A ruling in the ‘unfair’ bank charges test case yesterday could be the first step towards clinching millions of pounds worth of refunds for banking customers. The judgement has given the Office of Fair Trading the authority to challenge whether the fees – which it considers disproportionate and unlawful – are fair or not.
Many banks charge fees for missed direct debits, bounced cheques and unauthorised overdrafts, with some customers incurring charges as high as £39. Many have already successfully claimed back their bank charges, and others are hoping that they will be able to do the same.
Head of personal finance at Fool.co.uk, David Kuo, said: “For two years Fool.co.uk has deemed unauthorised overdraft charges to be excessive and unnecessarily punitive.
“Customers who have been unfairly penalised should continue to reclaim unfair penalty fees. There is a six-year limit for reclaiming the charges though the clock stops the moment you lodge your complaint with the court. Customers should not delay.”
Although there is currently an Financial Services Authority-imposed freeze on bank charges claims pending a final decision customers who feel they have been charged unfairly can write directly to their bank asking for a refund, or can enlist the help of an intermediary firm who will appeal to the lender on their behalf and deal with the claim from start to finish.
The Citizens Advice Bureau encourages those experiencing financial difficulties to take action immediately. “Until the case is resolved, complaints remain on hold and charges continue to be applied to accounts, unless a customer is considered to be in financial hardship,” said director of policy, Teresa Perchard.
“This is why it’s important that people in difficulties let their bank know and that banks take a broad view of what financial hardship means.”
Head of personal finance at uSwitch.com, Simeon Linstead, said: “As the case rumbles on, uSwitch.com estimates that more than one million consumer claims have been on hold since July 2007 awaiting refunds on default charges, totalling more than £713 million. From the start of the claims freeze to January 2008, banks have made £20.5 million in interest on this money. Meanwhile, consumers waiting to reclaim these funds remain out of pocket for the foreseeable future.”
