This is Money - It DOES pay to take on the bully boy banks

Banks are resorting to bullying tactics over charges - and the worst offenders risk being fined by the City watchdog, the Financial Services Authority, for the way they handle these cases.

Millions of customers have demanded their charges be returned on the back of our Fair Play on Charges campaign. You can request repayment of the last six years' worth of charges for unauthorised borrowing - such as those implemented for bounced direct debits.

But banks are not paying up willingly. Some of the ploys used by the banks to put off customers from reclaiming all their charges include: using spurious legal language; saying that the Ombudsman cannot look at their case; threatening that if the customer pursues their claim then they could end up paying the bank's ' considerable' legal costs; and claiming that there have been High Court judgments which have found against the customers.

All these assertions are incorrect. The Ombudsman can deal with cases. There has never been a bank charges case that has made it as far as a High Court decision, so there is no legal precedent. County court cases - such as the one reported today where the claimant failed to get Lloyds TSB to refund his charges - don't set a precedent.

Also there is no reason to assume that if a case got to court the costs would be huge and awarded against the complainant.

Customers are still being threatened that if they pursue a complaint, their account will be closed. The Financial Ombudsman Service has made a ruling on a case of this nature and said that banks are not allowed to do this.

Banks are also resorting to horsetrading over how much they will pay out. A first request for a refund will be rebuffed. A second request leads the bank to offer half the charges. On the third attempt, the bank will offer three-quarters.

If the customer isn't worn down and takes their case to the Ombudsman then the bank pays up in full.

So far, the Financial Ombudsman Service has not had to make an adjudication on a single case. Every time a case arrives at the Ombudsman, the bank pays up.

Whenever the banks make a payout, they say it is a 'goodwill' gesture. If a case actually did make it as far as an Ombudsman adjudication, then everything would become more formalised.

Banks would have to follow principles laid out by the Ombudsman - and they could no longer get away with making a series of offers.

The Chief Financial Ombudsman, Walter Merricks, has warned banks he is watching the way they deal with charge complaints. In a speech, Mr Merricks said: 'We have learned that some firms, when faced with a complaint, first respond by saying the charges are justified.

'If the customer presses the point and threatens to refer the matter to us, they are offered a write-off of half the charges.

'If the customer issues court proceedings, or actually refers the matter to us, the whole of the charges are written off. I'll just repeat what the rule says: handle complaints consistently and remedy recurring problems.'

The Ombudsman has referred some banks to City watchdog the Financial Services Authority (FSA) over the way they are handling bankcharge disputes.

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