When even the head of the Financial Services Authority doesn’t understand contract law…
An amazing little aside in the news this week: John Tiner, head of the Financial Services Authority (FSA), doesn’t understand contract law. That’s the only conclusion I can draw from this extract from Guardian Unlimited Business | | Lunchbreak sessions to tackle financial skills:
The City watchdog boss even laid bare the difficulties his own 19-year-old daughter has suffered grappling with her first financial products as she began university. “She rang me after getting a £25 penalty charge which was added on to her credit card. It turned out she hadn’t understood that you had to pay at least the minimum amount off each month.”
No, Mr Tiner, you’re wrong. You don’t have to pay anything off, and you certainly don’t have to pay any penalty charge. As I pointed out back in September 2004 at “If your credit card imposes a penalty payment, don’t pay it: it’s not legally enforceable“, penalty charges like those are disproportionate. The credit card provider hasn’t incurred £25 worth of trouble; it won’t have gone to £25 worth of trouble (such as printing a separate letter or looking up your credit record or anything like that). Therefore that charge cannot be enforced. It’s referenced in that blog entry. Yes, you do eventually have to pay them back that money you’ve borrowed, at the interest rate they specify. But not the penalty charges (or, if you’re being strict, the interest on them).
GMTV has been running a campaign along exactly these lines, over bank overdraft charges: see this story about how a man challenged it, and won his case. The bank didn’t turn up at the County Court. Hey, legally does that count as a precedent? You’d think if it was so open-and-shut they could afford to send one brief for a day, even to establish the precedent, hmm?
And does it work - refusing to pay penalty charges? Yes, it does. I’ve done it before. I did it the other day. I called to check why my outstanding amount wasn’t what I thought it should be (nothing untoward, just an uncleared transaction). And thought I’d pay on the phone. But first, asked if there was a “penalty charge” in there, since I was fairly sure I’d missed the payment date. Why yes, said the cheery person. I’m sorry, I’m not paying it, I explained. Contract law, unenforceable, and so on.
“Well,” he said, “as this is the first time this year that you’ve asked for this to be removed…” I still paid the outstanding amount. But not the penalty. Hey, it’s £20 - or £25 now. Whatever. I don’t pay it. And neither would your daughter, Mr Tiner, if you’d pay a bit more attention.
- These posts might be related (the database thinks..):
- Imagine the regulation stink if British banks hadn't been allowed to deal in toxic loans (20 September 2008; score: 45.4%)
- Gorkana catches my attention: Roy Greenslade leaving Guardian.. (4 October 2005; score: 42.92%)
- Links: an IMF warning, and why financial journalists missed it (28 March 2009; score: 36.73%)
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April 5th, 2006 at 10:32 am
I agree with you with regard to the illegality of the penalty charge (and the OFT has just announced that it considers the charges to be unfair too: http://www.oft.gov.uk/News/Press+releases/2006/68-06.htm).
However, just because the penalty charge is unfair that does not relieve the credit card holder of their contractual obligations — one of which is to pay off at least the minimum amount each month.
April 17th, 2006 at 10:01 am
I’m reliably informed, by someone who actually does it, that the amount of late payment penalties being credited back currently approximates to the wages of the ones taking the calls in the call centre.
The word seems to have got around! As it should.
April 16th, 2007 at 10:30 pm
I Andrew Caldin was reading your Sun newspaper this weekend and rembered how i use to buy whole pages with init for my company and how the telphone lines never stopped ringing unfortunantley the comapany had to go into liquidation and i was to sick to save it my comapny was called AC TYRE AND WHEEL SERVICES the company was on a roll with the sun and we couldnt belive the turnover !Unfortunatley i became sick but luckily i would be able to turn to my insurance policies for reassuarance on living the rest of my life stress free ! Unfortunatleythis wasnt to be the case and the shit was about to cover me thick and fast and i was
WONDERED IF YOU MIGHT BE ABLE TO HELP ME!
I was diagnosed with a terminal illness and have been trying to get payment out of my insurance companies for the last couple of years with no help from the FSA.
As a consumer I thought that the FSA was here to police the insurance brokers and the ifa and the industrie, but in my case this doesn’t have seemed to have happened.
To cut a long story short I was sold three insurance policies. One of them was mandatory with my mortgage application and the other was to support my life style and my mortgage with Barclays Bank.
I was told when taking on my first house and Mortgage that “you never know whats was around the corner and it was better to be protected than not protected.”.
Life was good for me then and I became a celebrity for the Daily Mirror when I won the Vanessa Feltz’s show for the Worlds worst husband many years ago. My company was doing well in advertising through The Sun and Star Newspaper and I was able to afford my first Ferrari. I couldn’t ask for anything else in life i had a nice house a wife and children !
At the end of 1998-1999 I became sick and was diagnosed with a rare illness called Krabbe’s Disease. It is an irreversible terminal illness and was firstly diagnosed as depression and then properly diagnosed by the Royal Free Hospital. Most people that are born with the illness are dead by the age of eight! The disease I contracted had better odds on me winning the lottery than getting this disease .
