then there are measures in place to effectively deal with that, but there doesn't seem to be an effective system in place which automatically guards against the banks misappropriation of public funds in such a way. My guess is that the banks between them have made far more money from legitimate benefit claimants than those fraudulently claiming benefits have made in total. (And no, I don't agree with fraud in any way before anyone says anything, but neither do I agree with robbing from the poor to give to the rich) Sorry, rant over.

Hi all, this seems to be just the thread i've been looking for for hours on a few message boards. Anyway, i'm going through the process of claiming back my own bank charges, and was helping a friend earlier on go through their bank statements, which they have dating back years (amazingly organised with paperwork!) their charges total just over £1000 alone. But then on top of that, going through the statements, we worked out that although they'd been payed about £3000 in housing benefits from the local council, they effectively only had use of about £1000 of that figure because roughly £2000 in benefit had just being gobbled up by their overdraft. On at least 2 occasions it was partly an unauthorised overdraft. So not only did they get £1000 in charges, they also effectively lost about £2000 in Housing Benefits, ended up in about 3 or 4 weeks arrears with the rent, and had to pay the gap between what they were being paid in benefits and the total rent(they weren't elligible for a full award) Has anyone any advice for this situation please? Thanks in advance.

According to the Financial Ombudsman's response to my complaint, Nationwide's address for any further correspondence is: Nationwide Building Society, Member Service Department, 1st Floor, Old Building, King's Park Road, Moulton Park, Northampton, NN3 6NW Hope this helps.

Hi all, I was searching around for legal information on the banks lending responsibilities, I'm particularly interested in attempting to reclaim the amounts I was over my authorised overdraft limit by, purely as a result of the imposition of unlawful penalty charges, as when that happens we not only have the charges debited from our accounts, but we are also supposed to bring the balance back within its limit. Personally, I don't think attempting to reclaim back these amounts in particular would be attempting to unduly enrich ourselves for the reason above, and I don't see how the banks can say they're behaving fairly when they are allowing our balances to exceed their authorised overdraft limits purely due to debiting penalty charges from our accounts, yet returning direct debits and cheques unpaid - there's a contradiction there surely? And doesn't this imply an "unfair relationship", as stipulated in the Consumer Credit Act 2006? Please see following post for details: http://www.consumeractiongroup.co.uk/forum/word-banks/97788-pre-determined-internal-limits.html#post921027 Any thoughts would be welcome.

Hi again, i've been thinking about this matter quite a bit today, and found the following: Consumer Credit Act 2006 140A Unfair relationships between creditors and debtors (1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following- (a) any of the terms of the agreement or of any related agreement; (b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement; © any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement). "140B Powers of court in relation to unfair relationships (1) An order under this section in connection with a credit agreement may do one or more of the following- (a) require the creditor, or any associate or former associate of his, to repay (in whole or in part) any sum paid by the debtor or by a surety by virtue of the agreement or any related agreement (whether paid to the creditor, the associate or the former associate or to any other person); (b) require the creditor, or any associate or former associate of his, to do or not to do (or to cease doing) anything specified in the order in connection with the agreement or any related agreement; © reduce or discharge any sum payable by the debtor or by a surety by virtue of the agreement or any related agreement; (d) direct the return to a surety of any property provided by him for the purposes of a security; (e) otherwise set aside (in whole or in part) any duty imposed on the debtor or on a surety by virtue of the agreement or any related agreement; (f) alter the terms of the agreement or of any related agreement; (g) direct accounts to be taken, or (in Scotland) an accounting to be made, between any persons. Surely the banks allowing themselves to temporarily allow an account to enter an unauthorised overdraft purely for the benefit of debiting their unlawful penalty charges, while returning unpaid direct debits and cheques would fall under the above?

Ok, finally got copies of all evidence and filled in the form I received yesterday from the Ombudsman last night, posted by recorded delivery this morning. I've stated on the form that I believe its highly unfair that on the occasions the Nationwide's actions permitted my account to exceed its authorised limit without my agreement, not only did they take the unlawful penalty charges out of my account, but then required me to bring the balance back within the agreed limit, effectively applying a service charge for a service I did not request on top of an unlawful excessive penalty charge for a breach of contract. I've also requested that they explain how the Nationwide allow my balance to exceed its overdraft limit on the occasions when they deem it fit to give me the "service" of an unauthorised overdraft to recover penalty charges, yet return direct debits and cheques unpaid when I am only on occasions a minimum of a few pence short of the amount due on the dates the direct debits/cheques are due. This seems to be a cynical exploitation of the charging and lending regime.

Hi Skeggs, certainly seems to be rather underhand tactics by the Nationwide again. I'm sorry I can't give you advice on this, but I wish you the best of luck, and hope you manage to get all your money back.

Hi there, just wondered if it might be worth you giving them a call or even nipping in to your local branch, just explaining that you have had funds deposited to an account you no longer have access to, and if they could arrange either for you to go into a branch, and collect your money with some proof, or whether they could send out a cheque?

