20 year claim limit in Scotland & other ramblings

[m'n'bc]

Well, I'll probably give it a whirl Robert, nothing ventured etc etc.

 

The wife will *definitely* have charges to claim though, so if we don't get mine, there should be no issues with hers as they are all fairly recent - within the last five years anyway.

[bfb]

none of the discussion so far on this mentions the question of what the act calls fraud, ie the banks concealing the facts on the charges by maintaining that they were lawful

 

"reasonable diligence" needs to be taken in context of the reputation of the banks and their self portrayal as prudent professionals over the years

It would have been extraordinarily diligent for anyone to discover the duplicitousness of the banks before the publicity recently, the reasonable person would perhaps have been duped by the publicity

[m'n'bc]

Hiya bfb,

 

Basically, I think the banks are only concerned about reputations as portrayed in the papers. Since when has a bank practiced AND preached fiscal prudence simultaneously?

 

I'm about to go slightly off at a tangent here with my thoughts, but will get back to the point in hand in a mo - As I've mentioned I am looking at my charges from when i was a student about 10 years ago. Certainly, BoS gave both myself and most other students I knew tacit approval to run up frightening overdrafts. An overdraft of £1500 was effectively granted without question and was implemented in £500 increments. I remember asking for a limit of £500 and being told that I might as well have the £1500 now to save me coming back later in the year!

 

£1500 was the maximum you could have without consultation. That's a lot of money for a non-earner. Many more run up far heavier debt with the full approval of the bank. The student market is very competitive - you'll see this when the banks offer railcards, "free £25 in your account" and more recently, iPods etc to 18 year old kids who have never controlled their own finances before except in the most facile way. The flip side for said 18 year olds is on page 4 of a terms and conditions sheet which, rightly or wrongly, might never be consulted or highlighted, but the bank knows that all they have to do is penalty charge the person once or twice and that's the introductory gift cost recouped!

 

And as for the charges....well, I think of them in the same way as banks withdrawing from "undesirable" areas and sticking in cashpoints in shops which charge you to get at your money. The people who can afford it least are the ones they'll do what they can to shaft without compunction - indeed they depend on it to an extent. It's cynical and morally wrong but some think that it's the fault of the person at the receiving end for not exercising "reasonable diligence" to get to the bottom of what these charges are comprised of.

 

I had never considered claiming back / launching a claim against until a friend told me about this site a couple of months ago after I had said that my wife had been charged £30 for going a pound or two over her agreed limit for a day. I've found all my old statements and the original query was "is this within a statute of limitations?" 10 years might be pushing it, yes, but I'd feel so bl00dy justified in doing it!!!!

 

Anyway, rant over. We'll sort out the wifes claim which chould be a certainty before trying my one out .

 

Incidentally if anyone has had success outwith the 5 / 6 year period, please post to let me know!

[Advocate]

I am afraid not BfB. The "fraud" discussed in the 1973 Act is equated with the requirements for fraud at common law, i.e. the criminal variety. The Banks have been pretty up front about the fact that you would get charged if you breaching your contract (and lets not get too sanctimonious. The charges are only applied when the consumer fails to adhere to the terms of their contract. While harsh to be charged £25 for going £1 or so overdrawn, it seems to me that you cannot rack up thousands of pounds in charges without being at least a little financially irresponsible, if not reckless).

 

The best argument is that suggested by Robertxc. He is saying that as the Banks have not disclosed the costs involved in administering breaches of contract by the customer, a consumer exercising reasonable diligence could never have known until the OFT report that the charges were penalty charges. The riposte is that that is exactly why we have litigation. People believing they have been wronged and then using the process of litigation to determine the true facts through the process of pleadings and the tools afforded by the process to discover information from the other side. If it appears half-way through that the other side actually has a reasonable defence, it will cost you cash to have found that out, but then you have to settle and pay their expenses.

 

Whether the banks will actually run with the prescription defence is yet to be seen, but if they do the consumer will be well advised to seek the assistance of a lawyer, or give up. These kind of legal arguments require someone with a knowledge of the law and the ability to argue on the basis of analogy.