I was advised to live a different life style and my business went into liquidation due to the fact that I was too ill to control the day to day running of the business,and Barclays bank was putting me under to much prasure to cope with the day to day running of the buisness,and required even more security than i could offer it was hard dealing with the amount of work that the sun newspaper produced and the finance comapanyies were also under stress with the amount of applications we were givng to them ,on one week we were over paid by £38,000 for new business given to them ! It was a real shame that i wasnt fit enough to battel out the problems with the bank and try to find a new backer to help with our cash flow !
I was in the process of making claims upon my insurance policies because of the unexpected when my ex-wife decided to abandon me and my children and run off to Birmingham to find a better life style as living off of benifits was not for her even though she had been sold for a pound by the Mirror Newspaper , to which caused me great stress and anxiety because of her disapereance . I had to be sectioned for my own safety which turned out to be a great thing and I made two wonderful friends from the event, but things were to get worse and I received a letter back from Scottish Widows insurance company to say that I had no critical insurance cover.
I couldn’t understand what had happened. I had been through my policy documents with a fine tooth comb and that he IFA broker had sold me all of the policies that I required with a receipt for four hundred pounds. I would have had a cover for a total of 1.3 million pounds, more than enough to cover my mortgage and my style of living.
After my claim was refused by The Royal & Sunalliance for depression, the Ombudsman intervened and I was awarded 12 monthly back payments towards my mortgage totalling just less than twelve thousand pounds. I then found out that this was to be my last and only payment because I had been sold a policy which would not cover the term of my policy, but only twelve months. Then things went even worse and Scottish Widows let the penny drop in letting me know that a new broker had submitted my proposals different to the one that I had mentioned in my letters and telephone calls to them.
I found out that the broker had changed my signature from her employer’s name to her own brokerage and Scottish Widows asked me to report the matter to the police, to which I did and the police did nothing to help me at all, except argue over whose district the report belonged to.
I REPORTED THE MATTER TO THE FSA and they did nothing. I reported it again and wrote a letter to the head of the FSA, Sir Macalum. He organised a further investigation for me and sent me a report explaining that the IFA was not licensed to sell insurance with the FSA when I decided to buy my insurance and mortgage and that they were not aware of her qualifications, but she worked under a further company called Sesame Ltd. I have recently found out that Sesame Ltd have many non licenced ifa members and that the whole thing is a cover up and there are hundreds of insurance policies being sold by non regulated members,and the fsa do not want this to get out to the public ,sesame ltd have allready been found guilty of £250,000 last year for pennsion misselling but this is far greater problem than that and it needs to be exposed !
I asked the FSA to police this crime and to take action against Sesame Ltd and the independent financial advisor. I was also told about their new website by an advertisement in a local newspaper and how they supported the consumer and police for protection. Last week I received a further e-mail back from the secretary of sir Macalum asking me to stop sending e-mails and that everything I write or email is only being filed here, there and everywhere AND THEY WERE NOT PREPARED TO DO ANYTHING AT ALL!
I was a normal British citizen. Why should the tax payer have to pay to keep me on benefits when I was fully insured? I have recently taken the case to court and because I can not afford a solicitor and can not get legal assistance I have got the costs of the case of £35,000, for what I don’t know. All I know is that I was paying for my insurance and what was the point of me taking out on insurance and paying out all those months when you don’t get nothing back, but stress and agrivation .
I have attached a further copy of my claim form, maybe you could help me to appeal against my court order and to report my story to other professional people who could be left in the same position as me, especially if they have taken insurance out in connection with Sesame Ltd.
As a normal British citizen with a Terminal illness what am I expected to do to get justice? Maybe I should take the law into my own hands because the law isn’t doing anything to protect me and my fingers are itching to cause a publicity stunt outside the FSA building in hope to cause a stir, but this might only cause me further pain and accelerate my illness.
I have been offered the use of an army tank to place before the fsa building iam so angry these white collar workers are doing nothing to protect the british public even the head SIR macalum THEY ARE JUST WHITE COLLAR WORKERS DOING NOTHING and taking money from the goverment for nothing!
Their new web site is just a load of bollocks ,they prech it like a bible but dont abide by it !
Please, help me.
Yours sincerely,
Andrew Caldin
Andrew Caldin.
April 16th, 2007 at 10:31 pm
sorry whats the fsa for!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1
January 25th, 2008 at 9:10 pm
Its time the industry new what was happening with my case and that Scottish widows forgot to deal with a stat demand and nearly ended up in the grave with the widows now their protection racket has shown that they don’t give a monkeys for the English people and only allow their policies to cover the Scottish people, they have had to make an undertaking in the High court to abide to English law ,but now they pushed it to far ,they have provided fraudulent accounts to protect their assets and to prevent payment on my account ! Cooking the books is one thing but fraud is another red and white wine don’t mix and as an English man i am fighting for the widows to finally lie to rest !
Unfortunately to British law i can not reveal any more but watch out the widows are going to rest!
March 5th, 2008 at 11:08 pm
the fsa have now decided to re-investigate my case!