When you inadvertently write a cheque from the wrong account putting said account into overdraft, you expect to pay for your mistake. But would you expect to pay four different charges, incurring a total liability in fees nearly four times the size of the overdraft—even though it was rectified within 6 working days? If you bank with Halifax, who always give you extra, you can indeed.
A costly mistake
We had seven Halifax chequebooks on hand: I grabbed the wrong one, writing a small cheque from an unused (almost empty) account. The account went into overdraft by £23.96 when the cheque was cleared on the day we went abroad.
When we returned from holiday the bank had informed me via two online letters of the unarranged overdraft and the fees I had incurred:
- A £35 charge for going overdrawn without arrangement;
- A monthly unauthorised overdraft charge for April (covering 3 working days);
- A monthly unauthorised overdraft charge for May (covering 3 working days);
- Debit interest, amount undisclosed.
When Halifax say they give you extra, they mean it
Needless to say I was annoyed at my mistake—but we were outraged at the charges. Specifically we took issue with the fact that:
- Fees of £91 (excluding interest) were out of proportion to the overdraft amount of £23.96;
- There was no "grace period" to allow rectification.
The bank's response by telephone
Immediately after reading the letters online I telephoned the bank; the stub confirmed I had written the cheque from the wrong book. Centralised customer support agreed to waive the £35 charge as a "goodwill" gesture, but that was really all they could do, they said, after confirming no salary was being paid direct into the account. If I went to the bank next working day, I'd need to hand over £56 in fees together with the outstanding amount of £23.96.
The local branch get it right
Needless to say we were still peeved, and I went to the local branch intending to speak to the Customer Service Manager and complain about their unjustifiable charges.
I went up to the help desk and spoke to J. Employees are of course different from corporate entities and I politely explained the situation. That's all I needed to do; I didn't ask for anything, although I had hoped J might cancel one of the £28 charges.
She revoked both, saying she could understand my genuine mistake (having made that one herself) and agreed it was "unfair" I was hit with the £28 twice just because the month had changed. J also helpfully offered to destroy (and cancel on the computer) some of the unnecessary cheques I had brought in, to make a repeat error less likely.
After paying in the outstanding amount (and retaining our accounts) I went back with a bunch of flowers for J. I felt like a customer again.
Implications
If you make a mistake, own up but be prepared to challenge any charges that seem unreasonable. Banks need to know when they are failing on the customer care front, and good customer care deserves reward. Stay calm, and make the bank not the person doing their job the focus of your scorn. You might get more satisfaction from a face-to-face conversation at your local branch. There's no need to make threats; you can give feedback with you feet and take your business elsewhere any time you choose, but the bank will have little motivation to make goodwill gestures if they've already lost your custom. Don't just accept over-charging: name and shame your bank, and blog about your experience to help raise consumer awareness.
Meantime, Halifax have this to say concerning consumer complaints about excessive unarranged overdraft charges and ongoing court action against them:
On 27 July 2007, the Office of Fair Trading (OFT), 7 UK banks (including HBOS) and Nationwide Building Society, started a court case to decide on the legality of unarranged overdraft bank charges.
The case has been called a "test case" because the decision will clarify the law in this area. It is likely to apply to all current and new claims against current account providers about unarranged overdraft bank charges.
We believe that unarranged overdraft fees are fair and reflect the service customers enjoy and that legal certainty over unarranged overdraft bank charges is in the interests of all concerned.
The first step in this process was a trial of certain 'preliminary' issues. This preliminary trial concluded on 8 February 2008.
The Court has issued its judgement on this first stage of the test case process. The judgement is complex and the Banks are currently considering its implications.
Further Court hearings will be required before the test case process is concluded. The likely timetable for the next steps in the test case process will be decided by the Court on 22 May 2008.
As previously agreed with the Financial Ombudsman Service and the FSA, customer complaints relating to unarranged overdraft charges will currently remain on hold. The Banks will continue to ask County (England & Wales) and Sheriff (Scotland) Courts to keep cases relating to unarranged overdraft charges on hold until the test case process is concluded.
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Interesting attitude to customer service. Presumably it is an automated function.
I imagine that a bank here would simply bounce the cheque and you would be charged the fee for that.
Your creditor would then be slightly peeved, and either be mean enough to continue representing the cheque (generating more bounce fees) or would attempt to contact you about the problem.
I also vaguely remember a bank here advertising to the effect of - if you accidentally go into overdraft, but have funds in other accounts, they would either use the other accounts to cover the cheque or at very least only charge you the unarranged OD interest rate on the outstanding balance since you clearly had funds available but had erred.
It is always nice to deal with a sympathetic person. It's a shame that so much of banking satisfaction appears to be dependent upon your relationship with your manager or someone who is not the "more than my job's worth" rigid-rule-following type. I can definitively say that my view of my banks past and current is based on the competence and people skills of my regular contact person. What a difference it makes when I feel my banker is my friend.
Good on you for standing up to unnecessarily punitive fees.
@Oh Waily: Yes, it is a good thing that they paid the cheque—they acknowledged it was a "small sum" (indicating they wouldn't have paid if it were a large amount, but I don't know their cutoff.) If they can see the overdraft was relatively trivial, you'd think they might reflect that in the fees. If my cheque added 3 zeros I'd still have been charged the same.
Incidentally I hadn't written a cheque for ages. Had the National Insurance Office not received my Class 1 contributions, I would have re-directed some of my frustration at them. I wanted to make an electronic payment but for instructions you have to phone them; their phone only tells you they're too busy so try again later. After several attempts I followed "how to pay by cheque" on the invoice.