Claim Bank Charges Back - Helping you to reclaim Unfair Bank Charges!

Consumer campaigners want the Financial Services Authority (FSA) to crackdown on banks who have sent in debt collectors after customers who have disputed unfair overdraft charges.

These customers have had their complaints shelved for two years by the banks because of a waiver authorised by the FSA.
This waiver has left thousands of current account customers who disputed rip-off bank charges stuck in limbo, while racking up fees and interest.

Some are being chased through the courts, hounded by debt collectors and are having black marks put on their credit history.

The waiver was put in place by the FSA on July 27, 2007. Initially, it was for just 12 months while a court case between the banks and the Office of Fair Trading (OFT) was argued.

However, almost two years later, this case is still being fought, despite High Court and Appeal Court judges ruling the OFT can decide on whether bank charges are a breach of unfair contract terms.

Next Tuesday will see the latest twist in the saga as the banks take their case to the House of Lords. The result of this is not likely to be known for several months at best. This will pile on the misery for customers who have racked up thousands of pounds worth of charges, which they claim had sent them massively overdrawn.

Marc Gander, from the Consumer Action Group, says: 'It is the banks that sought the shelter of the FSA and wanted the waiver to be placed on complaints and it is the banks who wanted to contest the charges in the court and get a legal ruling on them.

'It is unacceptable that they should be involved in litigation against their customers and chasing them for charges that are in dispute when they have acknowledged there has been no decision on whether the charges are lawful.'

Banks have to resolve cases where there is financial hardship.

Under the terms of the waiver, banks can still look at complaints, but they choose not to.

The British Bankers' Association insists it is within its rights to pursue customers who have not repaid debts.

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Rip-off banks face being forced to pay refunds totalling more than £10billion to customers following a landmark court victory.

The High Court has ruled the Office of Fair Trading (OFT) has the right to decide whether charges of up to £38 for busting overdraft limits are unfair.

The decision clears the way for the OFT to rule that millions of Britons have been overcharged for going overdrawn or bouncing a cheque.

In theory - assuming the banks do not appeal to the House of Lords - refunds dating back at least six years could be reclaimed.

The news was welcomed by campaigning consumer groups as a victory for ordinary people.

However, some fear the banks will retaliate by imposing charges on all current account customers - ending the current model of supposedly free banking.

The decision by the High Court is a vindication of attempts by the OFT to curtail excessive bank charges.

It comes on the heels of the Daily Mail's Fair Play on Charges campaign, which has highlighted sky-high bank charges and helped thousands to claim refunds.

The consumer group Which? called on the banks to start paying refunds with immediate effect.

Chief executive Peter Vicary-Smith, said: 'The courts have made it clear the banks should now throw in the towel.

'This case has been going on too long and it's about time they tried to regain some of their dignity and paid customers their dues.

'This whole saga has severely damaged the banks' reputations. If they try to appeal in the face of such a clear decision, they will suffer further losses in the court of public opinion.'

The banks have generated big profits by issuing warning letters linked to overdrafts and bounced payments - each charged at £25 - like confetti.

Anger has been fuelled by reports that people, including students and pensioners, have been hit with bills of £100 or more after just going a few pence into the red.

The OFT calculates that banks and building societies have been making £2.6billion a year from unfair and excessive overdraft charges.

The High Court case has delivered a day of reckoning that means as many as 10 million people will be entitled to a refund, generating a total bill likely to top £10billion.

Such a huge bill would be a hammer blow to the banks which are reeling from multi-billion pound losses linked to reckless borrowing and expansion.

Martin Lewis, founder of the consumer revenge site MoneySavingExpert.com, said: This is a fantastic day for bank charge reclaiming. All gates to victory have now been unbarred.'

He said it now only requires the OFT to make a ruling that the charges are unfair - a decision expected later this year - in order to trigger a tidal wave of refund claims.

There are millions of claims already in the pipeline at banks and building societies. Currently, the firms currently have the right to put a hold on settling them until the legal case is concluded.

However, consumer experts said it would be wise for people to make their refund claims as early as possible to ensure they are among the first in the queue for a pay-out.

Advice and template letters on how to make a claim are carried on the Daily Mail's sister website Thisismoney.co.uk.

OFT officials have made clear that the banks would have no reason to use the loss of the court case as an excuse to start imposing monthly fees on current accounts.

However, many analysts feel that the banks will simply ignore this stance.

Michelle Slade, of the website Moneyfacts.co.uk said: 'Penalty charges are a significant revenue stream for the banks, which they can ill afford to lose at the moment. If the OFT does move to force the banks to lower charges, we could see increased costs elsewhere.

