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.

Lloyds TSB charges customers who go into the red with a massive £165 charge, according to research from Moneynet.co.uk.

This month, the OFT announced that banks are making £8.3billion a year from unfair bank charges, but Moneynet.co.uk’s Andrew Hagger says that is only telling half the story.

“The OFT’s research does not really tell us anything we didn’t know already in that it is those that fall foul of the providers’ complex and punitive charging structures that end up providing free banking for the masses,” he said.

Following research into the money that banks actually make from each charge, Mr Hagger says, “It’s not surprising that lenders make 81% of their income from such charges”.

Using the example of an unauthorised overdraft of £50 for two weeks, Moneynet.co.uk found that Lloyds TSB customers would be faced with the highest bank charges -£165.36. Alliance and Leicester customers would get £95 in fees and those who bank with Halifax would get bank charges of £63.55. The study revealed that HSBC has the lowest charges of the high street banks with the same breach costing £25.10.

Mr Hagger says that there should be a “clear, simple and widely publicised tariff” which would enable consumers to manage their money properly without “being hammered hard for minor indiscretions.”

“The consumer has a part to play too of course. It is essential that you keep close tabs on your balance and this option is available via many channels ie, in branch, via telephone, from the ATM network or online,” he said.

“If and when the decision is made to cap the current unauthorised overdraft fees and unpaid charges it is inevitable that we will move towards paying monthly or annual fees for our personal banking.

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