The following is a 16 month exchange of letters between Peter Cotterell, a very small customer of the Halifax, and the Halifax, over the issue of illegally unfair bank charges.
The result was that the Halifax refunded all charges in full after refusing to name a fair price for their costs and under the threat of court action.
Those also trying to get their bank to treat them fairly, rather than as revenue fodder, will find the letters interesting.
And so will those who believe that the banks follow a code of ethical conduct, that the Financial Services Ombudsman is independent of the banks, that the Financial Services Authority (FSA) is an effective policing body and that there really is a tooth-fairy.
The letters are published in the public interest, and in the hope that they will encourage others to fight
Peter Cotterell
---oOo---
25 April 2005
Halifax Plc
Customer Relations
Trinity Road
Halifax
West Yorks HX1 2RG
Dear Sirs
I write with reference to the enclosed letter, sent in February this year.
I note you claim that the £30 charge is “to cover costs”. Would you please now give me a breakdown of these costs since they seem to comprise the automatic sending of a computerised letter, a few pence at most.
I have addressed this question to your staff at my branch and your customer services department and they are unable to supply any answer other than a statement that your charges are “in line” with those made by other banks (by agreement?).
Looking forward to a sensible answer.
Yours faithfully
Peter Cotterell
From Halifax
Dear Mr Cotterell
Thank you for your letter dated 25th April.
Charges are an issue, which many customers feel strongly about, however the Halifax operates a pricing policy, which we believe to be both fair and open.
I not your comments about the breakdown of our charges, and I regret that I am unable to provide this information. Deciding whether to honour a transaction, over the authorised overdraft limit, does involve extra work and costs other than simply using a system-generated letter. Having sought clarification from our Legal and Banking Product departments, I confirm our charges are based on a genuine pre-estimate of our loss.
Your account shows we waived the fee notified in our letter of 10th February and the resulting overdraft usage charge.
We have acknowledged our previous unacceptable performance in dealing with endowment mis-selling complaints. Our aim is to resolve such complaints much more efficiently and we working on several initiatives to significantly improve resolution timescales.
You will find enclosed a copy of our leaflet explaining our complaint procedures.
Should any of your concerns remain unresolved please let me know what you’d like me to do to put matters right. We are keen to resolve your concerns, if we are unable to do so we’ll provide you with details of how you can contact the Financial Ombudsman Service for help. If I don’t hear from you in the next eight weeks I will assume you are happy.
If you would like to discuss your concerns, please telephone me on 01422 326630.
Yours sincerely
Helen Adams (Mrs)
Customer Relations Manager
Banking Team
11 May 2005
Mrs Helen Adams
Customer Relations Manager
Banking Team
Halifax Plc
Trinity Road
Halifax HX1 2RG
Dear Mrs Adams
Thank you for your quick response to my letter of 25 April.
I am concerned that senior staff at the Halifax are unwilling to answer a perfectly reasonable request to justify charges made to customers.
Would you please therefore supply the name and contact address of your chief executive, to whom I would now like to put my request.
Yours sincerely
Peter Cotterell
Dear Mr Cotterell
Thank you for your further letter of 11th May, I am sorry that you are dissatisfied with my response.
As requested I confirm our Chief Executive is Mr James Crosby, who can be contacted at the above address.
Yours sincerely
Helen Adams (Mrs)
Customer Relations Manager
Core Business
27 June 2005
Mr James Crosby
Chief Executive
Halifax Plc
Trinity Road
Halifax HX1 2RG
Dear Mr Crosby
I am writing to ask you to justify the punitive charges you make to customers “to cover costs” on unauthorised overdrafts.
I have put this question to my branch and they have told me that the letters advising a charge are generated by a computer and sent out automatically with no human interference. This appears to represent a cost of 50 pence at most and a long way from the £30 charged. One of your assistant managers Jane Johnson has also sent me a disrespectful letter (copy enclosed) which did not justify the charge but simply claimed that it was “in line with other financial institutions within the banking industry”.
