Wording Re: Interest in Initial Letter?

[nicsussex]

Not being an accountant or indeed even a barely competent user of Excel, I am seriously struggling on this point. Am today sending initial letter request for repayment of charges but see no way of my being able to calculate the interest. The sum involved is just under£2k, stretching back to mid 2002.

 

What would be the implications of stating in the letter "plus an as yet undetermined amount which you have charged me for interest for the sum which you have taken."

 

Any one have any thoughts?

[Spiceskull]

Hi Nic,

 

Interest and what to claim are hotly debated issues here, with interest being the 'undecided' element. In a nutshell, if you didn't agree to the charge, then you can claim it back. If you use the following as a guide you should be okay:

 

You can claim for everything on your statements that is not a justifiable service fee, or justifiable interest:

 

Claim:

• Penalty Charges applied to your account. This is for exceeding overdrafts, referral/representation of DD’s and SO’s, cancellation of DD’s and SO’s, card misuse charges - the list is long!
  
• Interest charged to your account for any of the above
  
• When the interest is applied to the penalty charges, then this interest should be included in your claim
  
• If your transaction history identifies what interest is applied for what reason, then be honest about the amount you request
  
• If the interest is not itemised, then claim for ‘Interest Charges,’ and the onus will be on the bank to demonstrate the proportion they are entitled to
  

 

Don't Claim:

• Agreed fees, such as £5 monthly overdraft arrangement fee
  
• In any 'charging month' if you have an interest charge, but no penalty charges, then clearly this is 'legitimate' interest charged to your overdraft. Do NOT claim for this
  
• Additionally, this figure can be used to apply an 'average' to your interest 'proper' charges over the months - i.e. deduct this figure from 'Interest Charges' each month, and the remainder will be an approximate figure for interest applied to penalty charges
  
• Any concept of costs or time at this time
  
• Interest other than that which appears on your statements
  
• Interest at 8% APR (that comes when you raise your claim at court)
  

Good luck with the letter.

[jonni2bad]

I think this post is more aimed at how we might be able to work out the interest charged - rather than what can be claimed, and that of course is a biggie!

 

Some, myseklf included, had previously thought it might be ossible to claim for the whole amount of interest and ask the bank to work it out in court, but this does not appear to be the correct response.

 

I'm now on the other bandwagon - leave that interest, as though it were your offer to pay something for the default actions. Although, I'm an ex Halifax customer, and they don't show the difference like others, so I would say that!

[Spiceskull]

I think this post is more aimed at how we might be able to work out the interest charged - rather than what can be claimed, and that of course is a biggie!

I agree completely - to the point that Vamp built a spreadsheet for exactly that reason. She is an accountant, and even she found all the parameters very complicated...

 

In all fairness, I think Joe Public would be considered to have made a reasonable effort by following this:

# In any 'charging month' if you have an interest charge, but no penalty charges, then clearly this is 'legitimate' interest charged to your overdraft. Do NOT claim for this

# Additionally, this figure can be used to apply an 'average' to your interest 'proper' charges over the months - i.e. deduct this figure from 'Interest Charges' each month, and the remainder will be an approximate figure for interest applied to penalty charges

However, if the banks had never made penalty charges to start with (previously to your account before the 6 year limit) you would not have been overdrawn to start with, and therefore would not be liable to interest...

 

If the banks don't provide the information, we can only assume that they don't want us to know it. We then have to guess, and be as fair and reasonable as possible...

[Bookworm]

And to answer your question, The way you want to phrase this looks sloppy, no offence. If you use the word "indetermined", the subliminal message is there that you don't know what you're doing.

 

If you're struggling now, you really should think about keeping it simple and leaving the interest out. If you have to issue court claim, you will be entitled to add 8% APR, which is a much easier calculation.

 

Of course, as always, it is your decision.

[Spiceskull]

If you use the word "indetermined", the subliminal message is there that you don't know what you're doing.

Sorry BW - the word nic used was 'undetermined' - a valid word in this context.

[nicsussex]

thanks for the replies - sorry still not sure which way to go with this but beginning to think that interest may be to tricky to claim at this stage - just to clarify thought my FULL wording for the letter was "AS YET undetermined" - any views would be greatly appreciated.

 

Keep up the fight!

[Neo]

I also think we have serious issues calculating the interest. Agrees and non agreed interest rates change at banks over the years and we do not know the correct percentage charged, so can therefore not correctly calculate the interest element?

 

I leave this out as it is complicated. Like said earlier, 8% can be charged at court time.

[bram stoker]

I'm in the process of having a template spreadsheet that I've prepared checked over for accuracy. It incorporates how much of your overdraft is made up of penalty charges as compared to overdraft created by your own spending. If it's ok it may end up on the site.

 

I figure that say you were charged £1,000 in charges in the first 3 of the six years and during the last 3 years you were never overdrawn by more than £1,000, but were nevertheless overdrawn and charged interest, then that overdraft is made up of unlawful penalty charges.