 

Also, if the courts were to allow such a subjective interpretation of the requirements of reasonable diligence, it would open up claims on the basis of peoples' deliberate ignorance, directly contrary to the policy of the Act, which is to ensure that claims are dealt with within a period of time which allows witnesses to remember things and documents to be available.

[Ropey]

Forgive my presumption here. Am I right in thinking, Advocate, that your sole intention in joining this forum was to disuade others from claiming monies unlawfully removed from their accounts by banks?

 

It seems strange to me that an uninterested party would do that.

[Advocate]

Ropey, this is the law, this is my interest. What I say here is not necessarily what happens in practice, but it is my considered opinion, based on the access I have to pretty extensive legal resources. It is also interesting to get other peoples' take.

 

I wonder what you think about the fact that a bank is now talking about charging people for simply operating a normal current account. Thin end of the wedge perhaps. Does this mean that those who manage their finances are now beginning to finance these settlements? What then for these consumers I wonder? The Banks make an obscene amount of money, but won't stop recording increased profits. Somebody pays.

 

I don't have any bank charges and it perhaps helps to have a bit distance mate.

[bfb]

some points

 

If the banks have been relying on unlawful charges and interest on these to fund free banking then there is something wrong at the core of their business

 

the questions of fraud or error are open to interpretation and the commentary in Johnston on Prescription and Limitation is less definitive than your opinion. The fact that the banks are perfectly upfront fall neatly into the provisions of 6.(4,a,ii) of the act in inducing error

 

Similarly the interpretation of reasonable diligence is subjective by its very nature and must rest on the facts and circumstances of each case That is a very long way from wilfull ignorance

 

finally it is quite possible to rack up penalty charges with no fecklessness in a vicious circle initialted by the bank

[Advocate]

BfB

 

1st: I doubt the banks have been "relying" on charges to fund free banking, although they have no doubt enjoyed the increase in profits that these charges have provided. Their constant and overrding duty is to their shareholders and if profits were to fall as a result of payments then pressure falls on the directors. They will do what they can to ensure this does not happen (and indeed are legally bound so to do). This may mean beginning to charge for basic services, as happens in most other European countries.

 

2nd: The law on prescrirption, as in many other areas, is not definitive and relies on argument by analogy. The banks are not guilty of "fraud" as they have not gained an advantage by deliberate concealment of anything, and proving that in court would in any case be a very tall order. They have been upfront about the charges that apply on default and the fact that they are now being challenged as unlawful does not alter this fact of openness.

 

3rd: they have not induced error as they have never stated they they are lawful, merely that they believe their charges to be so. This then puts the onus on the party who belives they have been wronged to challenge their belief by raising an action. The error must be induced by the defender and this would require the Banks to do something more than simply assert their opinion. It comes down once again to the individual responsibility of the individual to take action if they are of a different opinion, which of course many people are now doing.

 

4th: One or two bank charges can cause a difficulty, but how do you manage to get one in the first place. There must be a degree of mismanagement, albeit perhaps excuseable in our incrasingly complex working and social lives . People either do not have enough money to pay a direct debit they themselves instructed; have themselves written a cheque without ensuring there was enough money in their account (perhaps itself a fraud if done knowingly); or used their switch card again without checking or perhaps maybe knowing they do not have enough money/authorised overdraft to cover it. That, I am afraid, is personal responsibility.

 

5th: I note you do not express an opinion on the possible adverse consequences for those who have managed their finances and operated within their means. I think in the context of a discussion of the unconsciounable conduct of the Banks it is worth asking just how righteous the position of claimants is vis a vis other parties who will then suffer as a result of their breaches of contract.

 

I look forward to your response.

[bfb]

I will not comment on certain aspects I believe you are not disintereste

 

If institutions are increasing returns to shareholders by unlawful means that is wrong. If they are forced to return the ill gotten gains then the consequences must be borne

 

You are deliberately decontextualising the position with regard to error and fraud Being upfront does not preclude fraud

 

I have had bank charges caused directly by bank mismanagement leading directly to other consequences

 

The money is being paid back by the banks because they should not have had it in the first place, if they were entitled to it then they should keep it.

If the refunding of the money causes banks problems elsewhere, then it is the bank which has caused those problems not the person to whom they are repaying the money.