This suggests, wrongly I’m sure, that the charge may have been agreed after consultation with your competitors.
I also enclose a copy of a letter from Helen Adams in your customer relations department in which she advises me that your legal and banking product departments are also unwilling to justify the charge.
I am concerned that all of your staff are so far so unwilling to answer a perfectly simple and reasonable request from a customer for information. Before I take this up with the Financial Ombudsman I am therefore inviting you to answer my question.
If I do not hear from you in eight weeks I will assume that you too are unwilling to do this.
Yours sincerely
Peter Cotterell
From the Office of The Chief Executive
27th June 2005
Dear Mr Cotterell
James Crosby has asked me to thank you for your letter of 27th June. We are looking into the matter you raise and you will receive a response from Peter Jackson, Head of Banking. If you need to speak to Peter’s team in the meantime, please telephone 0113 326326.
Yours sincerely
Sarah Briggs
Executive Office
1st July 2005
Dear Mr Cotterell
Thank you for your letter dated 27th June addressed to our Chief Executive, James Crosby. I have been asked to respond in my capacity as Head of Banking.
With regard to your request for us to justify our paid item charge, it is not our policy to divulge information to that level of detail, as it is commercially sensitive information.
To comply with legislation, I would like to let you know that if you remain dissatisfied you can refer your concerns to the Financial Ombudsman Service. They can be contacted by telephone on 0845 080 1800, or by post at:
The Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London
E14 9SR
Email – enquiries@financial-ombudsman.org.uk
Website – www.financial-ombudsman.org.uk
A leaflet providing full details of the Ombudsman service is enclosed. If you wish to refer the matter to the Ombudsman you must do so within 6 months of the date of this letter.
Yours sincerely
Peter Jackson
Head of Banking
11 July 2005
James Crosby
Chief Executive
Halifax Plc
Trinity Road
Halifax
HX1 2RG
Dear Mr Crosby
I write with reference to the enclosed letter from Peter Jackson, your head of banking.
This portrays the Halifax as a company that is not prepared to be transparent in its dealings with customers. It would also lead many to conclude that you are ashamed of the high profits you make by charging customers £30 or more, “to cover costs” on something that could be covered by a payment of 50 pence or less.
As a Halifax customer I therefore find Mr Jackson’s position, on your behalf and that of the Halifax, indefensible. I note that you are also the managing director of the Financial Services Authority (FSA) and would like to know if, in that capacity, you would endorse this behaviour of the Halifax towards its customers.
Please answer this personally, on this occasion.
Yours sincerely
Peter Cotterell
cc Malcolm McCarthy, chairman, FSA
James Crosby
Chief Executive
26th July 2005
Dear Mr Cotterell
Thank you for your letter dated 11th July concerning justification of fees on your accounts, which I understand my colleague, Peter Jackson, has discussed with you on the telephone.
As my colleagues have made clear through correspondence on this subject, the breakdown of costs that make up our fees is not information we are prepared to discuss with our customers as it is commercially sensitive. I understand you have been in contact with the Financial Ombudsman and I can confirm that this is the appropriate body should you wish to take matters further.
Yours sincerely
James R Crosby
25 July 2005
James Crosby
Chief Executive
Halifax Plc
Trinity Road
Halifax
HX1 2RG
Dear Mr Crosby
I am very unhappy with the poor service I am getting on my Halifax account from someone signing himself “Garry R D Kettle” and sending me letters from my Biggleswade branch.
I have established that there is no-one called “Garry R D Kettle” based at Biggleswade and it is possible that this is just a silly fictional name used by your company to persuade its customers that they are dealing with a real human being, rather than a computer.
If so, please advise. Otherwise would you please have “Garry R D Kettle” call me on ***** ****** (daytime) or ***** ****** (evenings) as I would like to advise him how his actions are portraying the Halifax in a poor light with its customers.
