A network of individuals, independent and alternative media activists and organisations, offering grassroots, non-corporate, non-commercial coverage of important social and political issues.

Claim back your bank charges

Fly Posters | 18.05.2008 10:45

penalty charges on bank accounts are being successfully challanged across the country, with people winning large cash settlements from banks who have often put people into a cycle of debt. Heres some info on how to claim back those charges.

Before you begin considering claiming back your bank charges, only start the proccess if you plan to follow it through right to the end (which could include going to a claims court), the reason being is that ill thought out or executed claims have a detrimental effect on those wishing to claim in the future, it could take just a few failed test cases to screw things up.

The best resourse on the internet for guidance is the consumer action groups website and forums, and also their Wiki:

http://www.consumeractiongroup.co.uk/

http://www.consumerwiki.co.uk/index.php/Guide_to_reclaiming_bank_charges

On these you will find all the templates, letters and spreadsheets legally checked and regularly updated to acount for new legislation you will need to make you claim.

Things to avoid:

There are many guides to claiming back bank charges which will set you up to fail by not arming you properly such as the BBC's guide to claiming back charges:

http://news.bbc.co.uk/1/hi/business/6170209.stm

avoid!!!!!

Companies that offer to claim back your bank charges for you for a fee. - not only is it fairly straightforward to do it yourself, but these companies charge a lot and will often strike a deal with your bank meaning you get less.

Things You Can And Can't Claim For
For those that have looked at their statements and may be wondering what they can claim for and why are the descriptions confusing, or whether overdraft interest is claimable as well...Wonder no more.

You can claim for anything which is deemed a penalty charge,

which includes:-

returned direct debits
card misuse fees
unpaid standing orders
unpaid item fees
exceeding your overdraft
referral fee
overdraft interest (see below),
total charges (see below)
See your induvidual bank for a more detailed list (thanks - Michael Brown)

You can NOT claim for: -

ATM (cash machine) usage fees
an agreed overdraft fee
account "service" fees
- i.e. where you pay a fixed monthly amount but receive benefits such as free insurance or travel discounts etc

Overdraft Interest

This is the single most confusing part of most people's claims and one of the most frequently asked questions.

Overdraft interest is applied to your whole overdraft. However, if some of your overdraft is made up from unlawful charges, then a proportion of the interest has been wrongly applied and is therefore reclaimable.

Example

You have a £400 overdraft, you purchase something that day for £200 so now you are -£200 on your current account balance, but on the same day £200 of penalty charges are placed on your account, which means that your current account balance is now -£400 and the bank will charge interest on the whole £400, but as we are contesting that these bank charges are unlawful, then the interest should not be placed on the whole amount, only on the amount that you have actually spent. Therefore, in this example, you can claim back 50% of the interest, however these calculations have to be done daily to truly reflect the amount which can be reclaimed.

Total bank charges

Again this is another issue which many people aren't sure about.

Total charges are reclaimable, they are a separate issue to the other afore-mentioned charges (card misuse, returned d-d's etc), and are not simply all of these charges added together each month. So they are also claimable on top of the other charges.

"Total charges" refers to the penalty charge they put on your account for going over your overdraft limit. This penalty charge is calculated daily, and they can charge up to a maximum of £125 in one month for this, it is then debited from your account on a set date every month.

Good Luck!!

Fly Posters

Comments

Hide the following 7 comments

More info

18.05.2008 11:53

I found this on a website about a year ago and saved it just incase:

"Been stung by your bank? Get ALL your money back - I just did!

Here's what happened:

I was somewhat dismayed to find that my bank (the allegedly 'ethical' smile.co.uk) had stung me with stonking great charges for going over my overdraft limits on my accounts by a minimal amount last month.

I went outside my limit by 95p for 3 days on one account and £4.19 for 4 days on the other. For this they charged me >£70 in punitive and service charges (not counting interest).

I was pretty annoyed to say the least.

I did some research this morning and discovered that punitive bank charges and excessive service charges are actually unlawful. Basically your bank is not allowed to make money from such charges - They are only allowed to cover their costs.

I had a long chat this morning with 'Consumer Direct' an advisory service attached to the office of fair trading:

http://www.consumerdirect.gov.uk/

and also checked out some relevant sites. This one was particularly good:

http://www.govanlc.com/bankcharges.html
(they are based in Scotland, but also cover English law)

Basically as I say above - the law states that banks are not allowed to make profit from charges. Their profits can only come from the interest they charge you. Service charges can only cover the actual cost that the bank incurs from sending you a letter or whatever and cannot be any higher than that. Punitive charges are totally unlawful and not permitted at all.

Consumer direct advised me that I had the legal right to take my bank to court over these charges, but that it would never get this far as the bank knows they would lose and would incur costs (and possibly even lose their license with the FSA).

