UK Bank Charge Claims
We all grumble when we receive a letter from the bank informing us that we are X amount overdrawn, we failed to make our monthly payment or our payment to X failed due to lack of funds.
We grumble at ourselves for not controlling our money better, we grumble at our employer for messing up the automated wage payments and we grumble knowing that our bank will be adding anywhere between £15 and £50 to our debt for the privilege of being told via a letter.
Well there is some good news.
In April 2006, the OFT (Office of Fair Trading) concluded that any default charge levied by a bank or building society over £12 would automatically be presumed unfair with relation to the Unfair Terms in Consumer Contract Regulations.
BBC2s ‘The Money Programme’ estimated with the aid of several ex bankers that the real cost to the banks for sending a letter or administering a bounced cheque is somewhere between £2.50 and £4.50 meaning that a huge amount of the charges levied are in fact profit.
These excess bank charges can be claimed back from as far back as 6 years.
Currently the OFT and banks are fighting a legal case in the courts which will decide whether current and future registered claims will be paid out and at what level. On 24th April 2008 the OFT won the first preliminary part of the ongoing legal test case which is a very positive step in favour of the consumer. At this present time and for the foreseeable future claims are still on hold.
So, should you put in a claim for your excessive bank charges?
The answer is yes as the claim will be for the 6 years (5 in Scotland) prior to the claim being received. Delaying could cost you money.
How can I claim my bank charges back?
Well there are 2 ways. You can either handle the claim yourself which involves collating your bank statements for the last 6 years, constructing your claim and contacting your bank (template letters are available from sites such as MoneySavingExpert), or you can use a law firm / claim handling company to process the claim for you.
What are the pros and cons of DIY bank charge claims?
Well the obvious pro is it’s free bar the cost of acquiring lost bank statements (the maximum charge for this is around £10) and the time to process the claim.
The con is the time you have to invest in the subject to ensure your claim is in the best possible shape. If you are legally inclined and have spare time on your hands this may be the option for you.
What are the pros and cons of using a claim handler for bank charge claims?
Well here the obvious negative is the cost. A claims handler will typically charge between 25% and 40% of the eventual settlement with nothing to pay up front or should your claim fail.
The pro is that your claims handler should know all the legal background and will be up to date will the current state of affairs. Their experience should result in a more thorough claim. Also using a claim handler is more fire and forget than the hands on approach. Once you have passed on your details most of the work should be done for you, leaving you the time to enjoy the finer things in life like washing up, changing nappies and trying to get some sleep (maybe that’s just me then).
Claims handlers might also make you aware of other things you can claim for such as an accident or the lesser known PPI Claims.
How much can I expect back if my bank charges claim is successful?
Well I’m afraid it’s a bit of a how long is a piece of string question. If you have been penalised with more charges then you should receive more back. I have read about people who have received £200 and I have read about people who have received £4000. This was of course from before the bank took the issue to court and all claims were put on hold. Personally with grocery bills growing every week and the feeling that somebody has just stolen from me every time I fill up my car with diesel, I welcome any cash back.