[Robertxc]

This is an excellent debate, and exactly what we like to see on the forum. There are some outstanding contributions, and excellent arguments all round (especially mine ). It gives people the opportunity to see different sides of a situation, and then make up their own minds about what to do. PLEASE KEEP IT FRIENDLY!

 

Advocate, I think you've touched upon quite an interesting point here:

One or two bank charges can cause a difficulty, but how do you manage to get one in the first place. There must be a degree of mismanagement, albeit perhaps excuseable in our incrasingly complex working and social lives .

In this age of computerised banking, the concept of an 'unauthorised overdraft' appears to be quite anomolous. You would have to accept, I think, that no money leaves the bank under any circumstances without their authorisation. When a request to pay a Direct Debit is made on a particualar account, the bank is entirely free to pay it or not, depending on how much money is in the account. How then can any ensuing new level of overdraft be said to be 'unauthorised'? Granted, the bank is obliged to honour a guaranteed cheque (although we're not sure if it's a legal obligation), but they're still free to withdraw cheque facilities at any time.

 

There was a time when it was possible to withdraw cash from a cash machine at one bank, and then go to another to withdraw the same amount, because the system weren't working in 'real time', thus it was possible to exploit the inherent latency in the system to cause a truly 'unauthorised overdraft'. But those days are long gone. When the bank's computer gets a request for a payment, it doesn't care if it's for a Direct Debit or a Switch payment, it simply looks up the set of rules which apply to that particular account (overdraft level etc.), and either makes the payment or doesn't. At all times, the bank controls the level of borrowing, not the customer.

[Advocate]

Robertxc,

 

The legal analysis of the matter is thus: The customer instructs the bank to make payment to a third party by the bank. As long as they are in credit, the bank is contractually obliged to make the payment to the third party. If the customer is not in funds, the customer is then in effect offering to borrow from the bank on the pre-advertsied rates for unauthorised borrowing. I think this would be a new contract, or at least a variation on the existing one. If the bank makes the payment, it is accepting to enter into a new contract or vary the existing contract on the terms offered by the customer.

 

You seem to be suggesting that the customer has no responsibility in this transaction and the bank, by making it easy for this kind of borrowing, is fully responsible. Contracts are bilateral, that is they require two parties and an agreement on the essential or material terms of the contract between them. This is what happens in this situation and the bank is merely responding to an offer by the customer to borrow on the publicised terms.

 

The fact that the acceptance is effected through a computer program makes no difference to the legal classification and effect of the customer's actions. It merely makes it easier and faster. The customer is still the party making the first move and surely has a responsibility to ensure either that they have enough money to cover the payment in their account/authorised overdraft, or that they are content to contract on the terms previously pubslihed by the bank for such circumstances.

 

The question of whether the charges applied are then unlawful is a separate legal point and stems from a recognition by Parliament that the power of the banks in such contracts is skewed in their favour and there requires to be mechanisms to control contractual relationships where the imabalance of power is as vast. Whatever the answer to this question, it cannot absolve the customer of their own responsibility in instructing the transaction in the first place.

[Advocate]

BfB

 

I agree that banks ought not to be able to inflate profits through any means other than those which are lawful. I was not commenting on the morality of the practice, rather the practical effect of banks having to make these payments. Yes, the price must be borne, but unfortunately for those who service their accounts within the terms of their agreement with the bank, it is those persons who will end up paying the price. The moral righteousness of the claimant may have foundation as against the bank, but the practical effect of it is that those who acted lawfully, i.e. not breached their contracts, will be the people who suffer through having to pay for the repayments made to people who have consistently breached their contracts with the bank. You cannot get round this fact by simply stating that the banks must pay for their unlawful conduct, as in pracice it will be these other customers that pay for your settlements in the end. How do you justify that to your fellow consumers down the pub?

