The chance to claw some money back from your bank took another step forward last week. The banks lost another battle in their war against reimbursing bank charges when the Court of Appeal ruledthat fees for unauthorised overdrafts and bounced cheques are subject to regulation by the Office of Fair Trading (OFT) under 'unfair contract' rules. This clears the way for the OFT to rule on whether these charges are fair or not, and whether banks should be forced to reimburse customers who have been charged unfairly.
The Court of Appeal then dealt another blow to the banks by refusing to grant them permission to appeal to the House of Lords. Unfortunately, the banks may circumvent this by appealing directly to the law lords for permission to bring a final appeal, says The Times.
But in the meantime it is worth getting a bank charge rebate claim in now, so that you are already in the queue when a decision on bank charges is finally reached. Especially as the OFT is expected to find in your favour. "The smiles on the OFT's faces in court show it is highly likely it will find that charges are unfair", says Martin Lewis on MoneySavingExpert.com.
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Bank charges: how to place a claim
You can put in a rebate claim for any charges related to unauthorised overdrafts or bounced cheques taken from your account in the past six years. Even if you have closed the account, you can still claim.
First, dig out your bank statements. If you don't have copies of your statements going back very far, don't worry - there are a number of ways you can get hold of them.
If you use internet banking, check online to see how far back the electronic records go. For statements you can't get hold of online, or if you don't use internet banking, call your bank and ask them to send you copies. Some banks will send you the information as soon as you ask, but if they won't, try quoting the law at them. Under the Data Protection Act you are entitled to copies of your statements. So send them a letter pointing that out. Unfortunately, they are allowed to charge you up to £10 for providing this information, but with the average unauthorised overdraft charge at around £35 its worth paying the £10 to claim the rest back.
Your bank now has 40 days to respond. If you don't hear from them, try calling them. If that fails, report the lack of response to the Information Commissioner. Tell your bank that's what you plan to do, as it may be enough in itself to stir them into action. Although the Financial Services Authority has frozen any pending bank charges cases while the OFT carries on its investigation, this doesn't affect requests for bank statements.
Once you have your bank statements, go through them and highlight any penalty charges that have been made. Total them up and then write to your bank telling them you think the charges were disproportionate, asking for the money back. Get a letter template from MoneySavingExpert.com. Include photocopies of the statements and send the letter by recorded delivery so that you have proof of when the bank received your letter. Once again, the FSA freeze on pending cases doesn't affect this stage of the process and your bank is still obliged to acknowledge any new complaints within five days.
Once you've done all this, you are officially in the queue to get back any charges if the OFT eventually decrees that the charges were indeed unfair. However, you can avoid the wait if you are classed as being in financial hardship.
Bank charges: know your rights if money is tight
That's because the FSA waiver, which has currently put a hold on all complaints regarding unauthorised overdraft and bounced-cheque charges, does not extendto cases when the complainant is in financial hardship. This is defined as anyone whose "income is insufficient to cover reasonable living expenses and meet financial commitments as they become due", according to the FSA's official waiver guidelines. In English, this means anyone whose income isn't enough to pay vital bills such as rent, utilities bills or debts such as mortgage payments or credit card bills.
If that is the case for you, then tell the bank immediately. They will assess whether you fit the financial hardship guidelines. If you do, then the waiver no longer applies to you and your bank will have to consider your claim and respond to it within 40 days. But they can still say that the charges were lawful and not pay out. However, this is increasingly unlikely in the current climate, says Martin Lewis.
If you have already submitted a claim but your situation changes for example, you lose your job or are forced to take a pay cut then contact the bank and tell them you want your claim to be considered as a financial hardship case.
Bank charges: everyone else should sit tight
If you are not a financial hardship case, once you have sent in your letter plus evidence and received confirmation that the bank has received it, there is nothing more you can do. The OFT's final ruling could be a while coming yet. If the banks stop the appeals process, the judgment could come within six months. However, if the banks carry it on, the whole thing will take quite a bit longer. Even when a final judgment is made the banks may still drag their feet about paying back the money. However, at least your claim will already be in, and so yours won't be pushed below the deluge of claims that will be received should the OFT rule against the banks.
This article is taken from our weekly MoneyWeek Saver email. Sign up to MoneyWeek Saver here
Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping among many other titles both online and offline.
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