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8606348
FINANCIAL OMBUDSMAN
The Head of Compliance Lloyds TSB Bank PLC, 25 Gresham Street, London EC2V 7HN
26 MAY 2009
SERVICES
Dear Sir,
Re: Lloyds Bank Classic Vintage Current Account No 79342568
I am writing to you with reference to the above account and some of the transactions that have taken place on this account in the last few weeks.
I opened this account sometime in January 2009 with the Eltham Branch of Lloyds Bank. At the time of account opening, during my conversation with the Lloyds Bank representative, I had explicitly stated that I did not wish to have an account with an overdraft facility. In fact, I remember having wed the phrase 'No Overdraft Scams please'. This was specifically because I had heard about some horrendous experiences people known to me had with overdrafts earlier and did not want to have the 'facility'' cm my account. Moreover. I do not track my account on a daily basis, so I did not want to get into overdraft situation at any point in time.
So, the account was opened in January 2009 and I started transacting on the account. There was nothing to suggest all this while that my wishes had not been carried out. This is my primary bank account and all my bills, payments etc. are made to from it on a very regular basis, as you would be able to ascertain from the transaction records on this account.
While I was using the account regularly. I realized suddenly to my dismay sometime in the middle of March that my account was overdrawn. This happened when a Lloyds employee at the Eltham Branch told that he could not operate my account for a transaction because it was overdrawn. Needless to say this was news to me because I was not even aware that my account had this facility. On enquiring further, I was informed that Lloyds had provided me what the employee called 'a distress overdraft because some direct debit was due from my account and it was not sufficiently funded. to matters worse, I received a very patronizing letter from 'Head of Overdrafts' at Lloyds Bank explaining how my account had gone into overdraft and how Lloyds had been kind to me by offering the service called 'distress overdraft' and hence helped me pay the direct debit. It also went on to offer advice about how I should manage my bank account. Ensconced somewhere in the letter were a few lines about the charges on the overdraft that I had been offered. Needless to say, there were various kinds of charges, a monthly fee if the account was overdrawn even slightly anytime during a month, a daily fee based on slabs if the account was overdrawn on a particular day. Just so that all the facts are covered in this letter I write, permit me to provide you with the amounts and dates my account was overdrawn
1.9th Feb 2009-GBP 10.51
2.18th March 2009 - GBP 0.61
3.25th March 2009 - GBP 26.70
To also put on record the fee I have been made to pay by Lloyds to regularize the account, I have paid a total of GBP 132 to Lloyds towards the overdraft charges in addition to the principal amount of the overdraft.
I would herewith like to make a formal complaint against the banking practices of Lloyds and am listing below the details of the complaint:
1. Mis-selling and Incomplete disclosure - During the entire process of my application for the current account, I was not informed even once about this 'unplanned overdraft1 facility on my account despite my request at the outset to give me an account without any overdraft facility. When I was told my account was overdrawn, I realized on probing that Lloyds in the first place had an option to give me the same account without the OD facility by 'marking' the account. Why and how was not this done despite my request is something I fail to understand. The only reason I can think of is making money on customer OD is an attractive revenue model which lets Lloyds make absurdly high returns on very low OD amounts, as is borne out by the figures I have presented above.
2. Poor Customer Service - If my account did not have sufficient balance to pay for a direct debit, the decent thing would have been for Lloyds to call me up or write me an email/letter and let me know that the direct debit cannot be honored because of insufficient funds in the account. Moreover, during my interaction with the Lloyds branch at Eltham, I was never given a clear answer on why my account has an OD when I specifically requested for one without this facility. In a typical attitude of shirking responsibility, I was never given a clear answer. Furthermore, when I visited the Eltham branch. I was threatened by a bank clerk about the 'vicious circle' of debt, who advised that if I don't pay up the exorbitant charges levied on my account. I would be trapped in a vicious circle. So. First Lloyds gives an unplanned overdraft', which I never asked for. then they charge me huge disproportionate amounts as fees and then the bank staff - who's job I would guess is to help customers - threatens me to pay up lest I get into a vicious circle, which would mean Lloyds charging me more and more and more on an overdraft I never asked for and on the charges as well.
3. Extraordinary and Exorbitant Charging - if Lloyds genuinely had my interest in mind when they decided to extend this unplanned overdraft'. I would have expected them to charge a reasonable interest percentage (on lines of a personal loan interest rate) for the period the account remained overdrawn. For a total overdrawn amount of around GBP 38 across these days, I have been charged GBP 132, which in absolute terms is 347% interest rate and I shudder to think what this rate would come out to if I were to annualize it. Had this been a well intentioned loan, as the letter from 'Head of Overdrafts' would have me believe, it goes without saying that the interest charges would have been much much lower. I have dealt with enough banks across the EU to be aware of normal banking practices in such cases and I would call this anything but normal.