 

As to fraud, this position is quite contrary to what you say, which is that "being upfront does not preclude fraud". For fraud there must have been some false pretence conveyed by the bank to the customer with the intention of depriving them of their property. I suspect you would argue that the false pretence on the part of the bank is their purporting to claim these are lawful charges simply by having them incorporated within its contractual conditions with the customer and then applying them ondefault. The representation by the bank must be one which intends to defraud, i.e. they must know what they are saying is not true. Do you think the bank executives are sitting there thinking, these charges are unlawful but we shall apply them anyway. The bank will no doubt have a legal team which looks at such questions and provides an argument that supports their legality. The fact that they are scared to test this in court does not mean that they do not have it and are entitled to rely on it to guide their policies. This would negative intention and thus fraud. If there was evidence that the bank knew its charges were unlawful (which I would suggest requires a judicial determination) and then continued to apply them, then the test is relatively easily met, but not at this stage. That is the context.

[Vital Spark]

"4th: One or two bank charges can cause a difficulty, but how do you manage to get one in the first place. There must be a degree of mismanagement, albeit perhaps excuseable in our incrasingly complex working and social lives . People either do not have enough money to pay a direct debit they themselves instructed; have themselves written a cheque without ensuring there was enough money in their account (perhaps itself a fraud if done knowingly); or used their switch card again without checking or perhaps maybe knowing they do not have enough money/authorised overdraft to cover it. That, I am afraid, is personal responsibility."

 

I can't participate in your arguement regarding points of law or possible legal outcomes of certain scenarios as I am not equipped with sufficient knowledge on that subject, to allow me to do so. However, I will take issue with that part of your comments as quoted above (in this post,).

 

There are also folk falling pray to, not just one but a succession of, penalty charges who have "dificulties" such as dyslexia particularly if it affects numerical workings. If such a person survives on a very small income for whatever reason, the margin of error is drastically reduced to miniscule. Combine the two and it is not so ridiculous to understand how one can unwittingly become victim to charges.

 

On a low income one charge then leads into a more dire financial situation which probably incurs another charge and on the snowball rolls. I'm talking about a situation in which the £35 charge is perhaps, at least, 1/4 of the weekly income of the person concerned. That person may not only have valid reasons for not being able to work to earn a greater income but may have to lay out a great deal of that small income to enable them to live day to day by enlisting help to get about, have meals even toilet themselves. They may also have to lay out a fairly substancial fraction of their income on pain relief.

 

When not able to purchase the painkilling therapies/remedies, because bank charges have diminished the income, the customer is now also in a great deal of pain. Try thinking clearly with a headache far less than when suffering all consuming pain. Then I suggest you try working your finances accurately when the margin of error is already so small.

 

Added to the above, people who are not able to work for chronic health reasons but who have previously known a decent income, will fairly rapidly sink into clinical depression further reducing their ability to manage and cope with most things far less surviving on a meagre income.

 

To assume that a person in such circumstances is capable of being fully aware of whether the charges being placed upon their account are lawful or not is either, I think, a particularly callous view or niave in the extreme and, if it is so that the courts would consider as you appear to consider the situation, I am dismayed and fearful for the most vulnerable folk in society.

 

I thought our legal system was supposed to protect the vulnerable innocents.

 

Isn't it just as well that medical personel don't adopt the same attitude when considering the lawyer/advocate or judge lying under a bus?

 

"Sorry, it was reasonable to assume that, because motor vehicles travel on roads, you would be hit by a bus if you attempted to cross the road at the traffic lights which are out of working order. The driver of the bus did not say he wasn't speeding but that he believed he wasn't speeding. Sorry but I can't treat you or save your life. After all, it was you who made your legs work to carry you across the road: not the driver of the bus. This surely denotes personal responsibility."

 

Your advice on the law and legalities is interesting and important to all but your assumptions that those who fall foul of said penalty bank charges are all incompetent fools, is neither productive, constructive nor appreciated.

[Vital Spark]

"Yes, the price must be borne, but unfortunately for those who service their accounts within the terms of their agreement with the bank, it is those persons who will end up paying the price. The moral righteousness of the claimant may have foundation as against the bank, but the practical effect of it is that those who acted lawfully, i.e. not breached their contracts, will be the people who suffer through having to pay for the repayments made to people who have consistently breached their contracts with the bank. You cannot get round this fact by simply stating that the banks must pay for their unlawful conduct, as in pracice it will be these other customers that pay for your settlements in the end. How do you justify that to your fellow consumers down the pub?"