 

An accurate calculation is difficult, but I think I've come up with a spreadsheet that will give a close estimate.

[Neo]

I'm in the process of having a template spreadsheet that I've prepared checked over for accuracy. It incorporates how much of your overdraft is made up of penalty charges as compared to overdraft created by your own spending. If it's ok it may end up on the site.

 

I figure that say you were charged £1,000 in charges in the first 3 of the six years and during the last 3 years you were never overdrawn by more than £1,000, but were nevertheless overdrawn and charged interest, then that overdraft is made up of unlawful penalty charges.

 

An accurate calculation is difficult, but I think I've come up with a spreadsheet that will give a close estimate.

 

How owuld you know the exact rate of interest in that particular month?

 

If you would like a seond set of eyes over it, then i would be pleased to lend a hand. I mean, erm, eye.

[lee6370]

and what about the first 3 years?

 

I'll be interest to see your spreadsheet, i'd also be interested to have a legal viewpoint on this from someone with some legal acknowledge, how far would the courts expect a layperson to go in order to calculate the interest?

[cajdad]

......just to clarify thought my FULL wording for the letter was "AS YET undetermined" - any views would be greatly appreciated ......

 

I can't see any harm in saying "as yet undetermined interest". After all this is just the first shot across their bows, and it doesn't commit you to anything. And I don't see why you shouldn't tell them that you want some interest as well, even if you don't know the amount yet.

 

As far as the amount of interest is concerned, the strictly correct amount of interest is ridiculously difficult to calculate, and I'm not convinced its worth the effort of trying to get it that accurate. I just told them in one of the early letters that I didn't want to get involved in an argument with them about the exact amount of interest, so suggested they just pay the 8% that the court would award in due course!

 

Not that it makes any difference what you ask for in the early stages - they'll still send you the usual "sod off" letter.

[lee6370]

The interest is worth the effort, depending on when the charges were applied to your account the interest added to them can be more then the initial charge.

[Spiceskull]

I think in all honesty there are two fairly starightforward arguments to interest:

 

The first is that generally speaking, if you tend to run an overdrawn account, then the larger percentage of interest payable will be 'legitimate' - that is interest on money you have 'borrowed' from the bank. In this simplistic way it is almost forgivable to not worry about claiming for the interest element

 

The second argument is tied to the first, as Vamp's spreadsheet will (hopefully) demonstrate. I must say that we have discussed this at length, and I personally believe that the argument is stronger than the figures - If you have had an account for 20 years, and have had a single penalty charge in each of those 20 years, your account at this point in time will be about £500 in debit - effectively your overdraft is BECAUSE of previous charges...as such, if the bank had not made those charges to start with, you would not be overdrawn now, and therefore not liable to pay interest to begin with...

 

Clearly there are many aspects to discuss, but the general feel is that this is a logical argument, and can be applied to each individual account...for me it appears that the bank should have been paying me interest for all these years, not the other way round.

 

Vamp's spreadsheet is being looked at by a couple of people on the site, and if it stands the test it will likely be made available for others to use...watch those spaces...

[lee6370]

Spiceskull you seem to be suggesting that people are looking at the interest added to their overdraft and claiming that back.

 

I think what most people are doing (at least i am) is looking at when the charge was added, and then calculating the interest that would have been added to that charge. To try to work out what part of the interest applied to you account relates to charges seems to be an arse about face way of doing things.

 

Maybe I got it wrong, but isn't it just a case of saying they added the charge 'A' number of days ago and i've remained overdrawn, they charge interest at 'B' rate so charge x A x B=how much interest they have added. Although I compound this interest just as the bank would.

[Spiceskull]

Spiceskull you seem to be suggesting that people are looking at the interest added to their overdraft and claiming that back.

 

I think what most people are doing (at least i am) is looking at when the charge was added, and then calculating the interest that would have been added to that charge. To try to work out what part of the interest applied to you account relates to charges seems to be an arse about face way of doing things.

 

Maybe I got it wrong, but isn't it just a case of saying they added the charge 'A' number of days ago and i've remained overdrawn, they charge interest at 'B' rate so charge x A x B=how much interest they have added. Although I compound this interest just as the bank would.

You are correct - most people (myself included) are requesting penalty charges and penalty interest. Your suggestion is the 'honest' way to claim the interest, that is work out the penalty and the interest on the penalty, and if you can do this (some statements itemise a lot of elements) then all well and good.

 

However, my own statements (as I am sure with other banks) just state:

 

16th Apr - charges 16Mar-15Apr - £50

16th Apr - interest 16Mar-15Apr - £5.65

 

From this I have no way at all of working out dates/charges/interest, and therefore all I am able to do is add penalty interest as a recoverable, and let the bank prove otherwise. Believe me, if the bank said to me 'legit interest = £4.50, penalty interest = £1.15' then this is the interest I would claim back.

