With this post we will try to establish the nature and differences between the various charges likely to be considered of undue collection, determining the effects of its application and the reason for its inappropriateness.

In order to go deeper, we will carry out a small analysis of the most common ones:

1. Commission for the return of unpaid bills of exchange.

   These originate in the so-called “bill discount contracts“, normally signed by commercial companies and by virtue of which they assign their credit rights (normally not yet due) to financial institutions, in order to collect them in advance and in exchange for a discount/interest on the principal assigned.

   However, it must be borne in mind that in those cases in which the entity cannot enforce such a credit right, it is directed against the original creditor (the assignor), charging him a series of commissions of doubtful legality, in addition to the principal.

   There is no place for the collection of such commissions, since the risk of non-payment by the debtor is a circumstance that necessarily has to be considered ab initio, in addition to the fact that the difficulty or impossibility of collecting the credit is more than compensated by the agreed remunerative interests.

   It is therefore completely inadmissible for the bank customer to pay this type of commission, since the payment of the same commission corresponds to the collection of the same service twice, a situation which becomes abusive.

2. Commission for overdrafts generated in account.

   These are generated if the bank account remains in negative numbers (below 0), being the main reason of the entity that they respond to extraordinary expenses of overdraft claim (notification to the holder, etc).

   As in the previous case, current account contracts provide for the collection of interest in these situations, so that again we are faced with a double charge for the same management.

   Likewise, the expenses for extraordinary claim procedures must be considered as situations of probable occurrence and, therefore, should not be considered extraordinary. For example, sending letters by ordinary mail, e-mails or calls warning of present or imminent overdrafts should not be considered as additional management.

   In conclusion, in addition to double charging for the same service, overdraft fees should also be considered illegal as no information is given for pre-contractual or contractual purposes about the existence and cost of the additional services described in the previous paragraph.The above reasoning is legally protected, being the most relevant legislation:

   • Bank of Spain Circular 8/1990 of 7 September 1990. Credit institutions. Transparency of operations and protection of customers: we highlight your third standard:
     

     “The commissions and expenses charged must relate to services actually rendered or expenses incurred. In no case can commissions or expenses be charged for services not accepted or firmly requested by the client“.

   • Order EHA/2899/2011, of 28 October, on transparency and customer protection of banking services, states in its Article 3 that:
     

     “Commissions or charges may only be levied for services which are firmly requested or expressly accepted by a client and which respond to services actually rendered or expenses incurred”.

     The same article goes on to say:

     “This information shall be available in all commercial establishments of credit institutions, on their electronic pages and on the electronic page of the Banco de España, and shall be available to customers at any time and free of charge.Law 7/1998, of 13 April, on General Contracting Conditions, perhaps the most ambiguous and at the same time most categorical in terms of the regulation of clauses included in contracts:The general conditions will become part of the contract when its incorporation into it is accepted by the adherent and signed by all the contracting parties. All contracts must refer to the general conditions incorporated. Acceptance of the incorporation of the general terms and conditions into the contract may not be deemed to have taken place if the predisponent has not expressly informed the adherent of their existence and has not provided him with a copy thereof“.

     And he goes further, saying:

     “The following general conditions shall not be incorporated into the contract:

     a) Those that the adherent has not had a real opportunity to know completely at the time of the conclusion of the contract or when they have not been signed, when necessary.

     b) Those that are illegible, ambiguous, obscure and incomprehensible, except, as regards the latter, that have been expressly accepted in writing by the adhering party and conform to the specific regulations that discipline the necessary transparency of the clauses contained in the contract“.

In conclusion, the main features are:

1. The contractual conditions governing bank charges should be detailed in a concise manner, specifying their scope and effects.
2. The predisposing party (entity) must explicitly inform the adhering party (customer) of the inclusion of these provisions, ensuring a complete understanding of them.
3. Bank fees must appear in the bank’s tariff book, as well as in the bank’s information media, with the prior approval of the Bank of Spain.
4. Bank commissions must be expressly accepted by the member and respond in a real way to a service actually provided.
5. Entities may not charge simultaneously a commission and an interest for the same service, it being understood that interest alone already constitutes a sufficiently remunerative element.
6. The “additional” efforts to achieve an adequate provision of services should not be considered extraordinary events, but should be included in the daily activity of financial institutions.

Therefore, the reading of this post is only to make the bank client know their rights, being totally legitimate to show disagreement with the size of the charges.