Someone told me that bank charges where illegal?

Question

and that you can write to the bank and ask for the charges to be refunded. Is this true?

Answer 1

Reclaiming Unlawful Bank/Credit Card Charges


Did you know that when banks and credit card companies charge you for going over your overdraft limit, those charges are unlawful?

Nope, most people don’t. However, there are a few people who are waking up to this and have won back their charges, either directly from the banks or through the courts.

How to reclaim your charges. (Please note, you can just change the wording of the letters for your credit card or store card)

1. Before sending the sample letter, you need to know the amount you are claiming. You can back-date your claim for up to six years. If you need to get copies of your bank statements, use sample letter two.

Under the Data Protection Act - the bank has only 40 days to provide your statements. Do not worry about the extra wait - you can legally claim 8% APR on each charge for the full period, so the longer it takes them, the more money you will have back. If they still refuse, or do not furnish you with this information within 40 days, report them to the information commissioner - www.informationcommissioner.gov.uk - for a breach of the DPA.

2. Now you have your statements, add up all your charges and then send them sample letter one with your own details.

3. You should now receive a reply from your bank; it will be along the lines of:

a) Sorry you're not happy; however our charges are listed in the terms and conditions, if you are not happy you can now go to the Ombudsman.

b) We looking in to this, however please note under the bank code we have 8 weeks in which to reply. (Do not accept this - you have given them 7 days)

c) You will be offered a partial or full refund. You can choose to accept a partial refund, but the money is yours so it may be better to hold out for a full refund.

d) They will deny the claim that the charges are unlawful (about 50% do this)

4. If they do not offer you a full refund, send them a follow-up letter reiterating your original claims and giving them 7 days to pay




5. Most banks will have paid up by this stage. If your bank doesn’t, now is the time to take them to court. It is a simple procedure, don’t let it intimidate you. To enter a claim go to www.moneyclaim.gov.uk and fill in the claim form.

You will have to pay the fees upfront with a credit or debit card. If you are receiving benefits of any kind, you may be exempt from the fees. However, you will have to use the paper N1 claim form and submit it to your nearest county court; you can get these on-line or from your nearest county court.


6. The bank will now do one of four things.

a) Ignore the claim completely - in which case after 14 days you will need to ask the court for judgment in default. This means you win.

b) Offer to pay the claim in full, including interest and court fees

c) Acknowledge the claim – they then get a further 14 days to enter a defence. Some banks will acknowledge the claim and then pay up.

d) Acknowledge the claim, and then on the 26-28th day, enter a defence

If the bank defends, the next thing that will happen is that you will receive a Court Allocation Questionnaire you must fill this in within 7 days of receiving it, and pay the additional fee.

7. The court will now set a date (if the bank has not already given your money back by this point - and most will have done)

As far as we can tell from our research, most banks have settled before the court date, and those that have not, have lost the case.

Sample letters are on the next pages.



Important Updated information

Some banks are now closing down the accounts of those who chose to challenge them. They are entitled to do this and you should consider this possible outcome before taking any action.

The Office of Fair Trading has ruled that it will view any charges over £12 as automatically ‘unfair’. However, the banks have a yet to respond to this before any action will be taken. This response time may be used as an excuse for a delay in your claim. Do not accept this, you can still take them to court during this time.





Sample letter one
[YOUR NAME]
[YOUR ADDRESS]
[DATE]
[BANK’S NAME]
[BANK’S HEAD OFFICE ADDRESS]

Dear Sir/Madam

Penalty & unfair charges – request for refund for [YOUR NAME, SORT CODE, and ACCOUNT NUMBER]

[INSERT DETAILS of how charges were applied i.e. how much was charged, and the how this came about]

I am of the view that your charges represent a penalty and are therefore irrecoverable at common law. In the Scottish case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. (1904) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract. This is also the position in English law: Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.

Your charges do not reflect any actual loss, instead they appear to represent a lucrative profit-making scheme. In particular, charges were applied after I entered into a transaction(s) without sufficient funds in my account. However, payment was declined by you, and therefore, actual loss is the cost of automatically sending me a computer generated letter. I would respectfully submit that is valued at no more than 50 pence.

UK banks have recently given evidence to the House of Commons Treasury Committee on how bank charges are calculated: "The costs are going to pay for all the people we have who pursue debt, collect debt, speak to customers and chase payments. The way these charges are arrived at is by taking these total costs and making some assumptions about the volume that is going to come through to arrive at the individual charges" (2nd report, 25 January 2005, paragraph 50).

Accordingly, the charges applied to my account are not a reasonable pre-estimate of the bank’s loss in relation to my account. No-one has had to look at my account or telephone me. No one has had to collect anything. Your charges would appear to represent a device to recover global losses (for example, loan defaulters, bad debt write off, including commercial lending in, and outwith, the UK).

