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HUNDREDS of people are feared to have handed over their bank details to a firm claiming to be able to clawback over-paid bank charges.

JFM Marketing in Newcastle is being investigated over claims that none of its staff has been paid, no cash has been re-claimed and that is it unlicensed.

The firm placed ads in Jobcentres across the region, offering jobs as cold-calling sales staff.

Workers were said to have been sent on to the streets, without any checks on their criminal history, and asked to knock on doors and tell householders the firm could help get bank charges refunded.

It is illegal to do this kind of door-to-door work and the Ministry of Justice, which regulates claims firms, has launched an investigation.

All Jobcentres have now been instructed to remove JFM’s adverts during the investigation.

Today, JFM said it was working on behalf of a Bristol firm, which is also under investigation, and that it did not know it had to be licensed.

But staff who took on canvassing jobs spoke of their concern that they have not received a penny for the work they did.

JFM’s job ads were first placed in Jobcentre Plus offices across the North East in May. They stated candidates could expect to work 40 hours a week and get more than the national minimum wage.

People who applied for the roles were given brief interviews before being sent out on to the streets with a colour photocopied ID card and forms for people to fill out.

The canvassers were told to knock on doors, tell people they could get over-paid bank charges refunded, and collect their account details. Workers were told they would get between £5-10 for each form they collected.

The forms would then be handed back to JFM, which would send them-on to the Bristol firm, which in turn would arrange for the claim to be carried out by a firm of solicitors. One worker alone told the Chronicle he collected 60 sets of bank details, which he passed on. While there is no evidence any fraud has taken place, there are concerns that hundreds of account numbers and sort codes have been passed on to strangers, with no proper explanation about how the data will be used.

Any firm offering a claims management service must be registered with the Ministry of Justice and neither JFM nor the Bristol firm has the relevant licence.

It is also prohibited for any claims management firm to carry-out any form of cold calling, including house visits. Krystal Jones, 21, of Battle Hill, North Tyneside, was one of the people recruited to do the work and started at the end of June. But she says she has not received a penny in payment.

She said: “I saw the advert and was interviewed over the phone and then someone visited me at my home. I was given an ID card but I didn’t think it looked very professional. I was told to knock on doors and explain what it was about and get bank details, then pass them on.

“At first I was told I would get £5 for each one, then that changed to £10. I couldn’t believe it when I filled out the application form and I didn’t have to provide any references or have any checks on my background done.

Jason Luba, 32, of North Shields, was initially recruited as an area manager. He said: “I answered the advert and met a man at his house.

“He gave me a list of people and I had to contact them and explain to them they had to knock on doors and explain about claiming bank charges back and get their bank details.

“Everyone was given a target of 10 a day and I collected about 60, which I handed over. So that is a lot of people who’ve been contacted. I felt embarrassed because these people trusted me and I don’t know if any of them have had any money refunded.”

The ID cards given to workers state that the firm is based at All Saints, City Road, Newcastle. But the Chronicle visited all three office blocks at the All Saints complex and was told there is no firm called JFM with an office there.

We contacted John Fairley, who runs JFM. He said: “We asked a Bristol firm what we needed to do and they never told us we had to have a licence.”

Mr Fairley added that he did not think anyone had been cold-calling and knocking on people’s doors to get bank details.

But Kevin Sheardown, for JFM recruitment, said: We didn’t realise we had to have a licence and I didn’t know it was illegal for us to send people out to knock on people’s doors.” We have been working with the Ministry of Justice and they are explaining what we need to do.

He went on to claim: “We have not been able to pay people because we have not had any money from the firm we were passing the claims on to. We are considering a claim against them in the small claims court.”

A spokesman for the Bristol firm, said: “JFM phoned us up and they were already doing this service and would we like them to do it for us.

“But then we got a couple of complaints about them so we sacked them. I wasn’t aware it was illegal to do door-to-door sales and I’m horrified that JFM didn’t have the correct licence.

“We don’t have to be registered with the Ministry of Justice because we work for solicitors, who are regulated by their own code of conduct.”

A spokesman for the Department of Work & Pensions, which runs JobCentre Plus offices, said: “We can confirm JFM first advertised in JobCentres on May 30. The company was suspended on July 30 following advice.”

