Unfair Bank Charges
With banks said to be making an estimated £5,000,000,000 per year in overdraft charges there’s no wonder the past few years has seen somewhat of a revolt in this area. With the media and banking customers alike kicking up a fuss on the charges put on accounts that exceed their overdraft facility.
Bank customers who do not have access to an overdraft facility or subsequently breach their overdraft
limit are automatically hit with ‘unauthorised overdraft facility’ charges.
The banking corporations argue that such an ‘unauthorised overdraft’ is a service that has not been arranged in advance by the customer, so therefore the banks are entitled to charge a fee for the use of this service.
Whilst many customers appreciate that charges for the use of an unauthorised overdraft are acceptable, the disproportionate fees associated with such use are not.
Many banking customers argue that the banks should only apply charges that are reflective and in proportion to their actual costs when a customer exceeds their overdraft limits.
It is worth noting that contract law in the United Kingdom stipulates that a ‘contractual breach’ should only be rectified with the losing party recovering their liquidated loses. A report by a Professor of Banking has estimated this cost between £2.50 and £4.50 – which I’m sure you’ll agree is much more realistic in comparison to the current average charge of £35.00.
Claiming Back Bank Charges
So What Bank Charges Can I Reclaim?
You are entitled to claim back any unfair bank charges that you have been charged for over the past six years. In some cases however you may also be entitled to claim back additional interest that you have paid on these charges.
The Court allows 8% statutory interest on bank charge claims if they are concluded with the requirements of the Courts.
It was clear from the start that the banks did not want to go to Court regarding these bank charges, this was in part due to the concern that a judgement would have been granted which would see the banks forced to repay all the charges they have imposed.
Due to the media publicity and consumer information, the banks eventually had little choice but to try and defend their position on bank charges. This move resulted in the first ‘Test case’ of this nature, which in turn gave the banks a certain degree of breathing room.
On Friday 27th July the Financial Ombudsman and the FSA suspended all bank charge cases and permitted the banks to waive all new complaints until the outcome from the High Court test case commencing on the 14th January 2008. It is expected that a judgement will be given around July 2008. This should clarify once and for all, either way, whether these charges are fair or not.