 

The customer concerned is merely reclaiming the penalty charges applied by the bank with the interest the banks would have paid them for the loan of their money, which is what banks do: they borrow from us to invest in other places to earn themselves huge profits for their shareholders (of which you might well be one).

 

The money the banks have earned with the money they have unlawfully held goes to their shareholders so the customer who has managed to keep his account within the limits of their contract, does not pay. The bank has still made a profit beyond that to which it is entitled by investing that unlawfully held money.

 

Does said profit from such investment not then become "ill gotten gains" liable to confiscation by the Crown?

 

I cannot speak for the consumer down the pub. Apart from all else, I don't frequent pubs. However, I know that, if I heard of a customer in my bank or in any other place of business or walk of life being hammered unlawfully with penalty charges or having money taken from them unlawfully or immorally, I would not mind NOT gaining from the money held from them.

 

You see, your claim that these other customers would have to pay could also be regarded as "will not make as much out of...."

Surely it could as easily be said that it is wrong that a thief's family will have to pay if a thief took, unlawfully, another's possessions/money and sold on or invested them to make a profit for his family then had, merely, what he/she'd taken recovered. They'd still be better off by the profit he made from teh sale or investment.

 

 

[Ropey]

As a thought experiment.

 

Advocate, would you be willing to state, unequivocally, that you believe, to the best of your legal knowledge that bank charges, of the type being recovered by the members of this site, are unlawful and unrecoverable in law?

 

This is a self help site, are you being helpful, do you think?

[Advocate]

Ropey,

 

This is "the law" and, unfortunately, all that I can give is a considered opinion. Only our judges can state what the law is, the rest of us simply argue how to interpret words and phrases used in Acts of the Parliaments and the real application of a particular judge's judicial reasoning in a particular case.

 

There is an argument that the charges are unlawful, and indeed many lawyers have said as much in the press. This may succeed, but likewise, there will be an argument for the Banks as well and only our judges can make the determination of what the law is and whether the factual circusmances surrounding the application of bank charges falls foul of their interpretation of the law in this area. Typical legal answer I hear you say, but there is no such thing as being 100% certain of the law applying in a particular case. The facts will determine. For example, A stabs B outside the pub and B dies. This is murder is it not? Well maybe is the lawyer's reply. The circumstances may show that it was actually self-defence, or that it was an assault provoked by another. It may be the accused was acting under some mental incapacity which could excuse his actions, it may be that he was medically insane, in which case he is not responsible for his actions.

 

I have never said the charges were lawful and could not without more information. I suspect they may not meet the legal test for fairness and legality, but cannot state that with any certainty and could not argue it without first knowing the other side's response. That response is difficult to know without a real legal debate before the judges in the supreme, rather than small claims, courts. At present this is unlikely to happen.

 

This thread started as a discussion about prescription, which is a fascinating area of the law. I have a mate who has been repaid by a bank and he told me about this site, I popped along and saw an opportunity to clarify an understandable confusion over the limit that applies in such cases. You may not want to agree with it and indeed I would never expect you to rely on it, that is why you have high street lawyers, but it is an honest opinion based on my research.

[Vital Spark]

Ropey, I believe that Advocate is being helpful in pointing out the weaknesses of the law, as it stands. Unfortunately it appears that much of the Law of the land is set against the most vulnerable rather than protective of them and their Rights.

 

Neither do I think he is stating or even suggesting that the bank penalties are either lawful or unlawful (although, the flavour of his postings suggest a leaning towards favouring the postition of the banks,) but that we don't have the right of redress via the court. it appears that Advocate views the penalty charges as being lawful because they are stated clearly in the contracts signed when an account is opened. However, I am understanding that Advocate is also indicating that the fact that these penalty charges, even although it is blatantly obvious that they are, have not been proved in a court of law to be in excess of the cost of addressing any problem set the bank by the inconvenience of the customer's breach. As such, they cannot, in legal awareness, be regarded as unlawful: no court has ruled them to be so nor has Parliament passed any law rendering them so with a determined sum, above which the legal nature of the charges change to unlawful, quoted in that law.

