Reclaiming bank charges

[Dave Tudor]

As you may have heard by now, there is something of a consumer revolution taking place in banking at the moment, with thousands of customers believing that the fees imposed by banks for unauthorised overdrafts are both excessive and unlawful.

"Internet-based campaigners plan to use the annual bank profits reporting season, which takes place over the next fortnight, to trigger a massive round of complaints about unauthorised overdraft charges.

Martin Lewis, the founder of the campaigning internet site Moneysavingexpert.com, said: 'For years, all the high street banks have routinely ripped off millions of customers and now they are going to pay the penalty.'

Thousands of customers have already won compensation since an Office of Fair Trading ruling last April, which caused panic among leading banks. The OFT said penalty charges in the credit card industry were illegal and warned it would investigate almost identical fees levied by banks. The regulator is expected to announce its verdict within weeks."
(From The Independent, 20th February - full article here.)

Banks have routinely charged customers something in the region of 35 a time for going over their authorised overdraft limit. However, on more than occasion I know that I've been charged 100 for going overdrawn! Experts say that it should cost no more than 4 (at the very most) to produce an automated letter notifying a customer of an unauthorised overdraft, and that what the banks are doing - basically imposing excessive penalties to boost profits - is illegal. It's little wonder, then, that Barclays could announce a 7 billion annual profit last month, and, more recently, HSBC a record 11.9 billion profit if this is how they go about it!!

But customers are no longer standing for this, and are taking on the big high street banks in their thousands - and, in the majority of cases, winning.

"Banks and building societies are settling out of court or not contesting claims for the return of penalty fees - a policy which many suspect is an attempt to avoid a test case.

However, as a parting shot, Alliance & Leicester and the Nationwide building society have been closing the accounts of some people who have taken them to court. Their reason? The relationship between them and the customer has broken down completely. They have a point.

'There is a groundswell of anger out there about the subject of bank charges and customer service,' says Emma Bandey, personal finance campaigner at Which?. 'People feel charges are too high, unfair and breach regulations. They also feel taken for granted. In our surveys the big five High Street banks always come out bottom in terms of customer satisfaction.'

Against the backdrop of seething discontent, the Office of Fair Trading is investigating bank charges and may well decide - as they did with fees levied on people that miss their credit card repayments - that the currently level of charges is too high.

It may not be the storming of the Bastille or the Winter Palace but revolt is in the air."
(From BBC News, 6th March - full article here.)

So the path to reclaiming your money is not a smooth one, but there is a simple, tried method of going about it, laid out by Which? and, best of all, MoneySavingExpert.com, both of whom also provide the necessary template letters for contesting your case.

I have struggled with money for several years now, partly through my own fault, being rather cavalier with my cash, but partly because I have been penalised many, many times for being overdrawn. At the time, I took little notice of the charges, and simply allowed the bank to take the money from my account without protest. I did, however, once ask if they could defer a payment for a month or two because it would mean me going overdrawn again, and thus incurring another charge - naturally, they didn't want to know. Little did I know then that what they were doing was wrong.

But I have now decided to be more mindful with my finances and I too am joining the revolution! With the advice and encouragement of friends, and, using the step-by-step guides laid out in the above websites, I shall be attempting to reclaim the money I have paid out over the last six years, money which is rightfully mine. I shall keep you up-to-date of my progress, and, hopefully, if some of you are also contesting your bank charges, or if you have already done so and been successful, we can offer support and advice to each other.

[Ralph]

I've challenged every charge banks or credit card companies have ever made on me and they've backed down every time.

They prey on people who are sloppy with their money and often these are the people with the least cash to spare that are paying these overblown charges.

It is purely a means of generating further profits.

[Andrew Curnow]

We're actually in the middle of doing this at the moment Dave. I did at first feel irrationally guilty, since the charges were incurred from going overdrawn - but frankly the longer it's gone on, the more annoyed I feel. It seems clear that the banks really are doing something they shouldn't, but to compound it, they seem to take as long as humanly possible to do anything about it. We're now at the stage of having a solicitor involved - luckily it's my brother, so he's free (so far!) but if not, we would have to have found money for that.

The bank had a full list of the charges we were reclaiming (you can go back six years, and to my shock once I totalled it up it was four-figures) back in January. My brother got involved, after we got no response other than an acknowledgment that they were looking into it, a couple of weeks ago. His latest letter to them had a deadline for them to respond by 8th March, and when they didn't he today rang them. The answer he got (after spending ten minutes talking to Bangladesh before being put through to an English branch) was that his letter of 5th March, which he faxed, only reached them on 7th (must be a strange fax machine with a time-delay function) and had only been scanned in (whatever that means) today. He also asked to speak to the person who sent the acknowledgement letter, only to be told that that person wasn't actually handling the matter, it was just "a generic signature".

We're at the stage now where the next step is court, in which case it could be dragging on for another 3 or 4 weeks at least. What's really getting my goat now is that the bank account is over its limit, because of charges put through this year so far, which means that they are stopping direct debits, and charging us for the privilege. At the moment we're putting part of my wages into our Portman account, so that we can actually buy food, etc, each week; in real terms our bank balance is the same as it was six weeks ago, since I've been putting money in that equates to the various payments going out of it - but because of the charges, it's perpetually overdrawn.

