Questions of Cash: ‘£363 charge for £5 overdraft’: The Independent


Q. I had a bank account with NatWest for six years. In that time, I accidentally went overdrawn a couple of times – but by no more than £5. Each time I was charged £28. The last time, I complained and NatWest said it would review matters and contact me afterwards – which has not happened. A year and a half ago I relocated to the USA. Before moving away, I went overdrawn £4 by mistake. I paid this as soon as noticed my error. But now I have received several threatening letters stating that I owe NatWest £332.59 in interests and charges. Can I do something against such disproportionate charges? HC, United States.


A. Your previous complaint against the high charges for an unauthorised overdraft was put on stay until the legal review of banks’ charging policies was completed. That legal case is still underway, which is why you have not been contacted again. This latest problem illustrates the dramatic way in which bank charges can escalate. A payment by you to your card account of £18.85 led to you going overdrawn, without authorisation, by £5.39. You thought you had cleared this by paying £6 into your account. But, in fact, this failed to clear your account as NatWest had by then charged you £28 for going overdrawn. You were unaware of this, presumably because you had by then moved to the United States. Consequently, further penalty charges were imposed for having failed to clear the first penalty charge and subsequent monthly penalty charges. This escalated to the point where you owed NatWest £362.59 – even more than the figure you advised us. This process of applying penalty charges on top of penalty charges helps explain the anger with which consumer groups have demanded that the banks moderate their charging policy – which is why the legal case was brought. But there is good news in your case. As a gesture of goodwill, NatWest has written-off all the penalty charges. It will credit your account with £363.20, representing all the latest charges. In addition, recognising that you have now moved to the United States and wish to close your account, it will credit your account with a further £28 to clear the previous claim you made against penalty charges. Your account now stands at £28.61 – which it will pay you according to your instructions.


Q. I purchased a BA ticket to Islamabad from a travel agent in August last year. BA cancelled all flights to Islamabad for security reasons and I was told my money would be refunded via the travel agent. BA says it has given the money back to the travel agent, but I have not received a refund. I have been phoning and emailing the travel agent for a year without success. I tried speaking to my bank about this earlier in the year, but it refused to help me. I am owed £495. SS, by email.

A. Happily, as you paid by Visa debit card, you are protected against just such an eventuality. Unfortunately, Lloyds appears to have forgotten about this when you phoned them several months ago. Lloyds apologises for this and has fully refunded your £495. We were unable to contact the travel agent. Sadly your situation is not unusual when dealing with small independent travel agents. It is wise in these cases to pay, as you did, by Visa debit card, or, even better, to pay by credit card – which gives you stronger statutory rights.


Q. I had a two year Fixed Rate Bond with Heritable Bank that matured on 1 May 2009. It was taken over by ING Direct in May. I then closed the account and transferred funds to my current account. I have now received a letter from ING Direct requesting £54.32 because “prior to the transfer (from Heritable Bank to ING), a mistake was made when calculating the interest due”. Have other people received such letters? Is it a genuine request? Do I have to pay it back, as after all it was their mistake? ME, Gateshead.


A. Heritable Bank was a subsidiary of the Icelandic Landsbanki and is now in administration. After ING Direct took over Heritable there was a mistake made on interest calculations, which affected about 2,500 customers. ING Direct says that it is “confident” about its legal position seeking to obtain the money back, comparing this to the situation where it would have to pay customers if they had been underpaid interest.


Paul Bicknell of the Financial Ombudsman Service confirms that ING Direct is acting correctly. He says: “Legally the firm is entitled to ask for the money back. In some circumstances customers do not have to repay mistaken credits if they have ‘changed their position’ through believing, in good faith, that the money was theirs – for example, by buying some expensive service that they would not otherwise have bought.  But merely spending the money on ordinary day-to-day expenditure does not amount to a change of position. In cases such as this, involving relatively small amounts of money, we are usually interested in the practicalities of how consumers should repay the money and not the principle as to whether they should do it or not. It is possible [the reader] may be able to get a small refund of some of the charges to reflect the distress and the inconvenience caused to her, but this is unlikely to exceed £25 and she should complain to the bank in the first instance in order to obtain this. The bank may be more likely to take a favourable view on her position and getting this resolved informally given the fact that the case fee for a financial services company being complained about at the Financial Ombudsman is £500. But if the consumer simply decided to not repay the debt it is highly unlikely the bank would just write it off and it could affect her credit rating.”

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