 

I don't see how the government could do this given that such a law wouldn't merely govern banks. Costs, depending on the accessibilty of technological help etc, would mean a variation in the cost to any business/company of the administration involved.

 

Of course, Government could direct the banks to include, in their letters of notification that a charge is to be applied, a break down of said charge detailing the cost of their admin expenses.

 

Yes, it would be good to be able to get a legal judgement on this matter but it is unlikely given that, at present, only those who have become aware of a possible right to reclaim, are making that claim.

 

The situation would change drastically were the Courts to ascertain, through a test case, that the charges are in fact unlawful. Every relevant customer would have to be reimbursed. This would cost the banks well in excess of the current repayments.

 

This could be total garble but it's as I understand it and that, even if Advocate transpires to be the country's top lawyer, he cannot state, without that test case, that these charges are lawful or unlawful except in the context of the current law and in the absence of actual proof that the charges are in excess of the cost of administration costs necessary to deal with them.

[Vital Spark]

And thank you for your clarification, Advocate. I still don't like some of your personal assumptions though.

 

Tsk, tsk!

 

Stand admonished.

[Advocate]

Vitalspark,

 

First off, our legal system is primarily set up to defned people's proprietary rights, not to defend the vulnerable in society. There are many laws which do have that latter aim, but the considerations underlying them are often as much to do with maintaining the primary prorietary concern as they are with giving the disadvantaged a help up in certain circumstances.

 

I agree that some people will find it more difficult to deal with their financial situation than others and this is perhaps something which is beyond their physical and/or mental capabilities. Discretion should be the order of play in such circumstances and this is not always wisely exercised by large financial institutions. If people are suffering from real disabilities, then perhaps the Banks have a duty under the Disability Discrimination legislation to take measures in order to make it easier for such people to access and use their services.

 

However, there are a great many stories on these boards which do not appear to fit into the categories that you describe. These are instances of quite simply innapproriate spending, assisted by the banks' overgenerous, and ultimately profit driven, lending policies. Therefore the majority on these boards are, I would guess, not in the situations you discuss, although I agree there are some who are and they deserve this to be recognised and approriate assistance given. I further agree that these people and their difficulties are not always fully recognised by our financial institutions. However, our economic system is based on competition and, to a large degree, survival of the fitest. That may seem unfair, but that is the present system...until the revolution perhaps?

[Vital Spark]

 

Vive la Revolution!

 

Yeah, like a £35 charge when a dyslexic they know, because they've been advised so, to have particular difficulties has paid the money for a £2 Red Cross charity DD into the account used primarily for DDs and SOs etc forgetting, as short term working memory is adversely affected, that this particular DD is presented to the day to day account.

 

Now finances crucial.

 

Thank God for kids who ask nothing more than that we can share Christmas Day with each other. They have never once, as far as I can remember and it would be classified as rarity so I think it might be remembered, asked me for anything and they've always shown genuine appreciation for any small thing they've received from anyone. They were brought up to think of Christmas as a time for giving and not to concentrate on the getting.

 

I wanted them to appreciate that (or the message of the story, should it transpire that they don't hold Christian beliefs when adult : also brought them up to appreciate the gift of a Free Will and think for themselves,) Christmas is about a father giving the world his son to save those in the world form the destructive path they were taking.

 

Christmas, although held on 25th December to appease pagan solstice celebrators: God bless them: Peace be with them , is about giving thanks for the gift: that's why it's Christ mass day and in acknowledgement of the rightness and joy of giving.

 

Financially strapped but a very wealthy woman indeed.

 

Fortunately, I can write my grandchildren stories and make them wee books. For the adults, I'll be able to buy pillows in the Ponden Mill sale to make cushions and because I found some beautiful material (end of rolls,) going really cheap (not budgie style) in a charity shop, I'll be able to make covers cushion covers as gifts with maybe a wee box of home made sweeties.

 

I could never be accused of extravagance.

[Robertxc]

Robertxc,

 

The legal analysis of the matter is thus: The customer instructs the bank to make payment to a third party by the bank. As long as they are in credit, the bank is contractually obliged to make the payment to the third party. If the customer is not in funds, the customer is then in effect offering to borrow from the bank on the pre-advertsied rates for unauthorised borrowing. I think this would be a new contract, or at least a variation on the existing one. If the bank makes the payment, it is accepting to enter into a new contract or vary the existing contract on the terms offered by the customer.