In a nutshell, definitely go for it, Dave, but be prepared for a struggle, and a bit of a waiting game. And to get very wound up indeed while it's on-going.

[Dave Tudor]

Yikes! Sounds like a struggle indeed. Sorry to hear it's dragged on, Andrew, but I hope you get the outcome you deserve. Can I just ask you which bank you're dealing with?

Have you considered using the Financial Ombudsman Service? According to the Independent article I linked to earlier, "[it] offers an independent complaints service that has so far ruled in favour of every customer challenging overdraft charges. This process may take longer than the small claims court, but is completely free of charge."

It might be worth looking into if things keep dragging on.

[Captain Tancredi]

If the FOS works the same way as it did when I was in insurance, you need to have gone through the bank's normal complaints procedure first before they'll take up your case. The threat never does any harm, though.

From the point of view of somebody who works in one of the support departments of a bank, I have an idea of what's probably happening. All the stuff about scanning means is simply that they work on a paperless office system where incoming post is scanned into the application which processing staff then use to handle the correspondence; the original letters then get batched up and archived so they're out of the way. It's normal practice for one day's post to be scanned the following day and worked the next. Probably also worth bearing in mind that banks nowadays seem to be using a business model which regards anything which doesn't generate revenue as a cost to be pared down to the bare minimum, so the back office will simply not be geared up to deal with the inundation of claims which the banks are now receiving- and any payment is going to have to be checked very carefully before it's authorised. If Andrew's bank is anything like the one I work for, a four-figure refund is going to have to be authorised at a fairly high level.

It's a shame I'm not in work next week, otherwise I could have had a look at our complaints manual and see whether there are other ways of making more effective complaints. If all else fails, recorded delivery to head office will always get priority (and if you can find out who the chief exec is and address it to them personally, even better because it'll be forwarded on from their office).

[Andrew Curnow]

Yes, we looked into the Ombudsman route - as Ian says, it's essentially there as a 'next port of call' if the bank is no help. There's a website (of course) but I think the gist was that you can call on the Ombudsman if either you get no joy from the bank, or if they don't reply at all within 8 weeks. It is an option though, as an alternative to court (and you can't call in the Ombudsman if you've already gone down the legal route I believe).

I think it's going to be more of the waiting game, but at the moment I'm torn between thinking HSBC is being deliberately time-wasting, or between thinking they're just rather slapdash. Certainly, two days to scan in a letter seems a long time to me, whether it's cock-up or conspiracy.

Anyway, that's quite enough moaning from me. But in all seriousness, I would urge anybody who's suffered charges in the past, to contact their banks and get the ball rolling. There's a page here which is probably a good start!

[Dave Tudor]

at the moment I'm torn between thinking HSBC is being deliberately time-wasting, or between thinking they're just rather slapdash.

Aargh! HSBC is who I'm dealing with, too, so it looks like I really could be in for a struggle!

And thanks for that, Ian - any further tips you could give us would be most appreciated.

[Matthew T]

I've done this and got just over a grand back from the Halifax!

I had to actually issue proceedings in the small claims court before they backed down and paid up though!

[Dirk Gently]

I saw a TV programme on this subject & the banks will usually pay up if it gets to court because they don't want the publicity unless they are certain of a result in their favour. I believe a certain proportion of the settlement comes from their advertising budget.

[Matthew T]

I don't think any case has ever actually been heard in court...not when the bank has actually turned up to defend it anyway.

The reason being that they CAN'T defend it, they know they're in the wrong. They just hope that people will be frightened off by having to go to court.

They did a report on Watchdog about this recently. One guys bank let it get to court, but didn't turn up, meaning he got judgement in default. They still didn't pay up, so the guy went back to court, got a warrant of execution, and sent bailiffs into his local branch to seize property to the value of what he was owed!

I think the branch manager saw the error of his companies ways then, and paid up before they took all the PCs!

I couldn't help but smile while I watched that story, and typing it out now just makes me feel good inside.

[Dave Tudor]

I've done this and got just over a grand back from the Halifax!

Excellent! Good for you, Matt!

Yes, I believe every case which has got to the court stage has ended with the claimant victorious - and rightly so. It's good to hear that banks are not getting away with this, and it is indeed heartening to think that even they are not immune from the bailiffs!

However, there is a story in today's Independent (which seems to be the newspaper spearheading the customer revolt) saying that banks are to introduce sneaky 'stealth' charges, such as switching customers to accounts with annual fees, or levying charges on credit cards which are not used frequently (particularly disgraceful considering that credit cards are responsible for most of the debt people get themselves into), simply to recoup the millions that they have lost in paying back charges (full story here.). I find it hard to stomach that they still want to reclaim a few million, considering that they have made billions of pounds in the last year.

Anyway, I have taken my first steps in my attempt to reclaim my own money - I've written a letter to my bannk asking for a list of all charges in the last six years, and I've also enquired about opening a 'parachute' account, which is recommended just in case my own bank decides to close my account (which has been known to happen). Alliance & Leicester's Premier Direct Current Account, which is largely an internet-based account, has been highly recommended as about the best on the market, and so I phoned up today with a few queries (spoke to a very nice young lady from Liverpool ), and she went through the application with me. I think I might even switch over completely,as I haven't really been that happy with HSBC for some time now.