Looking forward to hearing from one or the other of you.
Yours sincerely
Peter Cotterell
2nd August 2005
Dear Mr Cotterell
Thank you for your letter dated 25th July addressed to our Chief Executive, James Crosby. I have been asked to respond because of my responsibilities within Customer Relations.
I confirm Garry R D Kettle is a senior manager within Payment Clearing Services. We include Mr Kettle’s name purely as signatory for many of our banking letters and include the branch address at which the account concerned is held. All letters we receive addressed to Mr Kettle are passed to the appropriate business area for a response.
Having checked our records I note you have already received a detailed response from my colleague D B Turner about concerns you raised about your overdraft facility.
It is regrettable that our service does not meet your expectations. Considering the comments you have made, I can see no value to you in continuing an association which gives you repeated cause for complaint. In the circumstances you may wish to consider changing your banking provider.
If you remain dissatisfied with my response please refer to our complaints leaflet, which explains our procedures and the help the Financial Ombudsman Service can provide. If I don’t hear from you in the next eight weeks I will assume you are happy.
Yours sincerely
Helen Adams (Mrs)
Customer Relations Manager
Core Business
26 September 2005
James Crosby
Chief Executive
Halifax Plc
Trinity Road
Halifax HX1 2RG
Dear Mr Crosby
I am enclosing a copy of a letter received from your customer relations department. (Mine to you of 25 July refers).
This explains that your manager “Garry R D Kettle” is not involved in my account but is simply the name you use at the bottom of computer generated letters, presumably to give me the false impression that I might be dealing with a real human being. This is as unconvincing as your firm having someone prance about on TV looking gormless to give it a human face.
I now refer to your letter to me of 26 July and your statement that you are not prepared to justify your charges for unauthorised overdrafts – currently under attack from a number of bodies, and the national press – on the basis that the costs of sending customers a computer generated letter are “commercially sensitive”. This betrays a worrying lack of transparency at Halifax and suggests that you are ashamed of the profits made.
For the record the Financial Ombudsman, the body you claim is the appropriate one to handle complaints about your dysfunctional industry, also comes across as lacking transparency being unwilling, from my exchange of letters with them, to answer two simple questions I asked them to establish how independent they were. These were “Who appoints the Ombudsman?” and “Who can dismiss the Ombudsman?” Is their reticence because the answer is “Our sponsors from the financial industry”?
Lastly I note, as well as being a director of Halifax you are also a director of the Financial Services Authority (FSA) a body which is supposed to be something of an industry watchdog (lapdog?) and this seems to be an ill-advised conflict of interest on their part.
Yours sincerely
Peter Cotterell
cc FSA
13 March 2006
Harold Francis Baines
Company Secretary
Halifax Plc
Trinity Road
Halifax
West Yorks HX1 2RG
Dear Mr Baines
Please find enclosed copies of two computer generated letters from “Garry R D Kettle”, who does not exist.
These advise two penalty charges on my account of £30 and £28 which I believe your company have applied illegally, on the following basis.
1. The charges made are contrary to the Unfair Terms in Consumer Contracts Regulations 1999. Subsection 1 (e) gives one definition of an “unfair” term as one that requires a consumer who fails in his obligation to pay a disproportionately high sum in compensation. A £28 + charge for a computer generated letter that costs a few pounds at most can fairly be described as disproportionately high.
2. In addition the charges are a Penalty and, as such, irrecoverable at common law. The precedent for this was a Scottish case, Castaneda and Others V. Clydebank Engineering and Shipbuilding Co (1904) 12 SLT 498. Along with the English case of Dunlop Pneumatic Tyre Co Ltd V. New Garage and Motor Co Ltd (1915) AC 79, it was held that a contractual party can only recover damages for an actual loss or liquidated losses. It is clear that your charges do not reflect any actual and or real loss.