 

You seem to be suggesting that the customer has no responsibility in this transaction and the bank, by making it easy for this kind of borrowing, is fully responsible. Contracts are bilateral, that is they require two parties and an agreement on the essential or material terms of the contract between them. This is what happens in this situation and the bank is merely responding to an offer by the customer to borrow on the publicised terms.

 

The fact that the acceptance is effected through a computer program makes no difference to the legal classification and effect of the customer's actions. It merely makes it easier and faster. The customer is still the party making the first move and surely has a responsibility to ensure either that they have enough money to cover the payment in their account/authorised overdraft, or that they are content to contract on the terms previously pubslihed by the bank for such circumstances.

 

The question of whether the charges applied are then unlawful is a separate legal point and stems from a recognition by Parliament that the power of the banks in such contracts is skewed in their favour and there requires to be mechanisms to control contractual relationships where the imabalance of power is as vast. Whatever the answer to this question, it cannot absolve the customer of their own responsibility in instructing the transaction in the first place.

None of this alters the fact that the bank is entirely free to decline any increase in overdraft. Therefore, there cannot be any 'unauthorised borrowing', because by definition if the bank makes the payment - regardless of the circumstances - it must be authorised.

 

Also, this is an example which is included in the Consumer Credit Act 1974:

EXAMPLE 17

 

Facts. The manager of the C Bank agrees orally with D (an individual) to open a current

account in D’s name. Nothing is said about overdraft facilities. After maintaining the account

in credit for some weeks, D draws a cheque in favour of E for an amount exceeding D’s

credit balance by £20. E presents the cheque and the Bank pay it.

 

Analysis. In drawing the cheque D, by implication, requests the Bank to grant him an

overdraft of £20 on its usual terms as to interest and other charges. In deciding to honour the

cheque, the Bank by implication accepts the offer. This constitutes a regulated small

consumer credit agreement for unrestricted-use, fixed-sum credit. It is a debtor-creditor

agreement, and falls within section 74(1)(b) if covered by a determination under section

74(3). (Compare Example 18.)

Obviously, since it is not possible to go overdrawn without the bank's authorisation, then they have no justification in charging 'unauthorised borrowing' rates.

[Vital Spark]

"Also, this is an example which is included in the Consumer Credit Act 1974:Obviously, since it is not possible to go overdrawn with the bank's authorisation, then they have no justification in charging 'unauthorised borrowing' rates.

 

I presume you meant ".....without the bank's authorisation", Rob.

 

Well, spotted and absolutely correct.

 

This legal stuff is facinating/intriguing although complex. Thank God there are some on board who are, apparently, well versed in the law, able to know it, understand it and convey it, to the likes of me, in an understandable form. All that not to mention extremely literate with an intricate understanding of the English language its pliable nature, the restrictions of that malleable property along with the same adeptness with it's lexicon.

 

Hmmm, the fact that the banks appear to be settling claims, for over the past 6 years, makes me think that they may well know themselves to be liable and in danger of a test case going ahead and finding them unlawful.

 

At present, they are creaming in the spondulicks, investing it to earn interest at rates of quadruple what they pay out to customers on any basis. The customers are recaliming the amount of charges applied to their accounts with meagre interest. The banks still hold teh vast profits gained from their initial investment.

 

They are laughing all the way to the......to the......to their shareholders.

[Vital Spark]

Maybe we should all withdraw our money from our banks and place them in a CAG bank co-operative style, at least while we (you Roberttxc with Bankfodder etc,) work out an exhorbitant rate of interest to charge the banks for borrowing our money to invest.

 

ALL banks would soon sit up and take note although it would also probably cause a drastic stockmarket/financial CRASSSSSSSSSSSSSH!!.

 

Maybe it would't though. :confused:

[bfb]

if only the judges can say what the law is, how can ignorance of it be no excuse.....................

[alanfromderby]

if only the judges can say what the law is, how can ignorance of it be no excuse.....................

 

 

Excellent.....That has to be quote of the week!