50% of Hardship Claimants not giving Banks enough information

[Amethyst]

There are many stories about the banks not considering consumers who are suffering financial hardship when handling overdraft fee complaints during the OFT v Abbey National & Ors. case currently awaiting judgment in the House of Lords.

Figures released by the Financial Service Authority to LegalBeagles under a Freedom of Information Request show that there are overall currently 1,125,853 overdraft charge complaints on hold entered since July 2007.

The figures show that 178,018 consumers have asked the banks to consider their complaints of unfair charging under financial difficulty rules since July 2008.

However headline figures show only 52,797 of these have been accepted as being in hardship. Another 32,329 have been deemed as not in difficulty and their complaints remain held under the waiver.

Consumers have to take partial responsibility for the low numbers of bank charge refunds being processed under financial difficulty exemptions.

Approximately 92,892 complainants have yet to be assessed - These include ''cases where the firm has not yet made a decision accepting or rejecting a claim of being in financial difficulty;'' or more worringly ''cases that are no longer considered to be pending (i.e. are not actively being worked on or chased) due to the customer not providing sufficient information for the case to be assessed''.

Many consumers feel the banks already hold enough information on them to assess whether they are in financial difficulty - a view the FSA agrees with to some extent. In guidance sent out on 19th March they asked firms;

''1. Firms to use their own records, where available (e.g. account activity and existing borrowing), to consider initially if the customer might be experiencing Financial Difficulty. ''

However the average consumer tends not to hold all financial information with one institution and simply looking at an individuals account conduct, whilst it may give an intial view, will not tell the full story - your account statements will not details your council tax, utilities or mortgage arrears - or show regular expenses paid out in cash.

The banks need to do more to chase up consumers who don't complete and return their forms. However one view may be taken that if you are in serious financial difficulty you will do everything possible to show the bank the situation so they are able to consider your case.

If you are claiming back your charges and asking the bank to consider your case under Financial Difficulty rules of the waiver, then this may be a good indication that you need to reassess your finances overall.

Bank charges complaints will not solve everyones problems, they may offer a temporary easing of immediate difficulties. The banks are not obliged to offer any refund / payment at all until the issues currently at the House of Lords are concluded and the OFT assessment is complete, and then only if it is in the consumers favour.

The FSA outlined the measures that may be considered in their guidance letter in March;

''Firms to provide a range of measures to support customers, and to treat them positively and sympathetically. These might include; help and guidance about dealing with FD and avoiding charges; suspending collections and recoveries activity; suspending the accrual of further interest and charges; and a consideration of a refund of charges, in particular where the charges may have added to the FD during, or immediately before, the period of FD. ''

We are continuing to push the OFT/FSA and the Banks to continue with the work on improving banks treatment of those in Financial Difficulty. In this age of the government pushing forwards with 'financial inclusion' banking has become a necessity, and with this comes responsibility to treat consumers positively and sympathetically whatever their circumstances.

There is a long way to go.

If you are claiming hardship in order to try and obtain a partial refund of charges now, PLEASE complete your income / expenditure form and send evidence of your difficulties to the banks - otherwise they cannot assess your case properly and you may not receive the assistance you need.

Bank Charges Hardship Claimants falling at first hurdle

[natweststaffmember]

Re: 50% of Hardship Claimants not giving Banks enough information

Greedy banks rapped over rip-off rejects - mirror.co.uk

Their figures are marginally higher.

[Amethyst]

Re: 50% of Hardship Claimants not giving Banks enough information

mmmmm well I would guess they could have Junes figures although that would only make 870 for June. Our figures are up to the end of May and prior to May since our last set of figures there were around 30,000 new claims a month...so doesnt really scan.

Anyway thats just picky.

178000 hardship claims of which 52000 accepted- so some generous rounding gives around 2/3rds not accepted (although actually 32,000 only have actually been turned down, the rest are pending or havent returned their documents/IE sheets).

[Lichfield]

Re: 50% of Hardship Claimants not giving Banks enough information

If the lower courts had imposed a waiver on all recoveries and collections by the banks until the OFT case was decided the question of hardship would have been largely obviated. The charging system is entirely automated and so charges escalate and are quite independent of normal interest accrual. The billing office is often hundreds of miles from the main bank HQ and you may well not have a local branch. So getting them to recognise the existence of a claim at all never mind hardship is a major problem. No wonder there's a backlog.

[natweststaffmember]

Re: 50% of Hardship Claimants not giving Banks enough information

If the lower courts had imposed a waiver on all recoveries and collections by the banks until the OFT case was decided the question of hardship would have been largely obviated. The charging system is entirely automated and so charges escalate and are quite independent of normal interest accrual. The billing office is often hundreds of miles from the main bank HQ and you may well not have a local branch. So getting them to recognise the existence of a claim at all never mind hardship is a major problem. No wonder there's a backlog.

That isn't right. All banks acknowledge a bank charges claim whether it is financial hardship or not. Courts do not give waivers so it is a regulatory tool. In fact, courts are issuing stays on all claims while the OFT test case issues are going through the court.
Charges do not always spiral out of control however the interplay of charges where one charge triggers another one is a big issue with regards to fairness.

