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It appears that reclaiming bank charges is the flavour of the month. Bank charges are a great way for the banks and credit card companies to add to their massive profits. The size of the problem is huge, it has been estimated that the financial institutions generate £4.5 billion a year from illegally applying bank charge penalties. Nice!
Banks and credit card companies, in the past, have charged their account holders punitive charges every time they make an unauthorised withdrawal, make a late payment, defaulting, handling a bounced cheque, failure of a standing order, or direct debit. These illegal penalty payments have affected 1 in 5 customers so it may be worth you while reading on.
Until recently, though, we all accepted these exorbitant charges to our account as part of the contractual terms of the account. However, these charges and the terms which apply to them have been seen as unfair in the eyes of the court and therefore unenforceable. Basically the banks can only recover the costs involved in the extra administration involved in the breach. The OFT have said that £12 is a reasonable amount for the banks to charge but, many financial commentators have said that even this is too large a fee to charge for what is in essence a computer generated letter. It has been estimated that with economies of scale the financial institutions should be only charging a maximum of £2 or even less for such letters.
Believe it or not it's relatively easy to do.
1. Write to your bank/credit card company requesting a comprehensive list of all your charges you have incurred, detailing the amount, the reason, and when they were made. Make it clear to the bank you are utilising your rights under the Data Protection Act and that you expect a response within 40 days.
2. Once you have received your response from the bank call them and make the point that they did not have your permission to remove the penalty payments from your account. If this does not spark them into action then write to them. Make it clear in your letter that you are demanding a full refund of bank charges and also for the removal of any default notices lodged against your credit files. A correction will not suffice. It's also worth making the point that you will pursue the matter in appropriate court to recover the charges, costs and any lost interest payments.
3. Don't worry about going to court, banks do not want to expose their charging structure to their competitors let alone the outside world, which they would have to do in order for them to win a case. Even if they do want to go to court then your costs will be limited in Scotland if the claim is up to £750 (shocking!) or in England and Wales £5000 (more like it). Above these levels the expertise of a lawyer is required. Many will do this on a no win no fee basis but do your own research on this before instructing. In any case you will have your day in court.