'The option that some banks may now levy an account fee is a real possibility.'

Kevin Mountford, head of banking at moneysupermarket.com, said: 'It seems the end of free banking could well be nigh.

'If banks have to reduce penalty charges they are likely to introduce a regular charge on current accounts, thus mirroring the system used most consistently across the world.'

Such a system could involve a monthly fee to cover a fixed number of direct debits, cheques and cash machine withdrawals. Customers would then be charged additional fees if they go above this number.

The British Bankers' Association gave no indication as to whether its members will appeal against the High Court ruling.

It said: 'These are important points of law. The courts can now go on to clarify the fairness of charges.

'Before that can happen the OFT has to provide the courts with its views on how charges should be assessed.'

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The Royal Bank of Scotland will refund millions of pounds in 'unauthorised' overdraft charges if it loses the current High Court test case, it has confirmed.

An internal document seen by the BBC reveals that the bank is drawing up contingency plans in case the current legal proceedings go against it.

In it, the group acknowledges that if it loses the case, it may have to refund 'millions of pounds worth' of past charges.

RBS, which includes NatWest, is one of seven banks and a building society that jointly brought a test case to the High Court with the Office of Fair Trading over unauthorised overdraft charges.

A judge ruled in April that the fees levied by the banks were subject to regulation by the OFT, paving the way for a second hearing into whether the charges are unfair and what a fair charge would be.

The banks have since appealed the judgment.

The RBS document says a team from the bank is 'preparing systems and processes to pro-actively refund charges to the group's customer base'.

It adds: 'All customer accounts that are due a refund will be calculated as accurately as possible' and 'any monies will be accurately accounted for and reconciled'.

But an RBS spokesman stressed that the document related to contingency planning in line with a commitment the banks have made to City watchdog the Financial Services Authority, and it did not reflect its expectations of the outcome of the case.

He said: 'This planning has absolutely no bearing on how we see the outcome of the test case.

'Along with the other banks, we agreed with the FSA back in July 2007 to deal 'efficiently and swiftly' with customer complaints on conclusion of the test case, irrespective of its outcome.

'Given the size of our organisation, complying with these requirements demands careful contingency planning and this document merely confirms that RBS is taking its obligations in this respect seriously.'

RBS has so far refunded £119 million to people who have complained to it about unauthorised overdraft charges.

The FSA has granted a stay on outstanding claims until January 26 next year, and it is expected to continue extending it until the end of the case.

Fees for people who go into unauthorised overdraft or who breach their agreed limit can be as much as £35 for a single bounced payment, although campaigners claim the cost to the banks could be as little as £2.50.

If it is upheld, the judgment could cost banks £2.6 billion a year in lost revenue and lead to them having to make refunds of up to £1 billion at a time when they can ill afford it.

Members of the industry have also warned that losing the case is likely to lead to the end of free banking in the UK, with consumers instead having to pay a monthly fee or a fee for every transaction they carry out.

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Banks are cashing in on the credit crunch by pushing up interest rates on overdrafts and dishing out credit card cheques carrying extortionate interest rates.

Two new studies have revealed how finance giants are using the national debt crisis to cash in.

The Bank of England has cut the base rate by 2.75 points in the past year bringing it down to 3 per cent, however banks have actually put up the cost of overdrafts.

A new study by personal finance experts Moneyfacts reveals that many banks have added between two and three points to their overdraft interest rate.

Some have added more than 7points to their overdraft interest rate with the result many struggling customers are being charged close to 17 per cent.

A squeeze on pay coupled with higher bills on food, energy and petrol over the past year has forced more Britons to resort to their overdraft and other forms of credit to make ends meet.

A sharp increase in the cost of new mortgages, a direct result of the credit crunch caused by bad investments by the banks, have also put the squeeze on customers.

Now these struggling families are being used to generate extra income by the banks as they try to build up their cash reserves.

Moneyfacts analyst, Michelle Slade, said: 'Bank base rate has decreased significantly in the last year, but a number of banks are charging their customers more for overdrafts than this time last year.'

Andrew Hagger, of the personal finance website Moneynet.co.uk, said: 'Higher overdraft interest rates represent another kick in the teeth for hard pressed consumers.'

He said someone with a £500 overdraft carrying a 17per cent interest rate will be paying £85 in a year. This goes up by £10 if there is a two-point increase.

Among the banks that have put up overdraft interest rates by at least two points in the past year are Abbey, Barclays, the Co-op, First Direct, Nationwide and Smile.

Banks were criticised yesterday for hiking the cost of their overdrafts piling further pressure onto cash-strapped customers.

