Reclaim Unfair Illegal Bank Charges

In 2005 UK banks made approximately £5bn profit from the penalty charges associated with consumers going overdrawn, having returned cheques, unpaid direct debits and standing orders.

Customers have accepted these charges because the banks will tell you it is the terms and conditions of the account. What the banks will not tell you however is that it is against English or Scottish law to charge a penalty fee which exceeds the cost incurred.

After successfully claiming back over £1000 in bank fees I decided to set up this website to help other people in similar circumstances who have, for whatever reason, been charged some of these unlawful, unethical, unfair charges.

A student from Cheltenham says she has been charged more than £800 for going just 8p overdrawn. Laura Gibson, 20, claims that she is now being threatened with legal action by her bank, Lloyds TSB, over the fine.

Ms Gibson claims the whole debacle started in September 2007 when, after buying a purchase for £60, she went 8p overdrawn in her account and was immediately charged £65.

She didn’t clear the overdraft, so she was charged again in October -£60, and then in December, £60. In January she was charged a further £78 and by May, Lloyds TSB’s bank charges had gone up to £20 a day.

Ms Gibson, who is due to start studying for her A levels in September told The Times newspaper that she is close to a nervous breakdown following the stress of the issue.

“This whole episode has been an absolute nightmare,” she said, “I’ve now paid more than £300 in charges but still they want more. I’ve stopped using the account and the way I’ve been treated is disgraceful.”

She claims that Lloyds TSB has been “harassing” her by phone and mail to get her to pay up.

“I feel that it is morally irresponsible that the bank can charge people such ridiculous amounts of money especially when some of the charges amount to more than my income each week,” she said.

But Lloyds TSB say that the charges Ms Gibson has received are not just for 8p.

“The charges that Ms Gibson has incurred are not for a one-off unplanned overdraft position of eight pence, they relate to an unplanned overdraft of varying amounts dating back to September 2007,” said a spokesman.

“In situations where there are extenuating circumstances, such as illness, that may affect a customer’s ability to manage their finances, we can consider waiving part or all of the charges that they have incurred. We will be contacting Ms Gibson again to discuss her personal circumstances.”

Find out how to reclaim unfair bank charges

Banks have effectively been given a £1.3billion bonus following a decision by the Financial Services Authority (FSA) to put the handling of unfair bank charges complaints and refunds on hold for a further six months.

The FSA originally put a waiver in place last July following an announcement from the Office of Fair Trading (OFT) and eight major banks that they would seek a high court ruling on whether the charges were fair.

The OFT won an initial judgment when the High Court judges that charges do come under its jurisdiction, but the banks appealed.

The appeal has drawn out the case further, and now, in light of the absence of a full legal ruling on the matter, the FSA has decided to allow the banks a further six months from the original waiver, which was until July 26.

The extension means that banks can ignore complaints until at least January 26 next year and continue imposing charges on their customers.

Last week, the OFT said that banks are making £2.6billion a year from bank charges; the extension to the waiver means they could potentially rake in a further £1.3billion from now until January.

Kevin Mountford, head of current accounts at moneysupermarket.com, was unimpressed by the further delays the new waiver will bring and says with such indecision, it no wonder UK consumers have lost faith in the banking system.

“We are seeing delays on overdraft fees, delays on the Financial Services Compensation Scheme and, all the while, nothing being done,” he said.

“There is an unhealthy addiction to committees and consultations at the moment – all at great expense – and the consumer loses with every piece of procrastination.

“Simply making a decision will improve people’s confidence in the sector rather than persisting with these seemingly perpetual delays,” he concluded.

But the FSA argues that the waiver is necessary in assisting the courts so that a legal ruling can be made on the issue.
Dan Waters, Director of retail policy at the FSA, said: “The FSA continues to work closely with the OFT and banks in reaching a resolution on the fairness of unauthorised overdraft charges.

“Our objectives continue to be certainty over this complex issue, and a fair and consistent resolution of consumer complaints about unauthorized overdraft charges.

“The FSA has reviewed the prevailing circumstances and has decided to offer firms a new waiver. The waiver will be for six months, when we expect to have a decision from the Court of Appeal.”

And Louise Hanson from consumer group Which? says although the waiver initially sounds like a further blow to the consumer fight, it is in fact a ‘necessary evil’ and that getting rid of it would not actually help unfair bank charges victims.

“Scrapping it won’t get people their money back,” she said, “only the banks can do that by conceding defeat and paying up instead of continuing to string out the process.

“In fact, lifting the waiver would actually see consumers losing more money. The clock would start ticking again on people’s claims even though they’ve no prospect of getting their money back until this whole issue is sorted out.”