Obviously I accept that I did in fact go £68.14 over my agreed overdraft amount and I am happy to pay you fair compensation based on the few pounds cost to you of sending me two computer generated letters. I have in the past tried to obtain these costs from your former chairman James Crosby, without success.
Accordingly, I now require you to advise me that you will be withdrawing your unfair penalty of £58 and that a figure more fairly based on your actual costs will be applied. Failing this I will, with regret and on an important matter of principle, take out a claim against Halifax in the small claims court.
Yours faithfully
Peter Cotterell
cc Office of Fair Trading
Financial Services Authority
British Bankers Association
Note: The above was written from a template kindly supplied free of charge by Stephen Hone, a law student at Plymouth University who was the first to take on a bank (Abbey National) over the issue of illegal penalty charges and win. Stephen now encourages others to fight their banks and offers a supportive website at www.penaltycharges.co.uk
15th March
Dear Mr Cotterell
Harry Baines has asked me to thank you for your letter of 13th March. We are looking into the matter you raise and you will receive a response from a Customer Relations Manager within Core Business. If you need to contact them in the meantime, please telephone 01422 333465.
I enclose a copy of our complaint leaflet, which tells you how we will deal with your complaint.
Yours sincerely
Sarah Briggs
Executive Office
29th March 2006
Dear Mr Cotterell
Thank you for your recent letter, and for taking the time today to discuss your concerns with me.
I confirm that Gary Kettle (sic) does work for the Halifax. He is a manager within Banking Services whose signature goes on all our set charges correspondence.
I am sure you will appreciate that like other organisations we incur costs for every transaction made. When we pay an item against an unauthorised overdraft or return an item unpaid, we incur extra costs regardless of the shortfall involved. We believe it is fair to pass these costs on to the accounts affected, rather than absorb them into other areas of our operations, penalising all our other customers as a result.
We clearly outline our charging policy in the terms and conditions that apply to your account. In addition, we are committed to complying with the Banking Code, which sets standards of good banking practice for banks and building societies to follow when dealing with personal customers. The terms and conditions of your account state that you must have funds in your account to cover your transactions. We cannot be responsible if you have authorised payments against funds that were not available.
As previously advised the information regarding the breakdown of costs that make up our charges is commercially sensitive, therefore a breakdown will not be provided. Our charges are constantly under review, however at present they will not be changing.
We are keen to help you avoid any unnecessary charges by providing various ways to keep track of your account. You can to this via telephone banking on 08457 20 30 40, online banking (www.halifax.co.uk) or mini statements at cash machines. You can also contact one of our banking advisers at any of our branches.
Ultimately it is your responsibility to manage your account. However, as a gesture of goodwill I am prepared to refund £58 of charges in full and final settlement of your complaint. I must stress that future valid charges will stand and we reserve the right to close you account if you do not manage it correctly. I note that you rejected this offer in our telephone conversation, however if you are prepared to accept my offer, please sign and return the enclosed acceptance form in the pre-paid envelope.
You recently received a copy of our leaflet explaining our complaints procedures. Should any of our concerns remain unresolved please let me know what you’d like me to do to put matters right. We are keen to resolve your concerns, if we are unable to do so we’ll provide you with details of how you can contact the Financial Ombudsman Service for help. If I don’t hear from you in the next eight weeks I will assume you are happy.
If you would like to discuss your concerns, please contact me on 01422 333465.
Yours sincerely
Helen Rawnsley
Customer Relations Manager
Core Business
Customer Relations
18 April 2006
Andrew Hedley Hornby
Chief Executive
Halifax Plc
Trinity Road
Halifax
West Yorks HX1 2RG
Dear Mr Hornby
I refer to my letter of 13 March to your company secretary, Harold Francis Baines. (enclosed)
This claimed that Halifax is trading in breach of the Unfair Terms in Contract Regulations 1999 and making charges to customers that are irrecoverable at common law.