Since June, the average rate on an authorised overdraft has jumped 1.35 percentage points despite the Bank of England cutting rates by a half-point.

The average rate is now 13.06 per cent, compared to 11.71 per cent, according to the research from the comparison website MoneyExpert.com.

The higher rates are a blow for millions of customers who are increasingly forced to rely on their overdrafts to find the money to pay soaring bills.

But the steeper charges mean their battle to get back into the black is even more difficult.
Sean Gardner, director of MoneyExpert.com, said: 'While attention has been focused on whether or not banks will survive in the current financial crisis, they've been quietly raising rates for borrowers and reducing them for customers in credit.

'The Bank of England may have cut rates with the likelihood of bigger cuts to come but customers using their agreed overdrafts are not feeling any benefit.'

He warned it is 'the shape of things to come' as banks prepare to raise money from every possible source, particularly if they lose a long-running court case about bank charges.

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The major high street banks launched an appeal today against a High Court ruling on controversial unauthorised overdraft charges.

A judge ruled in April that the fees levied by the banks were subject to regulation by the Office of Fair Trading (OFT) under 'unfair contract' rules.

The ruling had opened the way for an OFT investigation into whether the charges are actually unfair, and if so, what a fair charge should be.

But the banks are appealing the decision, arguing that their overdraft charges and conditions are exempt from the provisions of the 1999 Unfair Terms in Consumer Contracts Regulations.

They also say the charges are not unfair because they represent legitimate fees for providing overdraft facilities.

The test case was brought jointly by the Office of Fair Trading and seven banks and a building society after consumers began to reclaim millions of pounds of charges through the courts.

Fees for people who go into unauthorised overdraft or who breach their agreed limit can be as much as £35 for a single bounced payment, although campaigners claim the cost to the banks could be as little as £2.50.

If it is upheld, the judgment could cost banks £2.6billion a year in lost revenue and lead to them having to make refunds of up to £1billion at a time when they can ill afford it.

Members of the industry have also warned that losing the case is likely to lead to the end of free banking in the UK, with consumers instead having to pay a monthly fee or a fee for every transaction they carry out.

The decision by the banks to appeal the ruling has been criticised by consumer groups, as thousands of bank customers hoping to recover the charges must wait until the outcome of the test case is known before they can apply for a refund.

City watchdog the Financial Services Authority has granted a stay on outstanding claims until January 26 next year, and it is expected to continue extending it until the end of the case.

Which? chief executive Peter Vicary-Smith said: 'It's extremely disappointing that instead of looking for ways to make their customers' lives easier during these difficult times, the banks are piling on the misery by continuing to hit them with unfairly high unauthorised overdraft fees.

'The banks should not be appealing the High Court's decision. They should be working with the OFT to establish what constitutes a fair unauthorised overdraft charge and starting the process of refunding the customers they have been overcharging for years.'

The banks involved in the test case are Abbey, Barclays, Clydesdale, Halifax Bank of Scotland, HSBC, Lloyds TSB, Royal Bank of Scotland Group and Nationwide Building Society.

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Banks are set to rake in £1.3bn after being given permission to delay offering refunds to millions of customers hit with unfair overdraft fees.

The news follows a decision by City watchdogs relating to a long-running court case over the legality of rip-off overdraft fees.

The Office of Fair Trading (OFT) is taking the banking industry to court on the basis that charges of up to £38 a time for bouncing a cheque are unfair and excessive.

It has won an initial judgment that should ensure refunds are paid to millions of people.

However, the banks are dragging out the case through the appeal courts with the result that payments are being delayed.

The City watchdog, the Financial Services Authority (FSA), has allowed the banks to put the handling of complaints and refunds on hold until the case is settled.

This so-called waiver was first introduced in July last year and was due to run out this month - a year in which the banks will have collected £2.6billion in overdraft fees.

The FSA said it would allow the waiver to run another six months, until January 2009, allowing the banks to collect another £1.3bn.

There is every chance the banks will appeal the case through to the House of Lords, which could delay any compensation for customers until well into next year.

The delays mean the banks can continue to generate billions of pounds from what the OFT believes are illegal charges. This money is coming straight out of the pockets of some of the poorest people in the country.

The FSA said the delay in resolving the situation will not affect the ability of bank customers to claim refunds of charges going back to 2001, once the case is finally settled.

And while a general waiver for dealing with refunds has been established, the banks will be required to handle complaints involving customers suffering real financial hardship.

Martin Lewis, founder of MoneySavingExpert.com, said: 'For all its talk of consumer protection, the FSA's decision to extend the hold on reclaiming bank charges is a kick in the teeth to the millions of people trying to reclaim them.

