Why let your bank keep your money? Calculating your charges claim

[photoman]

Bankfodder, and all.

 

I agree wholeheartedly that you should also make claim for the additional interest the bank has applied/deprived you of due to the charges.

 

By also accounting for such interest, you often quite quickly reach a point whereby you can actually see that any subsequent "overdraft excess" or "limit breach" that then later gave rise to charges arose solely due to accumulated earlier charges and the interest upon such.

 

I would even suggest considering going even further.

 

Many people are also forced at some point to take consolidation loans with their banks in order to repay "borrowing".

.... borrowing that is often solely or mostly originally made up of charges and interest upon such !!

 

The calculations are admittedly a bit more involved and difficult to determine, but for anyone who makes the effort the results can be quite an eye opener !!

 

The chain of events would go something like this:

 

1/ You incur bank charges.

 

2/ The bank applies/deprives you of account interest as a result.

 

3/ The bank then puts you under pressure to take out a consolidation loan, to repay your existing borrowing .... but we contend that this existing borrowing consisted either solely or largely of charges and interest upon your original account.

 

4/ The consolidation loan then incurs yet more interest.

 

5/ ALSO...the account you make the loan installments from, then incurs/ is deprived of further interest due to making the monthly loan repayments.

 

6/ As a result, the account that the installments are made from then goes overdrawn..... often due largely to the loan installments... thus incurring even more charges, and interest.

 

........ and the whole cycle starts all over again.

 

 

I am currently working on modifying some of Mindzais sheets to try and create a set of (preferably a single) spreadsheets that would more easily allow the calculation of such a chain of events.

 

I am no mathematician or accountant though, and work on such is slow, so if anyone else more competent is interested in helping me then post up here or get in touch?

 

Such spreadsheets are currently being worked on in "Open Office", which is free to download software from the web, meaning that you wouldn't need to buy any software to use them, and also means they can be universally used on either PC or Mac.

 

PM

[photoman]

I'm a little iffy with bank charges, so can anyone tell me if they relate to charges you get for a)going overdrawn and b)on a business account please?

 

I was recently charged the best part of £70 over 2 months by Abbey business (thought my balance was at £0 so didn't check statements). I'm obviously rather miffed by this, but I don't know if it being a business account precludes doing anything about it?

 

Thanks - and sorry if this is the wrong place to ask.

 

Lex,

 

Yes, the bank charges issue is about charges for going overdrawn or having payments returned.

See the link to the business claims forum in my signature (in my earlier post) for information regards business accounts.

In short, Business account holders are being left somewhat in the cold regards the whole OFT business.

This is because Business accounts are NOT covered by The UTCCR, and so up until the OFT case have had to rely upon claiming charges being penalties under common law.

Unfortunately, the concept of penalties under common law has now been pretty much ruled out by the OFT case, and as they are not covered by or have any statutory protection under the UTCCR or other, are seemingly now left without a cause of action.

Some members of CAG are working behind the scenes at trying to find new ways to contend these charges for business claimants, so keep an eye on the business forums for updates and news.

 

All the best

Pm

[photoman]

.... I would just like to take this opportunity to say hello to all our "guests" on this thread.

 

Hello to the the respective legal representatives of all the various banks,

Hello to the lords and ladies of the HOL,

Hello to the members of the OFT

Hello to the employees of the "pay as you go" reclaim companies fishing for tips.

 

... and finally... Hello to the various visiting MP's maybe contemplating claiming back their bank charges... via their expenses claims !!

[photoman]

Stubie.

 

Any claim you make is based upon the contention that you should not have incurred the charge at the actual time of the charge. Thus your account balance at that point is amended in any calculations.

 

ie: Any additional interest incurred from that point onwards (and up until the time of your claim) which arose (either at the time or subsequently) as a result of the charge, is recoverable.

 

eg:

Lets say you incurred a charge in 2006 of £35, and this took you £35 overdrawn.

Then, you would have paid overdraft interest upon the sum of £35.

Now, lets say this was £2.

This means that the bank has taken a total of £37 from you.

 

If another 3, 6, 12, 24 or whatever months later your account became £37 overdrawn, (perhaps this time for legitimate over spending on your behalf).

And lets say this time you incurred interest of say £3 on that £37.

 

You contend that the account balance would not have been overdrawn by £37 had you not incurred the earlier charge, and the interest thereon.

Thus, that months interest of £3 is also recoverable.

 

ie: the effect is cumulative.

[photoman]

Bankfodder, and all.

 

I agree wholeheartedly that you should also make claim for the additional interest the bank has applied/deprived you of due to the charges.

 

By also accounting for such interest, you often quite quickly reach a point whereby you can actually see that any subsequent "overdraft excess" or "limit breach" that then later gave rise to charges arose solely due to accumulated earlier charges and the interest upon such.

 

I would even suggest considering going even further.

 

Many people are also forced at some point to take consolidation loans with their banks in order to repay "borrowing".

.... borrowing that is often solely or mostly originally made up of charges and interest upon such !!

 

The calculations are admittedly a bit more involved and difficult to determine, but for anyone who makes the effort the results can be quite an eye opener !!

 

The chain of events would go something like this:

 

1/ You incur bank charges.

 

2/ The bank applies/deprives you of account interest as a result.

 

3/ The bank then puts you under pressure to take out a consolidation loan, to repay your existing borrowing .... but we contend that this existing borrowing consisted either solely or largely of charges and interest upon your original account.

 

4/ The consolidation loan then incurs yet more interest.

 

5/ ALSO...the account you make the loan installments from, then incurs/ is deprived of further interest due to making the monthly loan repayments.