On a separate note, your charges appear to represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). My account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as

I am a consumer. Your charges constitute an unfair penalty under reference to paragraph 1(e) of schedule 2 of the said regulations:

‘Indicative and non-exhaustive list of terms which may be regarded as unfair - 1. Terms which have the object of effect of - (e) requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation’.

0n 26 July 2005 the OFT stated that 'a charge is likely to be disproportionately high if it is more than a court would be likely to award if the lender sued the cardholder for breach of contract'. Because your charges include a large profit margin, in addition to actual loss, they are irrecoverable as an unfair term in contract. I believe that your charges require me to pay a disproportionately high sum in compensation for incurring a transaction(s) which was ultimately declined by an automated computer system.

In addition, it is unfair to require me to subsidise your global debt recovery costs and debt write-off.

Please refund these charges to my account within the next 7 days. I reserve the right to commence court proceedings without any further notice.

Yours faithfully

[SIGNATURE]

Answer 2

I was listening to the Jeremy Vine show on Radio 2 and there was a guy on their who managed to get back nearly £3k in paid bank charges. The only real way to do this is to ensure that you have copies of the back statements for the past 6 years. This would then be used as proof for a claim. Fortuanately, I have never been charged for these things as I have a pre-arranged overdraft (just in case!) and as I get daily text messages telling me what my account is doing I can foresee if there are going to be any problems. Also, I know of people who ahve claimed any of these charges from my bank and the bank were more than happy credit it back. But that is the world of First Direct - In my experience the best customer experience there is! Hope this helps.

Answer 3

Bank charges are not illegal but they are unlawfully high. The bank is entitled to recover their costs if you go into an unauthorised overdraft however, they are not allowed to profit from your breach of contract. I have reclaimed my unlawful charges and so have thousands of other people. It is a fairly straightforward process and if you go to http://www.consumercorner.co.uk/forum you will get all the help you need FREE.

WARNING
Do not be tempted to sign up with a fee charging site. These people will charge you sometimes as much as 40% of YOUR money for simply sending a couple of letters.

Consumer Corner is friendly, free and will also advise on a whole range of consumer issues.

Answer 4

Charges are not Illegal but they are set at an unlawful level all these people that are saying that you signed and accepted the T&C's are totally wrong the law states that the banks etc. are not allowed to profit from your breach of contract which is exactly what you have done because you signed the T&C's i know someone who has just won £17,000 from there bank. If you go to http://www.consumercorner.co.uk they will help you and its all explained there and its totally free

Answer 5

That someone was dreaming. Charges are legal. When you opened the account, you got a list of the rules, and probably have gotten updates since then with your statements - continuing to use the account after receiving the updates says you accept the new conditions.

If you got a lot of charges, you can always ask that some of them be refunded - if you're a real good customer, they might even do it. But not because the charges were illegal, rather because they want to keep you as a customer.

Answer 6

You can and should demand immediate repayment..

The size of the charge has been legally challenged - see the campaign in the Daily Mail - you can ask for most of the cash back although banks will make this difficult for you/may get you to change your account..

Banks shy away from having someone taking them to court because they do not want a precedent to bet set which would open the flood gates..so most although being difficult will eventually with persistence refund your cash.

It is yours and you deserve it back - also you are able to charge them the same amount for your admin and letter fees although good luck getting this! It is just in theory.

Answer 7

It depends on 3 things:
1. The type of charges (some charges like processing fees etc. have been contested because you're really just paying them for nothing. The same goes for charges for banking online).
2. The reason for charging you ("paperwork" charges for you banking online are complete crap).
3. If you are charged more than you should be or if the charges are applied incorrectly, then the bank is at fault.

Answer 8

This is a matter that i have always challenged with the banks before it became public knowledge. I have just basically called up and told them the reason i may have gone slightly overdrawn and disputed the charge with them quite easily takes a few minutes of common sense talking, always get the name of the person you are talking to so that you can follow it up if you need to. Why on earth would it cost £25 to send a letter that was the way it was not way it is these days.

Answer 9

They'renot illegal; its just that they were supposed to be self regulated, but (suprise suprise) they got carried away with themselves and started charging £25 for errors and overdraghts that cost about 10p to administer.

As long as a bank tells you in advance what you'll be charged at for what you'll be charged, they are within their rights.

However,as a consumer, and with a very free banking market, we can afford to switch to banks that give is a better deal. Banks dont like it when we switch away from them, so if you areunhapy with your bank,you tell them you're leaving and they'll soon be nice to you.

mrben

Answer 10

can't see how they'd be illegal! - if you read the small print it'll be in there!
they also publish a list of all their current rates of charges, just go in n ask for it!

if for some reason you think the charges are unfair, ie there is a genuine reason why you got them, you could try explaining this to the bank to see if they are willing to waive them on this occasion. worth a try but don't go in there demanding they refund you or you won't get anywhere!

Answer 11

Some of the bank charges that banks impose on their customers are blatantly illegal