Simple Pound

To avoid court, NatWest has just paid a claimant £35,987.94 to cover the £24,000 in charges (plus interest) for bounced cheques. The man, who wants to remain anonymous, is running a window and conservatory business with a turnover of now £1million. But when he started out in 1999, he shared a problem of many young companies: (lack of) cashflow. When he tried to draw on money from customers whose cheques had not cleared, the bank would stop direct debit payments or bounce his cheques - leaving him with bank charges of up to £3,000 a month.

A case conference was scheduled for 11th May, to which NatWest’s solicitors responded as follows:

“Although our client is confident that it will be successful at a final hearing, its legal fees will almost certainly outweigh the value of the claim. As such our client must take a commercial approach to such claims. Without admission of liability our client is prepared to settle this matter in full.”

Read the BBC’s full coverage on the story here.

NatWest seems to be getting a hard time from the press at the moment, but as much as I would like to say that you should rather go somewhere else to avoid the hassle, I can’t. There is no bank I can think of that doesn’t issue such ridiculous charges for bounced cheques, unapproved overdrafts and the like.

I’m hoping that Brennan will win his appeal against NatWest so that they at least have to admit that the charges are indeed being unlawful. Even though this doesn’t necessarily work on a broader scale to include other retail banks as well, it should set the tone and maybe have banks overthink their position - precisely to avoid the bad publicity.

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The hearing for yesterday’s NatWest case has been delayed by the Judge until April, 30th. He regards the issues as “extremely important” and therefore requires a full day’s hearing as opposed to the two hours scheduled for yesterday.

Tom Brennan, the young barrister fighting this case, was disappointed by this outcome since it buys the defendants more time. He said:

“It should be noted that any delay is going to assist the defendants because only six years of charges can be made. Every day that passes, more money is being saved by the bank.”

BBC’s coverage here. I’ll keep you posted on what’s going on…

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It looks as if someone is finally talking serious with regards to the hideous bank charges one can easily accumulate by mistake. The young London Barrister Tom Brennan is taking NatWest to court on Friday despite being offered £4,000 to settle his claims of £2,500 worth of bank charges which he racked up in overdraft fees while at University.

He is accepting a considerable risk since losing could mean having to cover NatWest’s cost, which would bankrupt him and thus prevent a career in the legal profession.

I’ve had some trouble with my bank myself when they charged me £30 after my account had accidentally gone overdrawn by 20 pence for a few hours. I got an appointment with the branch manager, who finally agreed to refund my money after I had threatened that I would take my money (and the prospects of being able to sell me a mortgage and/or car insurance) and go some place else.

It all worked out fine in the end, but was a real nuisance and cost me a considerable amount of time, so I’m hoping that the court ruling on Friday will be in the consumers’ favour.

According to Tom Brennan, the administrative costs of a bounced cheque (for instance) are roughly £2.50 while banks frequently charge well above £30 - I don’t even want to calculate that profit margin. However, even if Brennan might win on Friday, he said that the ruling might not necessarily apply to other retail banks as well, but at least it should be a step in the right direction…

BBC Radio 4 interviewed Brennan last week and a transcript of the show can be found here in case you are keen on the details.

Thanks to MoneyWatch for making me aware of the news.

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