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Fighting back against British banks excessive overdraft charges
So the banks are furious that the sun may be setting on a multi-billion- pound scam on the British public. Simon Bain's report (February 10) carries a quote from Angela Knight, chief executive designate of the British Bankers' Association, justifying the imposition of bank charges because people "don't like parking tickets either, or speeding fines". True, but fines are a matter of public policy.
The government decided a long time ago that we should discourage speeding and bad parking to prevent accidents and ensure the safe flow of traffic. No-one likes road traffic fines but a democratically elected parliament passed legislation to give them effect. Who gave the banks the power to fine? And what public policy is served by generating billions of pounds of private profit by fining people?
The reality is that Scots and English common law has never permitted penalty charges. And neither do the Unfair Terms in Consumer Contract Regulations, 1999. It does not cost a bank £39 to bounce a direct debit or standing order and the banks are only entitled to recover their actual loss - the same as any other private citizen in a contractual dispute. Charging a fee for an unauthorised overdraft is not illegal, but charging 30% unauthorised interest, plus a per transaction penalty charge of £39, and a monthly unauthorised overdraft fee of £28 does constitute an unlawful penalty.
I debated this issue with Ms Knight's predecessor, Ian Mullen, on February 18 last year on BBC Radio 4. He told me that every time a transaction was declined there was a bank employee sitting in an office somewhere in the UK, on a 24/7 basis, looking through a customer file and deciding what to do. This was the "manual intervention" defence - in other words it cost £39 to send a computer-generated letter. For most automated charges this suggestion is dishonest nonsense. Consider this: the banks have refused repeatedly to tell the Commons Treasury Committee how they calculate charges.
Bank accounts have never been free in the UK. They are paid for several times over by fining the most vulnerable members of society. The policy of UK banks on charging has been regressive, morally bereft and a major cause of poverty and homelessness. But the tide is turning, and Scotland has taken a lead in the UK campaign against unfair bank charges. In early 2005, Govan Law Centre devised the UK initiative of self-help pro-forma letters to enable citizens to obtain free refunds of unfair charges: www.bankcharges.info
Our letters and tactics were rolled out across Scotland thanks to Citizens Advice Scotland and Glasgow University Students' Representatve Council, and copied by numerous websites in England and Wales. Such is the power of the internet. Millions of pounds in bank charges have been refunded across the UK, but there are still hundreds of millions to be reclaimed in Scotland alone.
Mike Dailly, Principal Solicitor, Govan Law Centre, 47 Burleigh Street, Glasgow.