Reclaiming Unfair Bank Charges

October 5th, 2008 by admin | Filed under Business Acounts, Debt, Money Management, Saving, UK Bank Accounts, UK Banks, savings accounts.

The fight between financial watchdog The Office of Fair Trading and banks over billions of pounds creamed off customer accounts as unfair bank charges is rumbling on.

The OFT won their case but is waiting for a High Court decision following an appeal by the British Bankers Association, representing the High Street banks.

What is the row about?

Banks and building societies imposed unauthorised overdraft charges on customers and charged interest on the overdrawn amount plus the charges.

These charges include:

Unpaid item fees – charged when a bill payment is refused because of a lack of funds in the account
Guaranteed paid item fees – charged when a payment is made but creates an unauthorised overdraft, like paying a cheque backed by a guarantee card
Paid item fees – charged when a payment is made and creates an unauthorised overdraft
Overdraft excess charges -fees charged for going in to the red at the bank without permission

Banks levied these charges totaling up to £3.5 billion a year on 1 in 20 customers. If you are one of these customers and incurred charges like this from July 27, 2001 onwards, you can reclaim the money.

How to claim

Claiming your money back is not difficult, providing you follow these steps in the right order:

The Unfair Terms In Consumer Contracts Regulations 1999 say penalty charges must reflect administration costs.

In plain language, this means banks must not profit from making you overdrawn and if they do, you can claim they are acting outside the law.

Write to your bank and ask for your account records. You are entitled to this information under the Data Protection Act
Tot up any fees the bank charged relating to your overdraft penalties.
Write and ask for a refund. Quote the legislation mentioned in step 1 above.
If the bank offers you some money but not the whole claim, refuse.
If your bank refuses a refund, write them a ‘seven day letter’, which is a warning that if they don’t pay, you will take the matter to court. They won’t, so after the seven days has passed, fill in a claim at www.moneyclaim.gov.uk.
The court will serve a notice on the bank giving them 14 days to respond.
If the bank responds, there is a further 14 days for them to prepare a court case.
If the bank doesn’t pay, ask the court for a warrant of execution by filling in form N323 on the Money Claim website.
Once this is granted, bailiffs can take items to the value of your claim from the branch.

Your bank may threaten to close your account. Before you write to them to make a claim, set up a new account at another bank.

For More information on specific Banks use these links

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