[Lichfield]

Re: 50% of Hardship Claimants not giving Banks enough information

Nattie. You say the courts are issuing stays on all claims while the OFT case is sub judice. Unfortunately this does not apply to the banks' cases against customers many of which are triggered entirely by illegal and excessive penalties. I see you do take my point about the interplay of charges and recognise their unfairness and, in my view, immorality.

[Amethyst]

Re: 50% of Hardship Claimants not giving Banks enough information

If the lower courts had imposed a waiver on all recoveries and collections by the banks until the OFT case was decided the question of hardship would have been largely obviated. The charging system is entirely automated and so charges escalate and are quite independent of normal interest accrual. The billing office is often hundreds of miles from the main bank HQ and you may well not have a local branch. So getting them to recognise the existence of a claim at all never mind hardship is a major problem. No wonder there's a backlog.

If the fsa had imposed a waiver on collections and recoveries by the banks there is the issue of what would happen if the banks were found 'not guilty'. Would they keep a tally and send out huge bills at the conclusion ? Would people think, oh good they can't charge it doesnt matter if i go over - actually if there was a waiver imposed on charging the charges in the first place i think the bank would do what a lot of people have been asking for a simply refuse everything that would take customers over their agreed limits.

There is still this possibility of the banks winning and even if the consumers win and charges are reduced heavily and imposed in different ways then going forwards theres the risk the banks, without proper regulation, will be less considerate than they are now under the waiver and refuse point blank to give any consideration to a customers circumstances and stick fast in the charge is valid you will pay it regime. hopefully the way the waiver has focussed the banks more on hardship will push them to continue/start recognising problems and working with customers to solve issues before the circle of charges and debt gets out of control like it does so often now.

Actually i think the courts pretty much have imposed a waiver - theres many cases where the banks have tried to take customers to court to collect overdrafts made up of charges which the county courts have imposed a stay on, in the same way as charges claims against the banks.

However the fsa needed to put something more in the waiver because people, who don't have the benefit of these kinds of forums, and quite a number that do actually, when faced with court forms, panic and accept ccj's, pay, or call a debt advice charity who tells them to let it be rubber stamped through and accept it.

I would like to see more discussion on what happens after the test case is concluded - the PCA is the most formal document that will be dealing with that side of thing, the future of personal current accounts, and with us having a lot more experience now with hardship issues i was thinking of maybe putting together a further submission to that specifically with regards to the handling of hardship. i don't think we covered it in enough detail in the intial response.



In the formal PCA response we did ask for the OFT to put some pressure on to stop charges being charged whilst the test case continues.

2.15. It is not, in our view, acceptable to allow the banks to continue imposing unlawful
charges whilst preventing any form of consumer redress through the courts or the
banks’ own complaints procedure. At the very least, interim injunctive relief should
have been sought, or should be sought immediately, to prevent the continued use of
these unfair terms.
2.16. Under Article 7 of EC Directive on Unfair Terms in consumer Contracts7:
1. Member States shall ensure that, in the interests of consumers and of
competitors, adequate and effective means exist to prevent the continued
use of unfair terms in contracts concluded with consumers by sellers or
suppliers.
(Emphasis supplied)
5 [2001] UKHL 52
6 See the OFT Report Calculating fair default charges in credit card contracts April 2006,
http://www.oft.gov.uk/shared_oft/rep...cts/oft842.pdf
7 Council Directive 93/13/EEC
10
2.17. In our view, allowing the banks to continue imposing such manifestly unfair
charges whilst preventing any form of consumer redress falls far short of the
statutory duty on the OFT to ensure that “adequate and effective means exist to
prevent the continues use of unfair terms”. On the contrary, many consumers
have reached the conclusion that the OFT and the FSA are allowing unfair terms
to be used against them, whilst preventing those consumers from taking any
action themselves. This prevailing view, with which we hold some sympathy, has
seriously undermined consumer confidence in the desire or the ability of the OFT
or the FSA to give adequate protection to consumers. In our experience,
consumers are particularly frustrated at the apparent bias in favour of the banks
by the regulators in enforcing and entrenching this unfair status quo.
2.18. Article 7 of the Directive goes on to state that:
2. The means referred to in paragraph 1 shall include provisions whereby
persons or organizations, having a legitimate interest under national law in
protecting consumers, may take action according to the national law
concerned before the courts or before competent administrative bodies for
a decision as to whether contractual terms drawn up for general use are
unfair, so that they can apply appropriate and effective means to prevent the
continued use of such terms.
(Emphasis supplied)
2.19. In our view, the OFT is the competent administrative body which is mandated to
reach decisions as to whether terms are unfair. There are not, in our view, any
legitimate grounds for awaiting a determination from a court that these charges are
unfair before seeking interim injunctive relief against the continued use of these
unfair charges. Having reached the obvious, albeit provisional, conclusion that these
charges are unfair, we are of the view that the OFT is failing to discharge its statutory
duties if it does not seek such interim injunctive relief. It is not, in our view,
acceptable to allow the test case proceedings to drag on for another 12 to 18 months
whilst allowing the banks to continue imposing these charges.

[natweststaffmember]

Re: 50% of Hardship Claimants not giving Banks enough information

I do see where you are going Lichfield and the claimant can counterclaim on the charges themselves so the case would then be stayed again this time for the bank.