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It is thought that the Office of Fair Trading (OFT) test case into bank charges is set to rule that they are in fact illegal.

This has been speculated by experts at Hall Advisory Services, stating that there is a strong chance that bank charges will be ruled illegal.

In this eventuality consumers across the UK will be able to legally request repayment of previous charges, which would be at considerable cost to the banks in question.

For example, HSBC is reported to have paid £116 million in bank charges over the past six months, according to This Is Money.

"We're quite confident that the courts will rule in favour of the claims against the banks," commented Tim Wickham, director of Hall Advisory Services.

"This has been [indicated] by the amount that they've been paying to avoid [a ruling] in the past."

OFT reports that tens of thousands of complaints over the fairness of bank charges have been received by the county courts and Financial Ombudsman Service.

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LONDON (Reuters) - Banks, financial regulator and consumer watchdog hailed the start of a test case on bank charges as bringing much needed clarity to a confused situation -- but experts warned it may take over a year to achieve that.

The Office of Fair Trading (OFT) started High Court proceedings on Friday to rule on whether bank charges on unauthorised overdrafts are fair. Eight of the biggest banks and building societies have joined the OFT, saying they want to clarify the law as well.

The Financial Services Authority -- which said it had found "significant deficiencies" among banks in their approaches to handling complaints about the charges -- welcomed the case.

The regulator suspended the refund process until the court ruling is given, although claims can still be made and banks will need to refund charges if the ruling goes against them.

The FSA said it will review the waiver after two months and again after a year, although a decision may not be known then.

A lawyer familiar with the case said the OFT and banks had agreed to proceed as quickly as possible, but it could take over a year. "Everybody accepts that, and whilst the aim is to take less time, it could take over a year," the lawyer said.

The process will take time due to the involvement of eight big companies and the OFT and complex and unclear legal issues, the lawyer said.

David Black, head of banking at financial research firm Defaqto, warned the test case could drag on for years.

"The simple fact is that the amounts involved for the banks are enormous and they're clearly going to argue their corner. Regardless of who wins the High Court case appeals are possible and, frankly, likely," Black said

Whilst claimants are obviously very upset about the new bank charge situation, with bank charge claims being put on hold, they are not the only people losing out!

With the banks being flooded with literaly hundreds of thousands of claims, many of the banks took on extra staff to process the claims.

As these claims are being put on hold for the time being, with no claims being dealt with for at least the coming months, many of the staff who process these claims are no longer required. Only a skeleton staff will be kept on to keep a log of new claims being filed.

As a result, there has already been talks within the banks about the fate of these staff, with many being laid off and made redundant. However, as many of these staff have only been with the bank for a short time, and less than the 2 year period at which they gain their rights, they will not be entitled to redundancy pay.

Obviously, this is going to have serious effects for a large number of people employed in the banking industry, as they will be losing their livelihoods, and it will obviously have a negative effect on their household income.

So whilst it may be upsetting that your claim will now be put on hold, spare a thought for the bank staff who will be losing much more!

Whilst many people are against the major banks, the staff themselves are not responsible for the large bank charges imposed. In the end it is the people at the higher levels who set the amount for bank charges, and you can be sure that these people will not suffer as a result of the new situation. It's the ordinary bank workers, people like you and me, who are going to lose out in a major way. Like us, many of the staff would not have known that this situation was on its way, so it must be as much of a shock to them as it was to us.

I would like to wish the bank staff affected the best of luck for the future, and hope that it does not cause them too many problems.

Gareth - Webmaster
Claim Bank Charges Back

The Financial Services Authority has granted waiver to the banks, so that they are no longer obliged to handle complaints about unlawful bank charges.

No, this is not because it's ruled that charges are lawful. In fact, it's because the Office of Fair Trading thinks they aren't lawful, and is taking a super-claim to court to get the matter settled once and for all.

The banks being taken to court are: Abbey National, Barclays, Clydesdale, Halifax, Bank of Scotland, HSBC, Lloyds, Nationwide, NatWest and Royal Bank of Scotland.

And that's all fine. It'd be nice and neat to get one decision that settles the matter once and for all. However,
it makes no sense that banks don't have to deal with claims in the meantime. It's ill-thought out, crazy even.

