Tweet
I asked the Financial Ombudsman Service for a view and here is the correspondence:
July 8th
"Can I ask for your opinion on a couple of issues that does seem to arise more and more on bank charges complaint re OFT test case.
Bank charges are on hold in court and with the FOS apart from financial hardship claims. A number of banks are acknowledging complaints of this nature yet when the charges are not repaid are sending account to debt collection agents. Where the total figure is made up of the full amount of their bank charges should banks still be doing this?
Furthermore, defaults are being placed on accounts for amounts equal or more than a person is claiming, again is this something that should be done since there is no recourse for the consumer since there is a hold on bank charges cases?"
Response:
"Thank you for your email and my apologies for the delay in getting back to you. I'm not aware that the FSA's waiver prevents banks from referring a bank charge-related debt to debt collectors where charges have been applied to the account. However, where a consumer is in financial difficulty firms should consider whether it is appropriate to enforce a debt that is related to unauthorised bank charges - I believe the FSA released a direction to firms with some guidance on this point and you might want to speak to them about this.
If a consumer is in financial hardship - particularly where unauthorised overdraft charges have been a large contributory factor - the bank should be dealing with the consumer's complaint in the usual way. If the consumer has explained to the bank that they are in financial hardship, but the bank is not dealing with their complaint they can (of course) refer the matter to the ombudsman service.
I hope this is of some use to you."
I did respond asking for more:
"Having re read the FSA Waiver you are right and I think the element is financial hardship.
"16. Before closing a personal current account of a customer in financial difficulty, the firm might offer the customer a basic bank account, if this is a facility that the bank offers. "
The above is specific to interpretation. For example, if someone is claiming financial difficulty it may be that they consider themselves to be in Financial hardship. However if they complain to their bank and have their financial difficulty element of the claim rejected the bank do not offer a basic account but may send the account to collections(internally) or debt collectors(externally). I advise on a lot of internet based forums and the first thing you sometimes advise is to open an account elsewhere since the charges may well be the cause of the problem and they may not necessarily qualify under financial hardship as defined and as interpreted by the banks in the waiver.
Can I ask how the financial ombudsman would hypothetically view a case where the individual is say -£700 no overdraft and the value of their claim is £1000 and they have moved their account to another bank? The OFT test case prevents a solution because it is on hold. The County Courts will stay cases(Moore Blick's advice which I think is reasonable). If ultimately someone states that they will resolve the matter on the conclusion of the OFT test case and do not qualify under financial hardship, would the ombudsman believe that they are being reasonable to the bank concerned?
Apologies for the hypotheticals but if UTCCR 1999 is assessable and terms are deemed unfair then all charges taken under that term are repayable to the consumer so that is where my reasoning is on this aspect of what is a complicated case because of the minefield it could open up."
There is more and just posting it shortly
------------------------------- merged -------------------------------
FOS response:
"Many thanks for your further enquiry. As you appreciate, we do have to be careful about commenting hypothetically on how we might view a particular case - as the law requires us to look at each case individually on its own facts. With the best will in the world, a hypothetical case can tend to have exaggerated or unrealistically clear-cut features which we find seldom reflected in the complexities of people's real-life complaints!
However, I'll certainly try my hardest to shed some more light for you in this area.
I think the main thing we can say is that it is not just down to how much is owed. Financial hardship/difficulty is all about the person's overall financial position and not just about a particular account. We would expect a bank to take an intelligent approach and gather relevant information from its customer (or ex-customer) - so that it can understand that person's situation. It should then make an assessment of how it might offer appropriate assistance to relieve immediate hardship - applying the Banking Code duty to take a "sympathetic and positive' approach to financial difficulties.
"I do appreciate your position but it doesn't really answer the question. I have seen cases where there is no financial hardship but the entirety of a person's claim represents the money owed. They have moved to another bank and have effectively left the account dormant with an amount owing which they would reasonable expect to deal with once the OFT test case issues are resolved. However, the bank having acknowledged their claim effectively send the account to debt collectors even though they have stated that the account is disputed and the OFT test case issues are not resolved. Would that constitute a breach of the waiver and should the bank be doing this since they have already acknowledged that the account is as such in dispute since they will have acknowledged a claim for bank charges."
The final response today:
July 8th
"Can I ask for your opinion on a couple of issues that does seem to arise more and more on bank charges complaint re OFT test case.
Bank charges are on hold in court and with the FOS apart from financial hardship claims. A number of banks are acknowledging complaints of this nature yet when the charges are not repaid are sending account to debt collection agents. Where the total figure is made up of the full amount of their bank charges should banks still be doing this?