Hi Kez, thanks for the reply. Yes, I certainly find the Ombudsman route is the most appropriate for myself at present, as you say if i'm not satisifed I can always proceed to the court route. I'm also trying an additional tactic, which i've not read anyone has tried until now saying that as the Nationwide have effectively applied service charges to my account in the form of allowing my balance to exceed its overdraft limit on numerous occasions without my specific acceptance of such a service, then i'm going to reclaim those charges back as well. If the Nationwide want to argue that I accepted their terms and conditions as they have up until now, i'm going to ask for them to specifically point to the individually negotiated terms which state that I have requested such a service. If they cannot point to such terms then I will say that they are attempting to apply yet another unfair term on my contract, and as such I do not accept liability for such terms. On most of the instances when my account has been over its agreed overdraft limit it has been because of the Nationwide's actions. I refuse to be subject to having to both bring the balance to within the agreed limit because of the Nationwides unlawful actions and maladministration of my account, and having to pay the penalty charges on top of that plus their interest rates. Thanks for your kind comment on the letter, yes, please feel free to use whatever you feel might be helpful from that. Best of luck in your own claim also Kez.

Hi Remus, I certainly have, as well as emailed copies to anyone who'd like a copy (a few people have PMd asking for copies, and i'm only too happy to help where I can) After careful consideration, I've also decided to attempt to reclaim the losses caused which were purely due to the Nationwide's maladministration of my account, and have attached a separate schedule accordingly to my form (i've only just finished completing it, and taking copies of all correspondence and relevant material - it's taken hours to get all the relevant info from statements). So that's all going to be sent off to the ombudsman. The Nationwide will wish I had gone down the court route, or they'd settled earlier after the've been contacted by the Ombudsman relating to a few (11 actually) specific instances of their maladministration over the past 2 years alone! If they refuse to refund those amounts which I incurred a loss by, then i'm going to do whatever it takes to find every single instance of maladministration by the Nationwide over the past 6 years which were in effect service charges for a service I did not request. On no occasion, as i've said did I request an unauthorised overdraft service, so i'm not paying for it. If the Nationwide want to argue that I did so under the terms of the contract, they have to point to the specific terms of the contract individually negotiated which say that, otherwise they're applying yet another unfair term on the contract, and as such, i'm not going to be liable for those amounts. Crazyworld fights back

Hi indebtstudent, well personally I don't really care about having interest added to any credit balance in a current account, i've recently opened a basic bank account with the Halifax which won't allow me to go overdrawn, doesn't give interest on credit balances, and doesn't give me any cheque books. I'm personally quite happy with this arrangement. I agree, I think that if I opened a savings account i'd expect interest to be applied in that case, more than i'd expect interest to be applied to any credit balance on a current account. The amount of interest applied to current accounts for each individual may only be small, but when those amounts are added up surely they could add up to millions when we're talking about these big banks and building societies?

Right, i've drafted a response for the part of the Ombudsman's form which asks for any more details. Any thoughts on the wording? This is the link where i've posted the draft: http://www.consumeractiongroup.co.uk/forum/word-banks/97788-pre-determined-internal-limits-post917041.html#post917041

Hi, in relation to this issue (and others), i'm in the process of drafting my response to the section of the Ombudsman's form "please give any more details." I thought the following might be appropriate to write in there, what are your thoughts? I do not believe that the Nationwide have acted appropriately in this case. Following my initial letter requesting that penalty charges applied to my account be returned, they sent out a standard letter, which appears to be a computer generated response to every such request. The Nationwide did not even attempt to address my concerns as an individual, which frankly concerns me. I believe that the Nationwide has a duty to be fair and transparent under the banking code, the Nationwide has not addressed my concerns whatsoever relating to its breaching of the Unfair Terms of Consumer Contracts Regulations 1999 (which does state that unless a contract is individually negotiated, not merely a template contract which gives disproprtionate advantage to the supplier over the consumer it is unenforceable) and refusing to account for its excessive penalty charges regime by means of explaining exactly how they arrive at a charge of £90, or even £120 in one month when 3 or 4 direct debits are returned, the law states that such charges are supposed to be proportionate to the suppliers costs of the breach, and not exceeding that. I have attached a copy of the Nationwide's leaflet titled "Important information Changes to your FlexAccount" (ref. P7850 March 2004) in which they state very clearly that their charges are penalty charges caused by a breach of contract, and admitting in the same leaflet that they don't conform to the law by purely charging what it costs to process such breaches, but use their charges to subsidise "an excellent range of benefits and competitive interest rates". Additionally, I would like an explanation from the Nationwide relating to the system they have in place which allows them to manage my account in a manner which permits my balance to exceed its authorised overdraft limit. This appears to be a cynical move on the part of the Nationwide to not only apply a further unfair term on my contract, but then exploit their privelaged position as managers of the account by adding further penalty charges once they have allowed me to exceed an agreed overdraft limit. On no occasion have I agreed that the Nationwide may manage my account in a manner which appears to breach the part of the banking code which states that I should be able to enjoy secure and reliable banking and payment systems which I can trust. Given the above, I cannot trust the Nationwide's systems, and their systems certainly are not fair and transparent in this regard. I would welcome a full breakdown of exactly how much it costs the Nationwide to process breaches of their terms and conditions, and what percentage of penalty charges the Nationwide are using to subsidise services for the benefit of other members. The Nationwide are not being fair at all and their terms and conditions allow a disproportionate advantage to the supplier over the consumer as I have explained above.