4. Loan Sharking - Continuing from my point above, I have every reason to believe that this is tantamount to loan sharking. Effectively, Lloyds gave me a small overdraft of GBP 38 across 3 days and then charged me an interest of GBP 132 for this. I am sure your terms and conditions cover Lloyds legally in the fine print and that these charges would not be counted as interest charges but simple common sense says that I have actually been charged this much for a GBP 38 OD across 3 days. I would be surprised if practices like these are not illegal.
As an aside, let me also mention that I am also a customer of some Spanish and Estonian banks. With the reference point of these banks' service in mind, I think UK banks leave a lot to be desired. I have had bank accounts with EU banks elsewhere in Europe which had overdraft facilities and the interest rate charged was a very reasonable 18% per annum and no other charges. These were 'unplanned' overdrafts as well. The general banking services are far superior, the practices much fairer, the communication is far clearer and customer friendly, the internet platforms are state of the art and the customer do most of the transactions online, bank staff are much friendlier oriented.
I am writing this complaint letter to you with the hope that someone will bother to look into the processes, product design and customer service levels at your bank in an impartial and fair manner and bring about changes accordingly to make a customer's experience far better and smoother.
Needless to say, I also expect Lloyds to compensate me for
1 .The disproportionate charges
2. The mental anguish caused by the incident
3 The amount of time I have had to waste with your branch and in writing this letter.
It I do not get a satisfactory response in a period of 21 days, covering compensation and the steps Lloyds has taken to set these practices right, I will be forced to go to the press and let the public in general know about the practices followed by one of the leading banks' in the UK.
With Regards,
CC
Committee on Petitions. European Parliament Customer Service Unit. Parliament
Directorate General for 'Health and Consumers'. European Commission
European Commission Representation in the UK
European Consumer
European Ombudsman
Financial Services Authority
Financial Services Compensation Scheme
Her Majesty the Queen
Information Service, House of Lords
Lloyds TSB Bank PLC, Eltham Branch. London
Office of Fair Trading
The Financial Ombudsman Service
The President of the European Parliament
The Trading Standards Institute
UK Media
Watchdog TV, UK
Banking service standards in UK
This letter is a follow up on the letter dated 8th May 2009 written to Lloyds TSB Bank and copied to yourselves. While the experience I detailed in the said letter was an outright disgrace and clearly bears out the deficient levels of services and customer communication at Lloyds TSB Bank, I am of the belief that banking standards in UK generally leave a lot to be desired.
I am an Estonian citizen and have held bank accounts with various Estonian and Spanish banks, as -erred to in the above mentioned letter as well. With the services offered by these EU banks in mind, I have realized that banking .......
8606348
FINANCIAL OMBUDSMAN
The Head of Compliance Lloyds TSB Bank PLC, 25 Gresham Street, London EC2V 7HN
26 MAY 2009
SERVICES
Dear Sir,
Re: Lloyds Bank Classic Vintage Current Account No 79342568
I am writing to you with reference to the above account and some of the transactions that have taken place on this account in the last few weeks.
I opened this account sometime in January 2009 with the Eltham Branch of Lloyds Bank. At the time of account opening, during my conversation with the Lloyds Bank representative, I had explicitly stated that I did not wish to have an account with an overdraft facility. In fact, I remember having wed the phrase 'No Overdraft Scams please'. This was specifically because I had heard about some horrendous experiences people known to me had with overdrafts earlier and did not want to have the 'facility'' cm my account. Moreover. I do not track my account on a daily basis, so I did not want to get into overdraft situation at any point in time.
So, the account was opened in January 2009 and I started transacting on the account. There was nothing to suggest all this while that my wishes had not been carried out. This is my primary bank account and all my bills, payments etc. are made to from it on a very regular basis, as you would be able to ascertain from the transaction records on this account.
While I was using the account regularly. I realized suddenly to my dismay sometime in the middle of March that my account was overdrawn. This happened when a Lloyds employee at the Eltham Branch told that he could not operate my account for a transaction because it was overdrawn. Needless to say this was news to me because I was not even aware that my account had this facility. On enquiring further, I was informed that Lloyds had provided me what the employee called 'a distress overdraft because some direct debit was due from my account and it was not sufficiently funded. to matters worse, I received a very patronizing letter from 'Head of Overdrafts' at Lloyds Bank explaining how my account had gone into overdraft and how Lloyds had been kind to me by offering the service called 'distress overdraft' and hence helped me pay the direct debit. It also went on to offer advice about how I should manage my bank account. Ensconced somewhere in the letter were a few lines about the charges on the overdraft that I had been offered. Needless to say, there were various kinds of charges, a monthly fee if the account was overdrawn even slightly anytime during a month, a daily fee based on slabs if the account was overdrawn on a particular day. Just so that all the facts are covered in this letter I write, permit me to provide you with the amounts and dates my account was overdrawn
1.9th Feb 2009-GBP 10.51
2.18th March 2009 - GBP 0.61
3.25th March 2009 - GBP 26.70
To also put on record the fee I have been made to pay by Lloyds to regularize the account, I have paid a total of GBP 132 to Lloyds towards the overdraft charges in addition to the principal amount of the overdraft.