 

My personal auggestion to people is simple - if you can get a rough figure for penalty interest then use it honestly. If you can't get that figure then the two options are 'claim it all' or 'claim none of it'

 

People are free to make their own choice in this, but in using the argument from my previous post I am claiming the lot. If the bank demonstrates otherwise, then I will accept a revised amount...

[bram stoker]

Lee. It's much more complicated than you suggest.

 

Do you know the interest rates your bank charged you over the last 6 years?

What is the effect of the cumulative charges over the whole six years?

What is the effect of the charges applied prior to the six years?

What about when you regularly go in and out of overdraft?

 

My spreadsheet takes all this into account, and once someone can check my spreadsheet and it's merits, I'll be happy to forward it to the Administrators and they can decide on what to do with it. It is just something I've been playing with and believe I would personally use.

[Bean]

Watching this thread for developments...

 

It is complex, and if you are accustomed to them, a spreadsheet example with a few descriptive notes can convey information so much better than a lengthy text description.

 

On Thursday last week I asked Lloyds for applicable overdraft interest rates going back 6 years. They had interest rates back to 10/11/2004 readily to hand but for dates prior to that said they would need to have someone get back to me. They said it should take '72 hours' to get back to me.....

 

As I understand it, there are ultimately two types of interest to be claimed:

Firstly, you claim back what the bank took as overdraft interest applied to unlawful charges (for mine, a rate of 17.7% applied from 10/11/2004 to present and rate as yet unknown prior to that). Secondly, when it gets as far as court proceedings, you apply interest at 8% to your claim to account for you not having use of the money that was taken - Not only have you not had use of the money, but you have also been charged interest on it and it seems the law rightly recognises this. Incidentally, even Lloyds 'Interest Line' (their term not mine) which I suspect is a phone extension number for a bloke in customer services, initially suggested I could assume the rate was the same before 10/11/04 as after it because 'the rates don't change much'...

 

Finally, if your unlawful charges build to equate to your overdraft limit, any overdraft interest or charges (other than monthly account fee) you are charged after the date this happens are reclaimable, but the charges you would ordinarily have incurred (i.e. if penalty charges were not there) are not.

[lee6370]

I fully understand just how complicated it is, I wasn't trying to say it wasn't my point is lets keep it simple.

 

If your spreadsheet takes the pain out of calculating the interest and is easy to use then great but I fear it will be complicated and that will mean people will not use it and not claim the interest. The only winners will be the banks.

 

I've already asked the question and not had an answer, how much effort would a court expect us to make when calculating the interest, I feel I've taken all reasonable steps, and that a court would deem that to be enough.

 

Spiceskull is right, better to ask for too much back and let the banks reduce it, then ask for too little, because they won't tell you that you aren't claiming enough.

 

I hope your spreadsheet works, and doesn;t muddy the waters of a subject that could and should be a lot more simple.

[Neo]

So far, I have tested the spreadsheet and it looks very good and works

 

Ok, the amount will generally be quite small, but it is up to the individual whether they want to claim the interest. The spreadsheet which Vampiress has created makes calculating it one hundred times easier.

 

I think if anything it will clear the water...

 

Watch this space.

[Spiceskull]

how much effort would a court expect us to make when calculating the interest, I feel I've taken all reasonable steps, and that a court would deem that to be enough.

The fact that you are able to explain what steps you have taken to get the information and make a calculation demonstrates that you have made a lot of effort.

 

A court would not look badly on you if your sums were wrong. Additionally, if you can explain that you have left bits of interest out of your calculation because there was uncertainty, this also shows a reasonable and fair approach.

 

The only irritating bit is that the bank will not let it get to court for you to prove your case...they will pay up before then.

[Bean]

Should it come to court, being able to refer to, or print off a dialogue like the one contained in this thread, should prove useful. It also builds the reputation of the site.

 

These exchanges are productive in establishing that we are making our best efforts to be fair and reasonable. It's important to find a balance that the court would accept and you are all making a valuable contribution to that process.

[bram stoker]

Should it come to court, being able to refer to, or print off a dialogue like the one contained in this thread,

Heart leaps into mouth...

 

Aren't we all anonymous, and aren't the banks NOT allowed in here!

Have I need to stress on this issue or am I over-panicking?

[Spiceskull]

Banks CAN come here - with permission. Judges can come here - I assume without permission.

 

What Bean is saying is that between us we are discussing what constitutes reasonable effort, and that balance of effort is moving in an upwards direction through discussion...

 

I think that this thread would make a great defence if the bank tried to contest 'effort to calculate interest...'

[bram stoker]

Ok ok. Just minor heart flutter.

 

Anyway, spreadsheet mostly done. Got the ok by Neo. Just a little tidying up to do and I'll contact Dave / BF with it this evening.

 

I can't say if it will even be on this site, but I'm hoping for a new thread linking to a template in the library. Keep eyes wide open and wish me luck.