 

6/ As a result, the account that the installments are made from then goes overdrawn..... often due largely to the loan installments... thus incurring even more charges, and interest.

 

........ and the whole cycle starts all over again.

 

 

I am currently working on modifying some of Mindzais sheets to try and create a set of (preferably a single) spreadsheets that would more easily allow the calculation of such a chain of events.

 

I am no mathematician or accountant though, and work on such is slow, so if anyone else more competent is interested in helping me then post up here or get in touch?

 

Such spreadsheets are currently being worked on in "Open Office", which is free to download software from the web, meaning that you wouldn't need to buy any software to use them, and also means they can be universally used on either PC or Mac.

 

PM

 

I agree completely that interest paid on consolidation loans should be claimed back in its entirety.

 

It is really quite disgusting that the banks have taken people's money, put them in debt and then obliged them to borrow more money simply to repay their own money!!

 

My problem is that I am not too clear at the moment as to how to express this as a head of damage so that it falls within a conventional cause of action.

 

However, I am sure that it will come to me.

 

 

Bankfodder,

 

Have you given/had any more thoughts on this ?

 

Can the contentions regards making them forfeit their additional interest gains applied to the penalised account, be carried forward to also encompass their gains made upon subsequent consolidation loans ?

 

IMHO, the principle and cause of action is identical ?

 

Any more thoughts, or reasonings as to why it may differ ?

 

Regards

 

PM

[photoman]

I agree completely that interest paid on consolidation loans should be claimed back in its entirety.

 

It is really quite disgusting that the banks have taken people's money, put them in debt and then obliged them to borrow more money simply to repay their own money!!

 

My problem is that I am not too clear at the moment as to how to express this as a head of damage so that it falls within a conventional cause of action.

 

However, I am sure that it will come to me.

 

 

Anyone got any more thoughts on this ?

 

PM

[photoman]

Thanks Caro,

 

So, IMHO, I think this is both reasonable and do-able.

 

Provided one can perhaps show there was pressure to consolidate,and it was with the same provider, then any extra interest gained by the lender (or perhaps even any interest foregone by borrower) should be claimable.

 

Think I'm going to have a go at this, unless someone here can show strong reasonings to contrary.

 

I think I actually started a thread on this topic a while back, but got little interest or reply.

 

I will seek out the link, and post it here (or start a new one), as I think this is a very overlooked and important aspect regards unfair charge victims compounded losses.

 

Any other comments anyone ?

 

Regards

 

PM

[photoman]

I personally think this is an important issue that has been quite overlooked.

 

So, just wanted to revive this thread.

 

http://www.consumeractiongroup.co.uk/forum/general/49648-loans-pay-off-overdrafts.html

 

 

(perhaps someone from the site team would like to take a peek, and perhaps sort the wheat from the chaff, so to speak) ?

 

 

My contention:

 

The Banks are getting away with additional "secret" profits, by forcing people to take out loans to repay borrowing, when in many cases, much of the "borrowing" is comprised of charges that have been wrongly applied to an account in the first place !!

 

So in effect, we get clobbered with penalty charges and additional interest on the account they are applied to...... THEN ALSO.. we take out subsequent loans with the bank, under great pressure from them to do so.. or risk facing some dire recovery consequences.

 

These subsequent loans are also often at higher rates, because of poor credit ratings (ratings which are themselves actually attributable to the history of charges).

 

I am now working on some claims of my own, which will include claiming the additional interest incurred through these loans.

 

I have myself been working on some spreadsheets to help calculate this.

 

It calculates the portion of interest upon a loan that can be attributed to the original penalties (and carefully calculates only such elements without trying to claim for anything twice over), and sits in, and ties up nicely with existing spreadsheets.

 

I hope it, or something similar (I am no accountant or speady whizz, so if anyone else is, or has any contributions to make, please do) can start to be incorporated into claims as standard practice.

 

I would appreciate if any Moderators, site helpers, or members with experience of prior claims including loans could contribute.

 

I would also like anyone perhaps contemplating similar actions to contribute.

 

 

Regards to all

 

PM

 

 

PS: I would like to just add, that I have tried out my own sheet regards to some loans I was forced to take out.

 

I was really very shocked at just how much additional interest has been paid due to these practices !!

 

So, for anyone who may think the sums are trifling, and perhaps not worth the trouble...think again !!

[photoman]

This is the issue I am trying to bring peoples awareness to:

 

Consider an example scenario:

 

You have an account, and run up a £1000 overdraft.

Say for example £500 of that O/d is charges.

First off that means you pay for example 18.5% p.a. interest on the extra £500, (which we all do presently try to account for in our claims)

You then take a consolidation loan to repay the £1000, at say 15% p.a. which will be paid by monthly installments from the original account.

This means that you are paying an additional 15% p.a. (compounded over the course of the loan) on the initial £500 and also on the extra overdraft interest you've already given them.

PLUS... because you are repaying it each month from your account, this could mean, that because of all the extra interest, you are more overdrawn on that account than you should be, and so also end up paying yet another 18.5 % p.a (compounded over the period of the loan) o/d interest from your original account to cover the extra interest you are paying out on the loan.

 

So in short:

They give you penalty charges & charge you interest on them.

They then charge extra loan interest on these charges and interest.

They then charge you extra o/d interest on the extra loan interest.

 

This means they have hit you 3 times over with additional interest (all compounded) on the initial charges.

 

Then of course there is the increased repayment insurance, because the loan is bigger than you really needed... along with the extra interest on the bigger premiums you need pay for the insurance !!

 

.....It's not so obvious that all this is the case, until you start to analyse it this way..... and that's probably just the way they like it !!