'The original hold was installed as the test case was announced, because of apparent "inconsistencies," even though the enormous majority of people were being paid out by the banks.

'Yet now, a year on, the test case decision is out and there's a legally binding, precedent-setting court decision that bank charges are governed by fairness rules, so why not allow people the chance to ask for their money back?'

Director of retail policy at the FSA, Dan Waters, explained the decision saying: 'The FSA continues to work closely with the OFT and banks in reaching a resolution on the fairness of unauthorised overdraft charges.

'Our objectives continue to be certainty over this complex issue, and a fair and consistent resolution of consumer complaints about unauthorised overdraft charges.

'The FSA has reviewed the prevailing circumstances and has decided to offer firms a new waiver. The waiver will be for six months, when we expect to have a decision from the Court of Appeal.'

The watchdog has the power to lift the waiver if it believes the banks are dragging out a resolution of the case unnecesarily.'

The consumer group Which? said extending the waiver for another six months appears to be the least worst option.

Its head of campaigns, Louise Hanson, said: 'The waiver is a necessary evil.

'Scrapping it won’t get people their money back – only the banks can do that by conceding defeat and paying up instead of continuing to string out the process.'

Which? is concerned that banks have been changing their terms and conditions in recent months in a bid to get around any crackdown on unfair overdraft fees.

Miss Hanson said: 'People in financial difficulty need greater clarity and banks must be prevented from moving the goalposts with detrimental changes to their terms and conditions.'

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A student has been landed with bank charges of £800 - after going just eight pence overdrawn.

Laura Gibson, 20, has been threatened with legal action by Lloyds TSB if she does not pay the extortionate charges.

The fees mounted up after Laura unwittingly went 8p overdrawn on her current account.

Despite paying back £300 the penniless student has been unable to keep ahead of the spiralling charges and still owes £515.18.

She claims the bank piled on daily fees of up to £20 plus a monthly fee of £15 for having an unplanned overdraft.

By the time Laura realised what was going on, the costs had spiralled out of control.

'I can't cope with it,' said Laura.

'The bank staff can see I'm not in a situation to pay yet they carry on telling me I have to or they will take me to court.

'They didn't contact me saying I had gone overdrawn. They just keep putting more and more charges on your account.

'The first charge was in the region of £80 but it goes up and up the more you go overdrawn.'

Laura, of Monkscroft, Cheltenham, Gloustershire, said it was hard to keep track of the situation while she was ill with a nervous breakdown.

'I had nothing to live on because it was swallowing up my benefit money.

'I tried to leave the bank in February but they told me I couldn't until I had paid the charges.'

The student, who is enrolled to start a course at the Gloucestershire College in September, found herself being charged £20 a week after getting overdrawn.

Once her debts topped £100, the bank started charging her £20 a day.

Laura's bank statement shows she was £180.97 overdrawn on May 1 but by July 1 it had increased to £515.38.

'I've now paid more than £300 in charges to them,' she said.

Laura now has a part-time job and has opened an account with another bank but says she is still unable to pay all the charges.

A spokeswoman for Lloyds TSB said they would investigate the case now they had been alerted and would contact Laura to discuss her account.

Last week an investigation by finance website Moneynet.co.uk reported that Lloyds TSB was worst offender for punishing customers who fall briefly into the red.

Those with the Lloyds TSB Classic Plus account - which Laura has - who exceed their agreed overdraft limit by £50 for two weeks are charged £165.

A damning report by the Office of Fair Trading (OFT) said that banks rake in more than £8.3 billion from current account charges.

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Banks yesterday threatened an end to free current accounts after they were accused of dirty tricks, ripping off customers and imposing stealth charges.

The warning of the death of free banking came after the Office of Fair Trading criticised practices that earn them £8.3billion a year from the accounts.

The Government watchdog said customers were actually paying an average of £152 a year for banking services in the form of excessive overdraft and penalty charges.

It has warned banks to change how they charge for services.

But they have hit back by threatening monthly charges for basic services if they have to cut fees.

It is feared they will retaliate by introducing fees of between £5 and £20 for a current account.

Industry leaders hint that customers may also face extra charges to use a cash machine, write a cheque or pay a direct debit.

Angela Knight, chief executive of the British Bankers Association, said: 'It is important that this model, which is what customers have asked for - free for their normal banking, does remain.

'We are worried that the OFT seems to be challenging that.

'Do you really want to pay for ATM use, pay for statements, pay for direct debits in this country?'

The OFT yesterday launched what consumer groups called a 'devastating critique' of how banks charge for current accounts.

