Bank plans for overdraft refunds

[Legal Beagles]

The RBS NatWest bank is planning to refund overdraft fees to customers "pro-actively" if it loses the current test case.

More...

[enaid]

Re: Bank plans for overdraft refunds

Bank plans for overdraft refunds


By Ian Pollock
Personal finance reporter, BBC News


The RBS NatWest may have to pay out millions if it loses the test case


The RBS NatWest bank is planning to refund overdraft fees to customers "pro-actively" if it loses the continuing test case over bank charges.
An internal bank document reveals for the first time the preparations banks are making should they lose their case.
The document acknowledges the group may have to refund past charges, which could run to many millions of pounds.
The bank said it was just drawing up contingency plans to deal with one possible outcome of the test case.
Refunds
The RBS NatWest is waiting, with seven other banks, for an Appeal Court judgement on whether or not the Office of Fair Trading (OFT) can decide if their overdraft charges are unfair.
All customer accounts that are due a refund will be calculated as accurately as possible


RBS/NatWest


The bank document, passed to the BBC, indicates that many customers can expect refunds if the banks eventually lose their case.
It says a team from the bank is "preparing systems and processes to pro-actively refund charges to the group's customer base."
The bank currently has about 13 million customers, though not all will have been charged overdraft fees in the past few years.
"All customer accounts that are due a refund will be calculated as accurately as possible," the bank document says.
"Any monies will be accurately accounted for and reconciled," it adds.
The document says the bank aims for "avoidance of group reputational damage and/or loss of funds."
Contingency plan
An RBS spokesman denied the bank was planning to throw in the towel if it lost the current appeal.
He said its plans simply reflected the fact that it was obliged by the Financial Services Authority (FSA) to deal "efficiently and swiftly" with the customers' complaints if it eventually lost the legal argument.
"This work stream has absolutely no bearing on how we see the outcome of the test case," he said.
"With an organisation of our size and our different brands, complying with these requirements demands careful contingency planning and this document merely confirms that RBS is taking its obligations in this respect seriously as it has done throughout the whole test case process," he added.
Sharon Coleman of the campaign group Legal Beagles said: "We would welcome a pro-active approach if they intend resolving the matter without further appeals."
"Consumers have become increasingly frustrated by the apparent lack of progress in the test case, especially those affected by financial difficulty," she added.
Unfair?
For the past three years the UK's banks have been besieged by hundreds of thousands of angry customers aided by high-profile internet and media campaigns.
The customers have been demanding the return of high charges, levied by the banks whenever customers go overdrawn without permission.
In 2007, eight financial institutions and the OFT agreed to stage a test case in the High Court to resolve the legal issues.
At that point all cases in the county courts, and with the Financial Ombudsman, were suspended.
The first round of High Court hearings, earlier this year, was a defeat for the banks.
Mr Justice Andrew Smith ruled that the Office of Fair Trading (OFT) had the power, under the 1999 Unfair Terms in Consumer Contracts Regulations (UTCCR), to decide if the banks' charges were fair or not. A subsequent appeal was heard in October and the judgement is now expected in the New Year. An analysis of the 2007 annual reports for the five biggest banks suggested that up until the summer of that year, all UK banks had between them paid out £784m in refunds to nearly 378,000 customers.

[Amethyst]

Re: Bank plans for overdraft refunds




RELATED INTERNET LINKS
FSA
Legal Beagles
OFT
RBS

Who is this Sharon Coleman anyway ?

[TANZARELLI]

Re: Bank plans for overdraft refunds

A nice little plug in there, good work.

[enaid]

Re: Bank plans for overdraft refunds

Anyone know that cheeky :beagle:?

Brill xx

[Amethyst]

Re: Bank plans for overdraft refunds

RBS to proactively refund bank charges | This is Money

The bank is currently in the process of appealing – along with seven other High Street banks – a ruling by the High Court earlier this year allowing the OFT to assess bank charges for fairness. However if it loses the overall case, the bank has outlined in an internal document leaked to the media that it plans to calculate how much each of its customers is owed and proactively return their cash to them.
RBS, which also owns NatWest, has approximately 13m customers, although not all of these will have been charged the unfair charges, which in some bank's cases were as high as £35 for falling marginally into an unauthorised overdraft.
The document says RBS is 'preparing systems and processes to pro-actively refund charges to the group's customer base.
'All customer accounts that are due a refund will be calculated as accurately as possible… Any monies will be accurately accounted for and reconciled.'
It also adds these measures are for the 'avoidance of group reputational damage and/or loss of funds'.
A spokesman for the bank said the plans reflect its obligation under Financial Services Authority rules to be able to deal efficiently with claims in the event banks lose the High Court case. He added it did not reflect RBS' confidence in the case: 'This work stream has absolutely no bearing on how we see the outcome of the test case.'
It is likely the other banks involved in the case - Abbey, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB and Nationwide Building Society - will have drawn up similar plans.
The revelation has been welcomed by consumer groups at the centre of the bank charge reclaim movement. It means customers will not have to retrieve account statements for the past six years, calculate what they are owed and then apply to the bank for recompense.
However some campaigners sounded a note of caution. Marc Gander of the Consumer Action Group said: 'The news that they may proactively repay people has to be welcomed, but I'm also worried by the idea that they will calculate these repayments themselves as they inevitably won't do it properly.
'We also have to ask how far back will they go? If banks lose the High Court case – and they will – it can be argued that reclaims should go back to 1995 when the Unfair Terms in Consumer Contracts Regulations came in and not just six years as many are claiming.'
The judge presiding over the banks' High Court appeal is expected to pronounce his verdict before the end of the year. Following this, the OFT will make a case for why it believes banks' overdraft charges are unfair. However the final High Court ruling on the inherent fairness of the charges is not expected until the end of 2009/ early 2010.