There are draft letters available on the govanlc site that you basically just have to fill in the blanks on and send off, but I never even had to get this far.

I called my bank this morning and explained that I had checked my rights and that they had no legal right to take that money. They said that as I had signed a contract stating that I accepted these charges, they could. THIS IS NOT TRUE. Under common law the court will ignore any clauses in a contract that it deems to be 'unreasonable' and I told her so.

The customer services woman offered to knock off 25% of the charges 'as a goodwill gesture'. I told her to stick it (politely) and demanded to speak to her manager.

He eventually called me back and offered me a discount of 50% off my charges (again as 'goodwill'). I again told him 'no dice' and said that I had been advised that if they did not refund the charges in fullI should report them to the OFT and start proceeding in the small claims court to recover my money.

At this point he folded faster than superman on laundry day. They have refunded ALL charges IN FULL (with the exception of the interest, which totalled a few pence).

This law applies to ALL unreasonable bank and credit card charges, regardless of what your contract with them says. If your bank has charged you a service charge for sending you letters or punitive charges for going overdrawn, I strongly advise you check out the govanlc site and speak to consumer direct - You can get the money back!

Obviously the banks will do whatever they can to keep this quiet, so don't let them - Tell your friends. Check your bank statements. Don't let them steal your money!"

Peat

Lol

18.05.2008 11:57

It's a heart-warming tale for anyone who thinks it is impossible to fight back against unfair charges by big banks. Last week, bailiffs raided a Royal Bank of Scotland branch in London to take control of computers, fax machines and a cash till after a customer won a court judgment over more than £3,000 in overdraft charges.

The unprecedented raid followed a long battle by RBS account holder Declan Purcell, 48, who had been an RBS customer for more than 20 years and ran a motorcycle business until recently.

He says: "Each time I exceeded my limits, the bank hit me with penalties of around £30. From 2002 to 2004 it added up to £3,000 on my business account alone."

Following advice from Guardian Money and website Consumer Action Group, Mr Purcell challenged the penalties, citing legal precedents to show the bank could not take more from him than the actual costs incurred with his unauthorised overdraft.

He also asked for copies of bank statements using a Data Protection Act "subject access request". He sent £10 for each account.

"The bank ignored all this so I took out a small claims court action in Bow County Court in late October. The bank did not respond in the 14 days allowed. The court gave me default judgment. The court then gave the bank a second chance but it did not enter a defence. So I asked the court to send in debt enforcers. By now, I was owed £3,369, including interest and court fees. This month, I went back to the court to get my money," he says.

The bailiffs enforced a "walk-in possession", effectively putting a sticker on items which would be grabbed and sold later if the bank did not cough up the judgment monies.

The bank admits the bailiff visit took place. It says: "Unfortunately, due to an administrative error, the bank failed to defend the claim, leading to a default judgment and a resulting warrant. The bank has since organised payment. No goods were actually taken."

Mr Purcell says: "The bank never bothered to reply. It treated me as if I did not exist. Now I want my penalty fees back on my personal bank account as well."

Earlier this week, Lib Dem shadow social exclusion secretary Matthew Taylor said in a parliamentary debate: "Millions of people are being ripped off by their own banks, plunging the poorest deeper into debt. The Office of Fair Trading has failed to act and the banks are dodging the courts.

"Banks are only supposed to charge customers for the real cost of a transaction, rather than make a profit. Everyone who has received one of these charges should phone their bank and demand the money back," he says.

Last year, the Office of Fair Trading ordered credit card companies to reduce their penalty fees to a maximum of £12.

fly Posters

Sttudent Loans

18.05.2008 14:53

Does anyone know if this applies to the Student Loans Company? They loaded charges of £8,000 on my "low cost" £2,000 loan.

Bunty Jenner

Great article,Ask local law centre,citizens advice&go with credit unions

18.05.2008 16:05

Great article,Ask local law centre,citizens advice&go with credit unions. Sumac centre nottingham has a cred union & there are local allover nottingham in community centres, plus they work with post office & are going more international soon

Green Syndicalist MEMBER IWW,ICA,

reponse: Bunty Jenner

18.05.2008 16:53

if your bank applied charges to you account for excessive overdraft, or other charges listed in my original article, then yes it will apply to you too, however if the extra amount you have to pay back is at the agreed interest rate then sadly no.

here's hoping you are in the former.

Fly Posters

Bunty Jenner

18.05.2008 16:57

actualy re-reading your quick post, I am not so sure, best get on the consumer action group website forum and run it past people there, you will get some top advice.

fly posters

Cheers

27.05.2008 13:49

Cheers mate

Bunty

UK Indymedia