The biggest earner relates to the fact that banks pay very low or no interest on current account balances. But they invest the money in customers' accounts at much higher rates of interest to make a profit of £4.1billion a year.

The OFT wants banks to give each customer an annual statement showing the value of this lost interest. Separately, they make £2.6billion a year from excessive overdraft charges, which have risen by 17 per cent above inflation in four years.

Four million people are paying more than £200 a year in overdraft charges, with 1.4 million of them handing over more than £500.

The watchdog made it clear that profit margins on overdraft penalty fees, which can be £38 for bouncing a payment, are excessive.

It said the nation was overdrawn by an average of £680million a day in 2006. However, bank fees and interest on this sum amounted to £1.5billion, a return of 220 per cent.

The OFT identified dirty tricks where banks have secretly pushed up penalty charges to subsidise other products brought in to attract new customers.

It said finance industry claims that they look after customers by providing 'free banking' were bogus.

OFT chief executive John Fingleton described the lack of interest on current accounts as a 'stealth charge', adding: 'There is a systemic problem. All of the banks have moved towards charging us more and more for things we can't see. Banking is not free, it is costing us £150 a year. Because we can't see how much it costs, we can't compare and switch properly.'

The OFT complained vulnerable groups such as pensioners were suffering. It said: 'There is significant potential for slight errors in financial management to result in hundreds of pounds of charges.'

It also pointed out that a customer going overdrawn with one bank might not be charged, while another would have to pay £260.

The OFT says customers should be able to get interest on their current accounts without paying monthly charges.

Philip Cullum, of the National Consumer Council, said: 'The OFT has delivered a devastating critique of this market, which has too long failed consumers.'

Andrew Hagger, of the website MoneyNet, said: 'If and when the decision is made to cap unauthorised overdraft fees, it is inevitable that we will move towards paying monthly fees for personal banking.'

When First Direct imposed a current account charge of £10 a month for 200,000 of its customers last year, 20,000 closed their accounts.

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One of Britain's biggest high street banks has slashed its overdraft charges in a move which is set to spark a battle for current account customers among other major banks.

Barclays announced today that it will launch two new accounts that charge a flat fee of just £8 for each transaction once a customer goes beyond the agreed overdraft limit, compared with the current £35 fee.

It comes after high street banks lost the first stage of a High Court battle over the legality of hefty overdraft and other fees. The banks are said to be reviewing fees after the ruling, which they are appealing.

Customers opting out of having the buffer zone will see payments over an agreed limit bounced, but will still only have to pay the reduced £8 charge.

Barclays said that it had been able to reduce its charges as a result of breakthroughs in its handling systems, with a far greater automated service.

But it is likely to be seized upon by campaigners who have long claimed that fees of up to £35 are unfair and does not represent the actual cost to banks - which they believe could be as little as £2.50.

In April, the Office of Fair Trading won a High Court ruling over the issue, when a judge said fees were subject to "unfair contract" rules.

It paves the way for a further hearing to decide whether charges are unfair and, if so, what a fair charge should be. Banks have since lodged an appeal over the High Court ruling.

Barclays' £8 charge could lead to other banks scrambling to play catch up in an industry that faces being forced to lower fees.

It is part of a new overdraft service for customers that will also include the launch of "Personal Reserves" on August 18.

These buffer zone, typically of around £250, can be used as often as the customer needs without repeat charges.

But if a customer fails to pay off the additional balance within five working days, they will be liable to pay another £22 fee.

According to the bank, the system will "significantly reduce" charges and give customers certainty about when their payments will be met and when they will be bounced.

Crucially, current account users can opt out of having the buffer zone - and therefore not be liable to the £22 charge - but still only face £8 for bouncing a payment.

Mark Parsons, managing director of current accounts at Barclays said: "We have listened to our customers and acted on this feedback by completely revamping our unauthorised overdraft service, replacing it with the new Personal Reserve.

"Our customers wanted a simple, clear way of managing payments when they go beyond agreed limits."

He added: "Our new approach has been tested with consumers extensively over the last two years and we are confident that our products will promote account switching to Barclays."

The bank also announced that from June 1 it is to scrap credit interest on standard current accounts. Research found that customers do not value the 0.1 per cent payment - which works out about 2p a week to the typical account holder.

And from June 2, interest on overdrafts will go up from 15.6 per cent to 17.9 per cent.

Mr Parsons added: "The overall package of changes we are making for new and existing customers provides a simple, clear choice and improved value, marking a step change in current account banking in the UK."

The bank's 11 million current account customers will receive a letter in the coming weeks informing them of the changes

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