The response from Mr Baines’ representative (copies enclosed) does not contest this claim in any way which may have been an oversight, so the purpose of this letter is to give you and the other directors of Halifax, who are responsible for it trading legally, a final opportunity to do so. If I do not hear from you to the contrary by Wednesday 31 May, the date by which the Office of Fair Trading (OFT) expects you to reduce your illegal and unfair charges, I will assume that you do not wish to contest my claim, and proceed accordingly.
I have studied the “Banking Code” referred to by Mr Baines’ representative there and note that it is a misleading publicity document produced by the trade associations you pay to look after your interests and has no legal status. Your bank, in any case, falls down on its commitment; “We promise that we will act fairly and reasonably in all our dealing with you”. The £58 you charge to “cover your costs” for advising on unauthorised overdrafts is not considered “fair” by either those courts which have ruled against the banks on unfair terms in consumer contracts, or the Office of Fair Trading (OFT) which has currently suggested an absolute maximum of £12. You will also be aware that your code has been drafted so that it does not preclude you, or any other banks from breaking any laws, which makes it nonsensical.
I note the veiled threat of punitive action against me, presumably for challenging you, made by Mr Baines’ representative and find this, along with the sanctimonious tone of the letter disappointing and regrettable, though not surprising.
Mr Baines’ representative also suggests that the Financial Services Ombudsman would be an appropriate body to impartially resolve any dispute between us. I disagree. I have found your ombudsman’s office untrustworthy in the matter of answering simple written questions as to who appoints them, who pays them and who can dismiss them. The ombudsman, as you know, has no power to order banks to do anything and, unlike the courts and the OFT, has never ruled in favour of a customer in the matter of illegally unfair penalties. The ombudsman is appointed, as you know, by the Financial Services Authority (FSA) on whose board of directors, as you know, your director and former chief executive James Robert Crosby sits, and has done so since January 15, 2004. This can only raise the suspicion amongst your customers that he has been planted there by the banks to protect the estimated £3 billion a year in illegal penalties taken off customers and I am, by copy of this letter to them, raising the issue of a serious conflict of interest that can only undermine the credibility of a body that is supposed to impartially police your industry.
Mr Hornby, under the circumstances I suggest that you answer this letter yourself, rather than pass it down to your company secretary for another inappropriate response.
Yours faithfully
Peter Cotterell
cc Office of Fair Trading
Financial Services Authority
Dear Mr Cotterell
Thank you for your recent letter and for allowing me the time to discuss your complaint on Saturday.
As we discussed at length, our position in relation to charges remains the same as you were advised in our letter of the 29th March 2006.
As a gesture of goodwill I have offered to refund £123.00, this offer is the balance of the total amount you have paid in charges. I must stress that future valid charges will stand and we reserve the right to close your account if you do not manage it correctly. If you are prepared to accept my offer in full and final settlement of your complaint, please sign and return the enclosed acceptance form in the pre-paid envelope.
Moving to the issue you raised in regard to credit card cheques. As promised, I have advised Card Services that you prefer not to receive these type of cheques. I am sorry you do not agree with our policy of sending these to credit card customers.
I have asked Halifax Insurance Ireland Ltd to review the complaint you made regarding payment protection insurance. They will contact you directly in response to this issue.
You recently received a copy of our leaflet explaining our complaints procedures. Should any of your concerns remain unresolved please let me know what you’d like me to do to put matters right. We are keen to resolve your concerns, if we are unable to do so we’ll provide you with details of how you can contact the Financial Ombudsman Service for help. If I don’t hear from you in the next eight weeks I will assume you are happy..
Yours sincerely
Deborah Sargent
Customer Relations Manager
Core Business
Customer Relations
22 May 2006
TO ALL HALIFAX DIRECTORS
HOME ADDRESSES
Dear
It seems my letters to Halifax directors are being intercepted and answered by juniors at Halifax head office, who are not addressing the important issues raised hence this, with apologies, to your home address on this occasion.
