I recently saw an adition of The Money Program on sunday night about how the legality of some banking charges are being called into question.
The program centered around a guy called Stephen Hone, a law student who challenged his bank in the small claims court for the repayment of the past six years banking charges. Stephen argued that under the Unfair Terms in Consumer Contracts Regulations (1999) all penalty charges have to truly reflect the cost of administering them. They are not permitted to be a profit-making enterprise for any business. He believes if a penalty charge is higher than its administrative cost, it is illegal, and yes you've quessed it he won.
This certainly got me going and following the advice given on the BBC website i decided to approach my bank. I first phoned my bank (RBS) and as expected wasn't given much credence to my arguement. So i took it to the next step and trawled through my last six years bank statements and calcuated all the charges, just over £1000, i photocopied all statements containing charges along with a letter stating the argument (Letter template downloaded from BBC site) and requesting a full refund within 14 days or i'll proceed with court action.
Well on the 14th day recieved a letter saying they are looking into the matter and to bare with them, gave them another 2 weeks and was due to start the ball rolling with court action this weekend when low and behold an offer of the full amount this morning. Result!!
Naturally the bank states that it disagrees with my complaint but as a good will gesture they will pay me back...funny how not one bank that has been challenged on this has had the balls to fight their case in the courts.
Now i know some of you are probably thinking well if you run your account well you wont get charged which is true but from time to time people do experience some financial strain. i'll give you an example of what recently happened to me, my partner recently lost her job and obviously the financial burden was all on my account for awhile. On a certain day last month i had a loan payment due to come out so knowing i didn't have the total funds in my account i paid some cash in to cover it. Now my bank is usually pretty good and if everything tallies by the end of the day then everything is fine. Well the Direct Debit came out 2 hours before the cash was paid in and i was charged £38 this then put me over my overdraft and i was charged again £38 this then put me well over my overdraft limit and as a result 2 further small direct debits failed incuring a further two charges of £38. Now if i wasn't charged initially everything would of gone through as expected. It wasn't until i checked my account a week or so later that i realised what had happened. That was the last straw for me and why i threatened court action.
Anyway thats enough of me now if your still awake here are the links for you to look into this yourselves
BBC
BBC NEWS | Business | Are penalty charges bank robbery?
Stephen Hone's Website
PENALTY CHARGES :: FIGHTING YOUR CORNER - FOR FREE
Martin lewis's Website
Bank charges: Reclaim them, they're unlawful, so you can get six years money back | MoneySavingExpert: Consumer Revenge, Credit Cards, Shopping, Bank Charges, Cheap Flights and more,
Consumer Action Group - Welcome
Regards
Stuart