FROM mARTIN lEWIS - money savign expert.
An introduction by Martin
Many people have contacted me recently to point out their boasts in the Chat forum of wonderful successes in reclaiming £100s if not £1000s in unfair bank charges. I contacted one of the main proponents, Dave Smith, and asked if he’d compile the information and write some notes.
Dave is one of the people behind the BankActionGroup, a collection of people dedicated to fighting these unfair charges. Originally I intended these notes to go in the forum, but they were so good I decided they merited a full article. Thus I’m in the rather unaccustomed position of writing an intro to an article on my own site – as this one isn’t by me!
How to reclaim your charges
A step-by-step action plan
Related Articles
Contacts
Claim back any bank charges by Dave Smith
Bank charges are not legally enforceable. Penalty clauses in contracts in English (and Scottish) law for breach of contract aren’t legal if the penalty exceeds the actual cost of the breach of either party.
We all know that it does not cost a bank £25 to £39 to return a Direct Debit, Standing Order or cheque, and luckily so do judges, and indeed the banks. It’s purely a money making scheme, and a lucrative one at that – with estimates that the charges from the top 4 UK high street banks generated £3 billion alone. One in five bank customers incur these types of charges, and because it's a bank imposing them, most assume that the bank must be legally entitled to do so.
OK so what are the rules?
Under the 1977 Unfair Terms (contracts) Act, the sheer fact that ALL banks make these charges makes this a breach of the act (the example given is exactly that!).
This is also a breach of the 1999 Consumer Credit Act (Unfair Terms in Consumer Contracts - the OFT is already investigating the charges levied by Credit Card Companies) and possibly the Sale of Goods Act, and many others.
How to reclaim your charges
We have now had over 100 people reclaim their charges from their bank - some by just asking, some by sending threatening letters and some by starting legal action. ALL got their money back before a court hearing has been heard.
REMEMBER THIS! The banks do NOT want to go to court.
They know they would lose and that it would create a lot of publicity that they do not want. In all of the letters received from banks giving the money back, they claim that it is for 'financial' reasons. i.e. The cost of defending a claim would outweigh that of just paying up.
In the case of one of our members the bank paid 600% of what was being claimed to avoid court. The bank in question has repaid back, to my knowledge over £30,000 so far.
Surely if they were legally entitled to this money they would have defended an action by now to prove the point and stop the 'snowball' effect. How many more cases do they have to pay back before it becomes financially viable? I think we all know the real answer.
A Step-By-Step Action Plan on reclaiming punitive charges
Anyway, to the point; here's a step-by-step indication of how to reclaim punitive charges from your bank.
STEP ONE. Send it a letter (standard form available)
Send the letter in the BankActionGroup forum (library section - you have to register - free, of course - to read this part of the forum - this is solely so we know how many people have used it – so sadly these links can only take you to the front page).
Which bit you use depends on whether you know all the charges you’ve paid in the last 6 years (under the stature of limitations you can only claim for the last six years).
If you do. Send the letter in the library for a preliminary approach for repayment.
If you don’t. Send the letter in the library requesting a full and comprehensive list of charges made on the account (including the date of the 'offence, the exact wording used - e.g. Unpaid Direct Debit, or Debit under advice etc... - and the amount) - the Data Protection Act disclosure request.
Under the Data Protection Act - the information holder has only 40 days to provide this information. Don't worry about the extra wait - you can legally claim 8% APR on each charge for the full period, so the longer it takes them the more money you will have back. If they still refuse, or do not furnish you with this information within 40 days, report them to the Informationcommissioner for a breach of the DPA.
STEP TWO. Enter the details into the special spread
Enter the charges into the spreadsheet, also provided in the Library section of the BankActionGroup forum. This will calculate the interest at 8% APR as allowed by the County Courts Act (1984).