Copies are enclosed. Compliance with the law is the responsibility of Halifax company directors, not your customer relations department.
As stated in my letter of 13 March if I do not hear to the contrary from the Halifax by Wednesday 31 May I will assume that you are not contesting my claim that you have broken the law by charging illegally unfair penalties.
Finally it should be obvious to you that my reasons for taking the time and trouble to challenge you in this way has little to do with the recovery of relatively paltry sums of money unfairly taken by you from my account. I simply believe that as a bank you have a considerable power that you abuse, just because you can, and that this abuse inflicted as it is by all the banks, is contrary to the general public interest.
My objective therefore is to persuade you to treat your customers like human beings, instead of just revenue fodder, and then enjoy a more healthy and mutually respectful business relationship with you in the years to come.
Let’s hope we can.
Yours faithfully
Peter Cotterell
cc All Halifax directors
Office of Fair Trading
Financial Services Authority
Consumers Association
16 June 2006
Dear Mr Cotterell
I refer to previous correspondence from our offices in response to your concerns regarding charges you have incurred on your Current Account.
I understand my colleague Deborah Sargent from Customer Relations has previously discussed this matter with you in detail and offered to refund all the charges applied to your account over the last six years. The total charges applied during this period amount to £158.
Please find enclosed a complete breakdown of all the charges as requested. You will note some of the charges were waived prior to being debited to your account. However, in March 2005 a charge of £35 was refunded as a goodwill gesture leaving a net figure of £123.
I am sorry you are unhappy your letters have not been handled by any of our Executive Officers. Our Customer Relations Managers have full authority to respond on their behalf.
I hope the enclosed information meets your requirements enabling you to now return our form of acceptance for a full refund of £123.
Yours sincerely
Glenn Clapham
Executive Office
10 July 2006
Andrew Hedley Hornby
Chief Executive
Halifax Plc
Trinity Road
Halifax
HX1 2RG
Dear Mr Hornby
I write further to the enclosed letter of 16 June from your office.
Thank you for offering to refund all the illegal and unfair penalty charges your firm has charged to my account over the last six years, this as “an act of goodwill”.
This is to confirm that, as a reciprocal act of goodwill, I accept my £123 back from you, with no further compensation in full and final settlement of the legal claim against the Halifax already advised to you and your board. Would you please now credit this figure back to my account and advise me when it has been done.
For the future, assuming you don’t close my account with the punitive action you threatened, I will no longer accept any similar charges from you.
These are, as you are fully aware, illegal, unfair and breach the Banking Code of Conduct you misleadingly claim to follow. I am, as I have always been, happy to pay your reasonable, justified costs, which should be submitted as a proper legal invoice, as all my other suppliers do.
Thank you, however for (belatedly) making the above move in the right direction. The shoddy, exploitative and in some cases downright inhuman treatment of customers by directors of banks such as yourself, your predecessor James Crosby and your board, has served to drastically lower your ranking for integrity and trustworthiness in the minds of the public. As a senior banker you cannot be happy with this and should as a matter of urgency be ordering a significant ethical makeover for the Halifax, and encouraging your close colleagues in other banks to do likewise.
Perhaps, then, we’ll all start to trust you again.
Yours sincerely
Peter Cotterell
NO RESPONSE
1 August 2006
Andrew Hedley Hornby
Chief Executive
Halifax Plc
Trinity Road
Halifax
HX1 2RG
Dear Mr Hornby
This is to confirm that your company has finally, after a 16 month fight, reimbursed all the illegal and unfair charges it took from my account from 2000 to 2006.
This was a total of £123 and you paid it to my account on 14 July in full and final settlement of any claim against the Halifax.
The reluctance, tardiness and attitude of the Halifax in respect of this issue does neither your firm nor the banking industry any credit.
Yours faithfully
Peter Cotterell
cc All Halifax directors, home addresses
NO RESPONSE
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