Thanks to the FSA, the situation now is that the banks don't have to deal with these claims at all. The FSA says also that the Financial Ombudsman will probably stop dealing with the claims and so will the county courts. This plays into the banks' hands.

Why on Earth should people halt their claims? There are lots of people with serious debt trouble largely, and in many cases solely, due to unlawful penalty charges, and now their claims will be suspended, perhaps for a year or several years, whilst we wait for the super-claim to be settled.

Their options for getting their money back in the meantime will be limited or non-existent, as their rights and protections are suspended. All the while, their debt will continue to grow, and their worry and anxieties along with it.

Furthermore, the FSA has, amazingly, agreed that claimants who have had offers from the bank already must either accept that offer in full and final settlement, or they'll almost certainly be forced to wait a long time, i.e. until this super-claim is finally resolved.

A Ross Shire man is this week celebrating winning back £7,368 of his hard-earned cash from a banking giant after successfully challenging its charges.

And David Brett, a father-of-three from Dingwall, says the “completely painless process” cost him just £15 and hopes his story will inspire other customers to reclaim unfair bank charges which have been imposed on them.

David, a train driver, of Burn Place, is one of the thousands of people who have taken part in the consumer revolution and challenged their banks to refund charges. Financial experts now believe the penalty charges which banks and credit card companies levy are unlawful. Banks disagree but so far no bank, when challenged by the banking watchdog the Financial Ombudsman, has refused to refund the charges.

David said: “There’s been a lot in the news about this and I had always thought bank charges were unfair. If you’re 20p overdrawn you get hit with a £30 charge, or if they return a direct debit payment because you’re £1 short you get charged again. But I never once complained. I just paid them.

“Then I heard that folk were challenging the charges and I looked up the internet for advice. I wrote to the head office of my bank, the Nationwide Building Society, and asked them to send me all my statements for the last six years. Then I tallied up all the charges which had been imposed on my account and wrote to the bank saying I believed the charges to be unlawful under contractual law as legally they are not allowed to charge more than it actually costs themselves to process it.”

David said banking experts reckon it costs the banks between 50p and £4.50 to return a direct debit or bounce a cheque – yet most charge around £30.

David was undeterred when the Nationwide rejected his claim, saying he had agreed to their terms and conditions.

“That’s the standard response,” said David. “They hope you will just go away. If they do not give you your money back you should then phone the Financial Ombudsman Service for a claim form or download one from their website, fill it in and send them the photocopies of the letters you have sent the bank. The Ombudsman’s service is free.

“The Ombudsman kept me informed and I was over the moon when the Nationwide agreed to settle my claim in full. I was always confident I would get my money because the banks can’t justify the charges. The Office of Fair Trading is currently carrying out an investigation and as yet the banks will not go to court or give a full disclosure as to how they come about their charges.”

He added: “Anyone can do it. All it cost me was the £15 charge to get my bank statements and £5 postage to send them recorded delivery to the Ombudsman. It’s easy and you don’t need a lawyer. It’s your money – claim it back!”

A spokesman for Nationwide said it could not comment on individual cases but added: “Nationwide evaluates all refund requests on a case-by-case basis and refunds are made where appropriate. Nationwide has always felt its fees and charges are fair and the society is very transparent in informing its membership of what fees and charges are associated with its products.”

A spokeswoman for the Financial Ombudsman said: “To date every case that’s come to us, the banks have refunded the charges. We write to the bank on behalf of the customer asking for a price structure in respect of their administration but in each case they have chosen to refund the charges rather than go through a formal investigation by the Ombudsman.

“The amounts range from several hundred pounds for a individual to up to £20,000 for a small business.

“We can’t guarantee everyone will get their money but at the moment that’s what seems to be happening.”

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Britain’s biggest banks have paid out an estimated £200m this year through customers reclaiming their “unfair” overdraft charges, according to a new report.

Credit Suisse on Wednesday published a study estimating that the banks including Barclays, Lloyds TSB and the Royal Bank of Scotland were likely to take an aggregate hit of £200m in the first six months of 2007 alone.

Earlier this year, some big lenders were receiving 500 claims a day from customers seeking to reclaim overdraft charges, although the volumes are thought to have dropped off in recent months.

