More Bank Claims
The banks have been under the cosh for some time, following the financial crisis and then a series of mis-selling scandals. There have also been questions over interest rate manipulation and other indiscretions. It seems another issue has arisen, this time concerning wrongfully charged interest on personal loans. The problem is that in many cases, banks failed to provide the necessary information to customers when issuing arrears notices or loan statements.
The Credit Consumer Act 1974 (“CCA”) sections 77 and 77A require lenders to provide certain information with standard bank statements, including:
- The total loan amount borrowed;
- The total amount which is due to be paid back to the bank to date, including any payments still outstanding . The dates of when each payment was due must be listed individually.
- The total amount which will be paid off by the time the loan agreement ends, again listing the dates when each payment will be due individually.
Section 77A CCA requires banks to provide customers with statements for this type of loan (fixed sum) over consecutive periods starting either on the date the loan was taken out or if the repayment date has since been changed by the customer, from the date chosen by the customer at that time.
It has now come to light that banks have been sending statements without all necessary information e.g. the original loan amount or change of repayment date. Despite these errors by banks, customers have been charged interest when it was not properly enforceable.
Bank refunds
The Office of Fair Trading (OFT) has stepped in and is requiring banks to refund interest paid in circumstances where the prescribed information had not been provided to customers.
It has been reported that that Barclays are to refund customers following an admission that 300,000 customers had been overcharged when the correct section 75 information had not been provided to them. The OFT has now written to 50 other banks and building societies regarding similar breaches and those banks are now looking at a hefty bill for refunding customers. This is on top of the ongoing PPI refunds and Interest Rate Swap claims.
It’s another tale of chickens coming home to roost, after years of malpractice by banks and other lenders.