I would herewith like to make a formal complaint against the banking practices of Lloyds and am listing below the details of the complaint:
1. Mis-selling and Incomplete disclosure - During the entire process of my application for the current account, I was not informed even once about this 'unplanned overdraft1 facility on my account despite my request at the outset to give me an account without any overdraft facility. When I was told my account was overdrawn, I realized on probing that Lloyds in the first place had an option to give me the same account without the OD facility by 'marking' the account. Why and how was not this done despite my request is something I fail to understand. The only reason I can think of is making money on customer OD is an attractive revenue model which lets Lloyds make absurdly high returns on very low OD amounts, as is borne out by the figures I have presented above.
2. Poor Customer Service - If my account did not have sufficient balance to pay for a direct debit, the decent thing would have been for Lloyds to call me up or write me an email/letter and let me know that the direct debit cannot be honored because of insufficient funds in the account. Moreover, during my interaction with the Lloyds branch at Eltham, I was never given a clear answer on why my account has an OD when I specifically requested for one without this facility. In a typical attitude of shirking responsibility, I was never given a clear answer. Furthermore, when I visited the Eltham branch. I was threatened by a bank clerk about the 'vicious circle' of debt, who advised that if I don't pay up the exorbitant charges levied on my account. I would be trapped in a vicious circle. So. First Lloyds gives an unplanned overdraft', which I never asked for. then they charge me huge disproportionate amounts as fees and then the bank staff - who's job I would guess is to help customers - threatens me to pay up lest I get into a vicious circle, which would mean Lloyds charging me more and more and more on an overdraft I never asked for and on the charges as well.
3. Extraordinary and Exorbitant Charging - if Lloyds genuinely had my interest in mind when they decided to extend this unplanned overdraft'. I would have expected them to charge a reasonable interest percentage (on lines of a personal loan interest rate) for the period the account remained overdrawn. For a total overdrawn amount of around GBP 38 across these days, I have been charged GBP 132, which in absolute terms is 347% interest rate and I shudder to think what this rate would come out to if I were to annualize it. Had this been a well intentioned loan, as the letter from 'Head of Overdrafts' would have me believe, it goes without saying that the interest charges would have been much much lower. I have dealt with enough banks across the EU to be aware of normal banking practices in such cases and I would call this anything but normal.
4. Loan Sharking - Continuing from my point above, I have every reason to believe that this is tantamount to loan sharking. Effectively, Lloyds gave me a small overdraft of GBP 38 across 3 days and then charged me an interest of GBP 132 for this. I am sure your terms and conditions cover Lloyds legally in the fine print and that these charges would not be counted as interest charges but simple common sense says that I have actually been charged this much for a GBP 38 OD across 3 days. I would be surprised if practices like these are not illegal.
As an aside, let me also mention that I am also a customer of some Spanish and Estonian banks. With the reference point of these banks' service in mind, I think UK banks leave a lot to be desired. I have had bank accounts with EU banks elsewhere in Europe which had overdraft facilities and the interest rate charged was a very reasonable 18% per annum and no other charges. These were 'unplanned' overdrafts as well. The general banking services are far superior, the practices much fairer, the communication is far clearer and customer friendly, the internet platforms are state of the art and the customer do most of the transactions online, bank staff are much friendlier oriented.
I am writing this complaint letter to you with the hope that someone will bother to look into the processes, product design and customer service levels at your bank in an impartial and fair manner and bring about changes accordingly to make a customer's experience far better and smoother.
Needless to say, I also expect Lloyds to compensate me for
1 .The disproportionate charges
2. The mental anguish caused by the incident
3 The amount of time I have had to waste with your branch and in writing this letter.
It I do not get a satisfactory response in a period of 21 days, covering compensation and the steps Lloyds has taken to set these practices right, I will be forced to go to the press and let the public in general know about the practices followed by one of the leading banks' in the UK.
With Regards,
CC
Committee on Petitions. European Parliament Customer Service Unit. Parliament
Directorate General for 'Health and Consumers'. European Commission
European Commission Representation in the UK
European Consumer
European Ombudsman
Financial Services Authority
Financial Services Compensation Scheme
Her Majesty the Queen
Information Service, House of Lords
Lloyds TSB Bank PLC, Eltham Branch. London
Office of Fair Trading
The Financial Ombudsman Service
The President of the European Parliament
The Trading Standards Institute
UK Media
Watchdog TV, UK
Banking service standards in UK
This letter is a follow up on the letter dated 8th May 2009 written to Lloyds TSB Bank and copied to yourselves. While the experience I detailed in the said letter was an outright disgrace and clearly bears out the deficient levels of services and customer communication at Lloyds TSB Bank, I am of the belief that banking standards in UK generally leave a lot to be desired.
I am an Estonian citizen and have held bank accounts with various Estonian and Spanish banks, as -erred to in the above mentioned letter as well. With the services offered by these EU banks in mind, I have realized that banking .......