Up to 3,000 consumers a day have been calling the Financial Ombudsman, the service that settles disputes between companies and consumers about bank charges.

In addition, claims-handling companies, which have encouraged customers to make mortgage endowment mis-selling claims, are piling into the sector and targeting people reclaiming bank charges.

Thousands of customers have been lodging legal claims against overdraft charges, which are placing a strain on the court system.

No banks have yet outlined how much the consumer backlash on penalty charges is costing them, although all have said the figure is not significant at a group level.

However, banks are expected to quantify the figures for the first time when they report first-half results later this month.

Jonathan Pierce, banks analyst at Credit Suisse, said on Wednesday he expected the impact of claims over penalty charges would be about 1 per cent of group profits, although he doubted every bank would disclose the numbers.

Barclays has said that claims on penalty charges have dragged down net fees and commissions.

HBOS has said it is splitting out claims on penalty charges from its underlying earnings. Mr Pierce estimates it will have to set aside £50m in the first half of 2007.

“HBOS said the number wasn’t material but that’s subjective and anything above say £50m would, in our view, be material in the context of the retail bank and pose a serious further threat to management credibility,” Mr Pierce wrote in his report.

Banks are arguing the fees are discretionary service fees but consumer groups such as Which? maintain that overdraft charges are penalties and should reflect only the modest costs that a bank incurs when imposing them.

The Office of Fair Trading’s investigation is set to be completed later this year.

People familiar with the organisation’s thinking say it is considering measures to help to curb the number of cases that come to court. If the OFT rules that bank penalty charges must be reduced, banks have made it clear that the industry could stop offering free banking to customers who are in credit.

Instead, banks could operate a more Continental-style system and charge for each transaction or impose a monthly fee.

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It's time for an update on bank charges.

The huge, vast majority of claimants who stick to their guns continue to win their claims. So what else isn't new and how is it old in a new way?

Banks still settling out of court

Banks often get as far as submitting a scary-looking defence to our County Court claims, but the majority settle before the claim goes to court. The rest of the time, the banks often don't bother turning up to defend themselves, in which case the judges have mostly been awarding in favour of us claimants.

Hull claims settled in claimants' favour

You may be aware that one judge in Hull County Court took a different view to the majority of judges across the country. He struck out 44 claims by bank customers -- meaning he cancelled them -- because he believed there was no prospect for success.

However, a legal team took on these claims to challenge the strike-out order, so that the claims could be heard. 37 of those 44 claims have now been settled out of court in the claimants' favour.

Three of the remaining seven claims are with the Alliance & Leicester, which hasn't bothered to respond. If it continues to ignore the claims it's likely the claimants will win by default.

Yorkshire Bank's bluff?

Yorkshire Bank has the remaining four claims. Unlike Alliance & Leicester, it has responded and it's sticking to its guns.

I believe that this is a bluff, although a very strange one, because it must know that the claimants won't back down, not with a free legal team supporting them. Thus, dragging out the claim costs the bank more in legal fees, but to no gain.

However, the Consumer Action Group, which helped to fund the legal team on behalf of the claimants, reports that the senior solicitor for Yorkshire Bank was 'out of his depth', so perhaps this solicitor is over-confident of success, and truly intends to pursue the claim.

What happens if we get test cases?

In the event that Yorkshire Bank does intend to turn up and defend itself, it will have to provide evidence to show that its charges are justified. It has agreed to a deadline of 28 September for this.

However, Yorkshire Bank may argue that its charges are not penalties, but the cost of a service. If it successfully argues this, which I consider to be unlikely, then it will not need to justify its charges.

If these claims are defended in court it will set a precedent although the judgment won't be binding on other county court judges. It simply means that a judge can consider these claims when judging similar cases.

Because I believe Yorkshire Bank, and Alliance & Leicester, will not defend these claims in court, I think we'll be lucky if we get a test case and that, in any event, any test case would apply to claimants from the same banks only.

Tom Brennan vs. NatWest

I'm still interested in Tom Brennan's hearing, which, the court tells me, will be decided on 30 July. The result of this peculiar hearing will have no effect on regular claims, but I'm sure it will interest many of you as much as me, so I'll write about it when judgment is handed down.