I'm on a mission now, and I can't wait to make the next move!

[Dave Tudor]

I thought I'd give you an update on my progress: in short, there hasn't been much progress!

Well, actually, that's not really true. After writing to my bank for a list of charges (and discovering that I should have actually written to the head office in London - doh!), I got the bit between my teeth, and decided not to be so lazy, and look up all the charges myself. I've still got all my bank statements from the last six or seven years, and, handily, there is a summary of charges for each month, meaning that I didn't actually have to look through every individual statement.

Adding up those charges, it seems that the bank has taken nearly 1100 off me since March 2001! I calculated the interest I would have earned on each charge using a handy tool on the MoneySavingExpert site, and added this on top, meaning that I have put in a cliam for just over 1300.

I sent a letter requesting that they repay those chargess to my branch on 9th March, giving them 14 days to reply. I've not heard anything yet, but they have still got until the end of the week to get in touch. If I haven't heard anything by then, I'll have to take the next step - threaten them with court proceedings...

[Andrew Curnow]

We're set to start legal proceedings through the courts on Monday - the last letter from our solicitor (also my brother!) was sent to the bank on 5th March. When he spoke to them this past week (14th) they said a letter had been sent out on 12th... However, when he chased them up yesterday it seems that although a letter may have been written on 12th it hadn't been posted yet as there was a backlog!!! Not sure whether that's deliberately spinning it out, or just very amateur, but whether conspiracy or cock-up, there's a limit to how long they can drag it out. It's been two months+ now and it's clearly not going anywhere until it heads for court.

[Stephen Morgan]

Viv's been pursuing the matter of charges with our bank, HSBC, and she's asked for statements for the last six years. Bearing in mind we have two accounts with them, this morning the first 39 of goodness knows how many more letters, dropped through our letter box. No wonder bank charges are so high, they need to pay their postal bills.

[Matthew T]

My bank agreed to settle about a month ago now, but I still haven't got anything! I'm going to have to send them a threatening letter tomorrow.

[Andrew Curnow]

The letter HSBC said they'd written on 12th March still hasn't arrived. Not sure whether that means they're incredibly incompetent, deliberately sneaky, or just plain liars, but it really really annoys me. It doesn't matter now, my brother's raised the court claim particulars now (it's just under 3000 now, plus interest!) but it still rankles with me that they can drag their heels so much. Quite separate from this claiming business, I'm definitely going to contact the Financial Ombudsman and my MP and whoever else I can think of, raising the issue and complaining about the behaviour of banks. Crikey, if we hadn't paid our mortgage since January we'd probably have been out on the streets by now, I'm pretty sure the bank wouldn't have waited a fortnight or more for us to contact them!

And, breath in through the nose, and hold, and out through the mouth...

[Stephen Morgan]

...HSBC... incredibly incompetent...

Certainly that, after Viv asked them if our statements would come in one large parcel and not as 39 seperate letters.

[Pip Madeley]

I bet the postman was cheesed off!

[Matthew T]

I had an extraordinary amount of letters between myself and the bank go missing. Very suspicious! I send everything recorded delivery now.

[Matthew T]

Got my cheque this morning. That's well over a grand I've had back off them now!

[Matthew T]

And it begins again. I've been charged 105 by my new bank for going very slightly over my overdraft for 2 days!

[Rob McCow]

How can they still be charging for this stuff? Surely everyone will just reclaim the charges now?

[Matthew T]

Presumably they're thinking along the lines that a lot of people can't be arsed with the effort of claiming them back. It can be a lot of work!

I don't have much choice though, I can't afford to lose over 100 for nothing!

[Steven Ford]

Lol - it's funny to see this thread - I'm in the middle of doing this to Nationwide (for the huge sum of 20). It's amazing the tripe they send back - the first letter they told me it was against the law for me to do this. When I wrote back and told them that that wasn't really the case, they said it would be "unfair to other customers" to give me my money back...

Well, we'll see - there's a very English way of writing angry letters, I think.

[Dave Tudor]

Time to bring you up to date with my own claim. After my initial letter, giving the bank 14 days to respond to my claim, I got a reply on the fourteenth day saying that they would get back to me when they had completed their investigations! Great.

So, I wrote back, saying that I would give them another two weeks to respond, or I would take the matter further with court proceedings (quite generous, I feel, extending the time allowing them to do something about my claim). In the meantime, I received a big pile of old statements in the post (Oh joy! Although at least they sent my 10 cheque back), but then last week, I got a letter from head office, basically refusing my request, stating that "the bank does not agree that our charges are in any way unfair or unenforceable." There's a surprise.

Tomorrow, the two weeks I gave the bank to respond when I wrote to my own branch is up, and so in the morning I'll go about making my claim through the courts. It's a daunting prospect, but I shall be doing it online, and as far as I can see, help is given, not only on MoneySavingExpert.com, but also on the court's own website.