STEP THREE. Now wait for one of four things to happen
a.) You will get a standard letter saying 'sorry you're not happy, we'll get back to you sometime in the next decade; or
b.) You will get a refund.
c.) You will be offered a partial refund (refuse this - the money is legally yours - note we are not claiming for the extra interest incurred on overdrafts - this more than covers their costs, so don't start to feel sorry for them). You will receive a letter offering a full refund next.
d.) They will deny the claim that the charges are unlawful (about 50% do this).
STEP FOUR. What to do if you don’t get a refund
If you didn't get a refund (some banks do refund straight away), then now go to the Moneyclaim site and fill in the form. Moneyclaim is the internet based court system allowing you to easily claim back money you’re owed. (There’s a pro forma of what to fill in on the bankactiongroup website).
There are fees, but you will get them back from the bank when they refund your money. If you are receiving benefits of any kind, you may be exempt from the fees. If you don't have a credit or debit card then pop-along to your nearest county court and pick up an N1 form - it's exactly the same as their website, but on paper, and you can pay in cash when you return the form.
N.B. The court fees range from £30 - £120 depending on how much you are claiming, it’s much cheaper to do it on line.
A quick comment from Martin: Take them on but be aware
Well now we’re getting legal on their ass! This means the time and effort needed from this point onwards increases. It’s also very important to ensure you know what you are doing and the risks.
On the whole past evidence seems to show if you do go for the legal solution you’ll win, at the very least most of the BankActionGroup feedback shows that to be the case. However if you enter a claim there are always counter risks, I’m not saying this to scare you, more to ensure if you take the decision to go further you’re doing so with your eyes open. Ultimately this is your fight, not anyone else’s and all the decisions are your responsibility.
FIVE. Now we wait again for one of four things to happen
The bank will:-
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Ignore the claim completely, this is their best bet - they can claim incompetence as the reason for not attending court - you win by default after 14 days if they do not enter an acknowledgment of the claim.
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Pay the claim in full, including interest and court fees (if they offer to settle for anything less, then refuse – you will get the full amount).
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Acknowledge the claim - this buys them a further 14 days to enter a defence. Some banks will acknowledge the claim and then pay up. They know you MEAN it now! For every threat that gets this far, there are probably 10 that give up long before this point and they know it. Some will acknowledge the claim, but 'forget' to enter a defence - after 28 days from the date you started proceedings you will have won by default and you will get your money back. If you don't get your money back in this event, you have every right to send the bailiffs in - this can also be done from the moneyclaim.gov.uk site.
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Acknowledge the claim, and then on the 26-28th day, enter a defence (don't worry, they're the ones STILL trying to scare you off).
SIX. What if you still haven’t won?
If the result is anything other than the bank entering a defence, you’ve won, so pat yourself on the back.
However in the rare event it does enter a defence, just do nothing. The next thing that will happen is that you will receive a Court Allocation Questionnaire - fill this in (very simple and very quick) and return it to the court (you must do so within 7 days of receiving it). Pay any additional fees at this point. Send a photocopy of the questionnaire to the bank - it is debatable whether you need to do this or not, but it's better to be safe than sorry over the price of a stamp.
The court will now set a date (if the bank hasn't already given your money back by this point - and most will have done). Some (actually only one has ever got this far) might actually attempt to win in court - they may claim that the charges are for an extra service and therefore not a penalty, and thus legally enforceable. If this happens, come to the forum - we have this angle covered, it's slightly more complicated but worth it in the long run.
SEVEN: To ensure you won’t ever pay costs
For you to be 'safe' from paying the banks legal costs should it get this far and you lose (extremely unlikely that they would win - remember only one bank has ever taken this to court and there is a lot of evidence that has been gathered since proving these charges as punitive in nature now), don’t claim for more than £5000 - that way it would be heard in the Small Claim Track, where no-one is eligible for the legal costs of the other.
Also, it pays to open another account somewhere else in case they turn nasty and close your accounts and/or demand overdrafts be paid pack immediately - some have been known to do this on occasion - although most don't. If you have the choice, stay with the same bank - next time they charge you for going 8 pence over your limit, they know that your threat is real.
Above all, stand your ground - this money is legally yours. Good luck.