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Banks and the competition watchdog are urgently trying to stem a rise in legal claims against overdraft charges, which are placing a growing strain on the court system.

The number of small consumer claims that allege unfairly high overdraft levels has risen sharply since last year, say banks, competition lawyers and government officials.

Official statistics on court activity do not state what each case is about, but many informed observers say the rises in money claim actions in the past 18 months reflect a rising tide of overdraft-related court cases.

A principal reason the overdraft fee dispute remains unresolved is that the banks tend to settle claims out of court or do not defend themselves in cases that do reach court. The merits of the claims have therefore never been contested all the way through county and higher courts.

Critics say the banks are afraid of losing a precedent-setting case.

Eric Leenders, director of the British Bankers’ Association, said banks were eager to resolve questions hanging over the running of current accounts, which were “at the core of the relationship between the bank and its customers”.

He said: “No bank wants to see their customer in court. That’s why banks take this so seriously and want to resolve the issue before it gets to court.”

The total number of money claims in county courts – where bank overdraft claims are typically heard – peaked at almost 47,000 in March, about 20 per cent up on January, before falling slightly in April and May. Cases filed through an internet claims service set up partly to relieve strain on the court system topped 20,000 in May, almost three times as high as during the same period last year.

Claims are having a noticeable financial impact on the banks. HBOS and other institutions plan to devote a separate line in financial results to customer claims over fees.

A deluge of cases has caused widespread anxiety, including among the district judges who are saddled with hearing the cases.

The explosion in overdraft-related claims has its roots in a campaign launched in March last year by the Which? consumer body.

It and other groups claim that overdraft charges are penalties rather than discretionary service fees, and so should reflect only the modest cost incurred by a bank.

Competition lawyers say such a shift could lead banks to stop offering free banking to customers who are in credit. Instead, banks could operate a more Continental-style system and charge for each transaction.

Banks privately say that they are keen to resolve both the logistical problems caused by the volume of litigation and the legal uncertainty over the status of overdraft charges.

One possibility under discussion is the launch of a test case against a consumer organisation, to win a ruling that would provide a precedent for other cases.

The dispute has pulled in the Office of Fair Trading, which is investigating the fairness of a wide range of bank charges. People familiar with the organisation’s thinking say it is considering measures to help curb the number of cases that come to court.

The OFT declined to comment.

For now the court service is bearing the brunt of small claim disputes, with which, it says, it is dealing “effectively” by investing extra resources.

That may be true, but many observers say the courts are having to bear the extra workload without any solution to the broader problem in sight.

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Up to 20,000 current account customers have left internet and telephone bank First Direct since it started charging a monthly fee in February.

The group, which prides itself on its customer service, became the first bank to levy a monthly fee when it began charging £10 a month to current account customers who do not pay more than £1,500 into their account each month.

When the bank first announced the move in November it estimated that around 195,000 of its 1.3 million customers would be affected, and it is thought as many as one in 10 of these have now closed their accounts.

First Direct declined to confirm the figure, but a spokesman said : "A small number of people out of our 1.3 million customer base have closed accounts following our decision to charge, but we are pleased with the numbers given that it was a significant move for us."

The group introduced the monthly charge in a bid to tackle the issue of dormant accounts.

It said in November that it had around 40,000 accounts that had not been used for a least three months, as well as more than 250,000 that had fewer than 10 transactions a month carried out on them.

By waiving the £10 charge if people paid at least £1,500 into their account each month, it aimed to encourage people to use First Direct as their main bank.

People can also avoid the fee if they maintain a balance of more than £1,500 in their account or if they hold another product with it such as a savings account, mortgage or home insurance.

The bank would not say how many people were now paying a fee, but said it was "far fewer" than it had estimated in November.

The spokesman said: "Significant numbers of people have taken out more products.

"We are very pleased with the way things have gone. Many more customers are now using First Direct as their main bank."

The issue of banking charges is currently being looked at by the Office of Fair Trading.

Thousands of customers are also trying to reclaim penalty charges of up to £30 for breaching overdraft limits or bouncing a single payment.

Last week Yorkshire Bank and Alliance and Leicester were ordered by a court to disclose how they calculate their penalty fees and what the actual cost to them of servicing a bounced payment is.

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