This week in UK, one Mr. Stephen Hone, won a case against Bank for compensation for what he claimed were “profit-making” penalty charges.
He claimed that the penalty charge of Â£32 for bouncing were disproportionate to the administrative costs incurred by the bank. He argued that, under the Unfair Terms in Consumer Contracts Regulations, 1999, a consumer should not pay a disproportionately high sum in compensation for failing to meet an obligation.
The also wrote to bank: Your charges do not reflect any actual or real loss; instead, they appear to represent a lucrative profit-making scheme. Â£32 was not a fair reflection of the amount it cost for a bank computer to generate an automatic letter and penalty charge and was instead a “money spinner”.
Bank failed to file the defence and therefore the decision has been given in favor of Mr Hone. Where the exact compensation to be paid is to be decided, though Â£2,000 has been claimed in compensation.
This is really a good decision, because Indian Private Banks are also charging like anything. And how fair is that when your cheque of Rs 150/- bounces and you are charged around 350/- as penalty. This happened few months back with a friend… and he was forced to pay Rs 220 to ICICI Bank and above Rs 100 to other organisation, in whose favor this ICICI cheque was drawn. And this really represent a lucrative profit-making scheme for ICICI Bank. He is joining in… for the action against ICICI Bank.
Now this decision will serve as the precendent in Indian court, as Indian Law is adaption of UK law. Therefore, next time ICICI or any other private Bank charges you with Rs 220 for bouncing of Cheque, move consumer court and challenge the exorbitant charges.
I was also charged Rs 220/- for bouncing, few months back. The mater I will surely take up in Consumer Forum along with all other issues in August ’05.
Another Decision: Syndicate Bank told to pay Rs 10,000 compensation to loan applicant (30 June 2005)