Furthermore, defaults are being placed on accounts for amounts equal or more than a person is claiming, again is this something that should be done since there is no recourse for the consumer since there is a hold on bank charges cases?"
Response:
"Thank you for your email and my apologies for the delay in getting back to you. I'm not aware that the FSA's waiver prevents banks from referring a bank charge-related debt to debt collectors where charges have been applied to the account. However, where a consumer is in financial difficulty firms should consider whether it is appropriate to enforce a debt that is related to unauthorised bank charges - I believe the FSA released a direction to firms with some guidance on this point and you might want to speak to them about this.
If a consumer is in financial hardship - particularly where unauthorised overdraft charges have been a large contributory factor - the bank should be dealing with the consumer's complaint in the usual way. If the consumer has explained to the bank that they are in financial hardship, but the bank is not dealing with their complaint they can (of course) refer the matter to the ombudsman service.
I hope this is of some use to you."
I did respond asking for more:
"Having re read the FSA Waiver you are right and I think the element is financial hardship.
"16. Before closing a personal current account of a customer in financial difficulty, the firm might offer the customer a basic bank account, if this is a facility that the bank offers. "
The above is specific to interpretation. For example, if someone is claiming financial difficulty it may be that they consider themselves to be in Financial hardship. However if they complain to their bank and have their financial difficulty element of the claim rejected the bank do not offer a basic account but may send the account to collections(internally) or debt collectors(externally). I advise on a lot of internet based forums and the first thing you sometimes advise is to open an account elsewhere since the charges may well be the cause of the problem and they may not necessarily qualify under financial hardship as defined and as interpreted by the banks in the waiver.
Can I ask how the financial ombudsman would hypothetically view a case where the individual is say -£700 no overdraft and the value of their claim is £1000 and they have moved their account to another bank? The OFT test case prevents a solution because it is on hold. The County Courts will stay cases(Moore Blick's advice which I think is reasonable). If ultimately someone states that they will resolve the matter on the conclusion of the OFT test case and do not qualify under financial hardship, would the ombudsman believe that they are being reasonable to the bank concerned?
Apologies for the hypotheticals but if UTCCR 1999 is assessable and terms are deemed unfair then all charges taken under that term are repayable to the consumer so that is where my reasoning is on this aspect of what is a complicated case because of the minefield it could open up."
There is more and just posting it shortly
------------------------------- merged -------------------------------
FOS response:
"Many thanks for your further enquiry. As you appreciate, we do have to be careful about commenting hypothetically on how we might view a particular case - as the law requires us to look at each case individually on its own facts. With the best will in the world, a hypothetical case can tend to have exaggerated or unrealistically clear-cut features which we find seldom reflected in the complexities of people's real-life complaints!
However, I'll certainly try my hardest to shed some more light for you in this area.
I think the main thing we can say is that it is not just down to how much is owed. Financial hardship/difficulty is all about the person's overall financial position and not just about a particular account. We would expect a bank to take an intelligent approach and gather relevant information from its customer (or ex-customer) - so that it can understand that person's situation. It should then make an assessment of how it might offer appropriate assistance to relieve immediate hardship - applying the Banking Code duty to take a "sympathetic and positive' approach to financial difficulties.
Sometimes this will involve refunding charges - but not always, and not necessarily all the charges. There may be other measures that a bank would offer - for example, suspension of interest, rearrangement of debt on more favourable terms, repayment moratoriums during unemployment etc. We would look to see whether what the bank has offered represents a fair, appropriate and proportionate response to the customer's individual circumstances.
I hope this is of some help to you."
I did ask for more:"I do appreciate your position but it doesn't really answer the question. I have seen cases where there is no financial hardship but the entirety of a person's claim represents the money owed. They have moved to another bank and have effectively left the account dormant with an amount owing which they would reasonable expect to deal with once the OFT test case issues are resolved. However, the bank having acknowledged their claim effectively send the account to debt collectors even though they have stated that the account is disputed and the OFT test case issues are not resolved. Would that constitute a breach of the waiver and should the bank be doing this since they have already acknowledged that the account is as such in dispute since they will have acknowledged a claim for bank charges."
The final response today:
"Thank you for your enquiry and please accept my apologies for the delay in getting back to you.
I'm afraid that there isn't much more I can add to my previous email. In trying to establish whether a firm is adhering to the provisions of the waiver, you might want to speak to the Financial Services Authority to see if they can clarify things further."
Comment