Unenforceable bank charges under common law in England & Wales
In September 2016, MPs called for "a cap on overdraft fees" - a simple but useless request. (Especially as MPs took powers away from those that had them in the first place!)
Overdraft fees are an unenforceable burden on account holders.
Over 100 years of legal precedent, determines that any fee, charge, etc. can "only recover actual loss incurred" - if actual loss cannot be proven (as banks systems are automated) then the charge cannot be enforced.
It really is that straight forward.
A current account has £10 balance.
A direct debit requests £20 from the bank.
The bank SHOULD return the direct debit unpaid (as not enough funds in the account to cover it)
The bank instead pays the direct debit, putting the account into an "unauthorised overdraft" incurring additional charges.
Santander currently charge £6 per day for an unauthorised overdraft balance.
So if this scenario is applied to a santander current account, where a two day unauthorised overdraft is charged for, santander take £12 from the account holder, for two days of the account being £10 overdrawn.A 20% fee.
There are endless examples of the bank taking £6 per day, from account holders being less than £2 overdrawn.
If an account is overdrawn for 5 days, this equates to £30 for a £2 negative balance.
If there is a bank out there that can prove in court that the "actual loss" for being £2 overdrawn, is a £30 "actual cost," I've yet to see a single example of it.
Banks tell customers that "it's up to the account holder to manage their account" that's all well and good, but when "the system" is applying charges/fees, "the system" is over-ruling account holders and paying direct debits without funds in the account, then the bank are responsible for it.
The bank's system is built, set by, controlled by the bank themselves.
For the bank to blame their own system and staff being unable to explain why some direct debits are paid and some are not, regardless of what the account holder requests, shows the banks to be fraudulently applying fees, to increase profits.
Which official body is asking the banks why they have a charge for non-payment of a direct debit on their "system" - when no one at the bank knows under which conditions their own "system" applies it to generate the charge/fee and the banks continue to pay direct debits and charge extra unauthorised overdraft fees on top?
I repeat again, bank charges are straight forward.
If a charge/fee does not recover "actual loss" then it is unenforceable under common law in England & Wales.
So which official body is enforcing the law? None that I can see.
This includes MPs, Financial Conduct Authority (FCA), ombudsmen, etc.
They all spend vast amounts of money doing reports and studies, taking years, yet the outcome is always the same, the customer always pays unenforceable bank charges.
They wonder why so many people are thoroughly hacked off with official bodies, they are toothless talking shops.
It's time for action.
If official bodies fail to act, then they should be closed down and replaced, or the court system should changed to allow free access to challenge them.
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