A BANK customer is sending bailiffs into a high street branch after he won a court ruling over sky-high charges for an overdraft.
Lloyds TSB in Reddish is facing a visit from the debt collectors after Brian Mullen,
pictured, took them to court claiming nearly '2,000 of penalties taken from his current account were illegal.
The 29-year-old, who works in Manchester, incurred the charges for bounced cheques, direct debits and standing orders when he exceeded his overdraft limit, mostly while a student.
He claims the series of '30 levies is unlawful because they make the bank money rather than simply recovering its costs.
Lloyds TSB didn't defend Mr Mullen's County Court claim and the judgement was awarded in his favour on February 14.
Warrant
When the bank failed to settle the bill, Mr Mullen was granted a warrant of execution giving bailiffs the power to seize the bank's assets.
Mr Mullen said: "If the bank doesn't settle they can go in any time they like and take assets to the value of the debt. I have always felt the charges were wrong because they don't just reflect the bank's costs, they are also penalty charges making them billions every year.
"Many of the ones I paid were '30 charges for letters telling me I'd exceeded my overdraft, bounced a cheque because of insufficient funds, things like that.
"Because they didn't defend my claim it was awarded in my favour, but when I didn't hear from them I was granted a Warrant of Execution which empowers the bailiffs to go into the bank."
Repurcussions
It is thought the decision could have major repercussions for banks across the country and open the floodgates to other customers wanting to challenge charges.
Mr Mullen, who is working towards gaining chartered status in accountancy, said he was planning to use the cash to settle his debts with the bank and close the account.
Lloyds TSB was not prepared to comment on the matter but said it had been given until Thursday to resolve it.
Karl Williams, head of the debt recovery unit at Manchester law firm Pannone and Partners, said he felt the bank would now try and get the judgement set aside.
Precedent
He said: "I think if the bailiffs get as far as going to the bank then there will be some hasty calls to their solicitors. They won't want this to set a precedent and I'm surprised they didn't defend the claim.
"You would assume a major clearing bank would have water-tight terms and conditions allowing them to make penalty charges on their account holders which may not reflect the level of business through the account.
"I assume this was an oversight and they will now try and prove to the court they have a defence to the claim. However, they will have to explain why they didn't respond to it originally.
"If they are successful then it will go to a full hearing and if they win that they will probably still be liable for a small amount of costs."
Click on the link below to learn how you can challenge your bank's sky-high charges.
Showing comments 1 to 25 and replies | View All
Ms D, Manchester (15/03/2006 at 09:09)
Len Cohen, London (15/03/2006 at 09:32)
MLP, London (15/03/2006 at 10:43)
He is of course not the first to win against the banks, more and more people are waking up to the fact that banks are acting unlawfully, and fighting back, and quite rightly so too. Too clever by half? For challenging unfair and unlawful terms? I don't think so.
PS to 1st poster: It's a County Court ("small claims"), no costs awarded unless it's been deemed frivolous or unreasonable. Oh, and I'll predict now that the bank will pay up, and will not go to court (again), because it knows it CAN NOT WIN.
stephen hone, Plymouth (15/03/2006 at 11:16)
keep up the good work
stoneybroke, London (15/03/2006 at 11:17)
Simon, Worsley (15/03/2006 at 11:28)
M Davies, Work (15/03/2006 at 11:58)
alex, manchester (15/03/2006 at 12:56)
Catherine, Manchester (15/03/2006 at 13:04)
TSB give him his money back!
Sam, Manchester (15/03/2006 at 13:10)
Helen, Manchester (15/03/2006 at 13:14)
Well done to Brian, about time people stood up to the banks, they are making billions out of the working class people, having had bank charges myself, I think its about time something has to be done, they took the ??300.00 pound overdraft off my husband and myself, but offered us a credit card limit of ??3,000.00. and that was the Lloyds TSB!
Big D, Manchester, City Centre (15/03/2006 at 15:11)
Gemma Morris, Manchester (15/03/2006 at 15:13)
d big, manchester (15/03/2006 at 15:33)
SDF, Huddersfield, West Yorks (15/03/2006 at 15:50)
Charlotte, Wigan (15/03/2006 at 15:56)
tsb, manchester (15/03/2006 at 16:00)
churchill Rogers, manachester (15/03/2006 at 16:21)
John, Notts (15/03/2006 at 17:16)
Well, to the untrained eye it would appear so, which is why the banks (and other financial institutions) have been able to do this for so long.
Please read the forum pages on the BankActionGroup website.
These charges are punative, effectively designed to stop you from doing it again, and as such are illegal. They are only entitled by law to charge the cost of dealing with it, which is perhaps not much more than the cost of an envelope and stamp! The fact that we have all signed up for these accounts and were told what the charges would be is irrelevant - we didn't know it was illegal - and THAT is why this bank did not contest the court action - because they have no effective defence to excessive charges.
The ball is rolling now, there are many, many more people currently in the process of reclaiming from all the banks - see for yourself on the BAG website. Halifax.... I'm coming for you next!!
P.S. Well done Brian....
ME, manchester (15/03/2006 at 18:29)
Dave Johnson, Beds (15/03/2006 at 18:45)
Over 7000 people registered,all with gripes against financial organisations.
They should never have educated the masses
pete, manchester (15/03/2006 at 18:58)
The Bank Action Group, London and UK (15/03/2006 at 19:13)
The Banks abuse their dominant position and have done for many years.
Not only do the Banks make huge profits from their disporoportionate penalties but when finally their customers are too drained of resources to pay any more, the banks abuse their privileged access to the Credit register by lodging a default which effectively damages the reputation and functionality of the customer for at least 6 years.
This is an iniquitous system. For anybody else to register a default they must have a court judgment. In otherwords they must present their case before an independent impartial arbiter. By their dominance, the banks have a direct access to the credit register and they use it without any control, scrutiny or oversight to register on their own account, unproven debts very often comprised of substantially unlawful charges.
If you have been a victim of any of this then come to The Bank Action Group.
We have over 7000 registered users and everyone is welcome.
The Bank Action group
Duncan, Moston (16/03/2006 at 01:59)
It is about time the banks were brought to task over these ridiculous charges.
I recently managed to recover almost ??800 from my bank for excessive charges. They paid up because they knew they were in the wrong.
They have been getting away with it for too long.
D.G.
NB, Manchester (16/03/2006 at 02:10)
At the same time, I had been made redundant, so I told the bank, which was a big mistake. I asked them to cancel my direct debits and standing orders, which they said they would do.
Over the course of the next couple weeks, I received many letters, sent by 2nd class post, telling me some standing orders had been rejected, charge ??25, and some had been paid, charge ??25. I went into the bank and went through them one by one to make sure they were cancelled.
Eventually, all the letters from the bank disappeared apart from their bank ststements showing I owed them over ??1,300. Did I pay it back? I received numerous phone calls over the next few years asking me about the 'terrible consequences' of not paying the money back, and my reply was always the same. This was the banks invention, I did not owe ??1,300 and over my dead body would I pay them a single penny. I had not received ??1'300 to spend, and it was nothing but the banks greed that had created the situation. It was akin to me writing to some anonymous individual with some fancy letter imposing charges for some reason, then threatening them with ' Court action'.
Anyway, the phone calls stopped after a while, the letters came for years which went straight in the bin, and I learned a very good lesson. If you don't open the door, the bailiffs can't get in. I had six years of it because the bank thought they could control me.