[Amethyst]

Re: Bank plans for overdraft refunds

Bank plans for overdraft refunds


By Ian Pollock
Personal finance reporter, BBC News


The RBS NatWest may have to pay out millions if it loses the test case


The RBS NatWest bank is planning to refund overdraft fees to customers "pro-actively" if it loses the continuing test case over bank charges.
An internal bank document reveals for the first time the preparations banks are making should they lose their case.
The document acknowledges the group may have to refund past charges, which could run to many millions of pounds.
The bank said it was just drawing up contingency plans to deal with one possible outcome of the test case.
Refunds
The RBS NatWest is waiting, with seven other banks, for an Appeal Court judgement on whether or not the Office of Fair Trading (OFT) can decide if their overdraft charges are unfair.
All customer accounts that are due a refund will be calculated as accurately as possible


RBS/NatWest


The bank document, passed to the BBC, indicates that many customers can expect refunds if the banks eventually lose their case.
It says a team from the bank is "preparing systems and processes to pro-actively refund charges to the group's customer base."
The bank currently has about 13 million customers, though not all will have been charged overdraft fees in the past few years.
"All customer accounts that are due a refund will be calculated as accurately as possible," the bank document says.
"Any monies will be accurately accounted for and reconciled," it adds.
The document says the bank aims for "avoidance of group reputational damage and/or loss of funds."
Contingency plan
An RBS spokesman denied the bank was planning to throw in the towel if it lost the current appeal.
He said its plans simply reflected the fact that it was obliged by the Financial Services Authority (FSA) to deal "efficiently and swiftly" with the customers' complaints if it eventually lost the legal argument.
"This work stream has absolutely no bearing on how we see the outcome of the test case," he said.
"With an organisation of our size and our different brands, complying with these requirements demands careful contingency planning and this document merely confirms that RBS is taking its obligations in this respect seriously as it has done throughout the whole test case process," he added.
Sharon Coleman of the campaign group Legal Beagles said: "We would welcome a pro-active approach if they intend resolving the matter without further appeals."
"Consumers have become increasingly frustrated by the apparent lack of progress in the test case, especially those affected by financial difficulty," she added.
Unfair?
For the past three years the UK's banks have been besieged by hundreds of thousands of angry customers aided by high-profile internet and media campaigns.
The customers have been demanding the return of high charges, levied by the banks whenever customers go overdrawn without permission.
In 2007, eight financial institutions and the OFT agreed to stage a test case in the High Court to resolve the legal issues.
At that point all cases in the county courts, and with the Financial Ombudsman, were suspended.
The first round of High Court hearings, earlier this year, was a defeat for the banks.
Mr Justice Andrew Smith ruled that the Office of Fair Trading (OFT) had the power, under the 1999 Unfair Terms in Consumer Contracts Regulations (UTCCR), to decide if the banks' charges were fair or not. A subsequent appeal was heard in October and the judgement is now expected in the New Year. An analysis of the 2007 annual reports for the five biggest banks suggested that up until the summer of that year, all UK banks had between them paid out £784m in refunds to nearly 378,000 customers.

additional paragraph to article added


BBC NEWS | Business | Bank plans for overdraft refunds


Losses
An analysis of the 2007 annual reports for the five biggest banks suggested that up until the summer of that year, all UK banks had between them paid out £784m in refunds to nearly 378,000 customers.
In its half year results, the Nationwide warned its investors recently that losing the court case could cost it a lot of money.
"Depending on the court's determinations, a range of outcomes is possible, some of which could have a significant financial impact on the society," it said.
Marc Gander of the Consumer Action Group (CAG) said that it was worrying that RBS NatWest was planning to take its own responsibility for calculating its customers' losses.
"We will be watching this very closely. The banks have shown that they are not to be trusted," he said.
"We will be encouraging all bank customers to calculate their own losses and to insist on getting all of it back plus interest."