Bank Charges - Don't let them rip you off.

The following from the FT.

The number of complaints about penalty charges imposed by banks has jumped dramatically in the past month.

**A bank staffed by Mark Benton wannabe's but without the inteligence, the humour or even the looks of that comedian.

The Financial Ombudsman, which resolves disputes between customers and companies, has seen complaints rise from 350 cases in February to 1,200 this month, with about 2,000 inquiries a day. - I am surprised that it is that low.

It says the increase is being driven by customers who have tried to reclaim penalty charges from their banks and are dissatisfied with either the settlement offered or the banks' response. - Which in most cases consists of a politely worded excercise in pr and telling the customer to go take a flying fuck.

The number of customers trying to reclaim bank charges is set to accelerate after the Office of Fair Trading postponed a crucial ruling this week on whether the level of charges should be reduced.

The regulator said on Thursday it needed to do more work on bank charges and would now conduct a full study into all retail bank pricing. It will also carry out a formal probe into the fairness of current account charges.

Banks had feared that the OFT might order them to reduce their charges on bounced cheques and unauthorised overdrafts, which can be as much as £30 a day.

The OFT will not report back on its findings until the end of the year, leaving -further uncertainty about whether the charges can be legally regarded as "fair". Banks have argued they are in fact fees for a service offered to customers, rather than penalty charges. - In much the same way that you could argue that a kick in the testicles can help detect cancer. Indeed this link shows how they confuse their "valued customers" over charges on credit cards: this is money - dti report on credit cards

Consumer groups are urging customers to continue reclaiming bank charges.

Emma Bandey, personal finance campaigner at Which?, said the OFT announcement had left -people in the dark about bank charges.

"Before the end of the year, consumers could be charged up to £3.5bn by their banks in unauthorised overdraft charges. We would say don't be put off claiming back your charges while the OFT is looking into this - claim them back," she said. - After all Barclays help support Bob Mugabe in Zimbabwe so anything Barclays customers can do to hit them is all well and good.

Many banks have been paying out on customer claims ahead of the OFT's ruling on whether the charges are unfair

Ms Bandey said that consumers who tried to reclaim charges from their bank had to get a reply within eight weeks of their letter being received, under guidelines laid down by the Financial Services Authority.

If the bank had not responded in that period or had given an unsatisfactory response, consumers could contact the Financial Ombudsman.

An OFT ruling that bank charges were unfair and must be reduced would spur more consumers to reclaim charges, which some banks estimate could total £10bn over the past six years.

The watchdog has so far only said that, while it shares public concern about the level of bank charges, it recognises the application of general principles is "not straightforward" and it needs to do more work.

It will set out the scope of its inquiry into retail bank pricing next month; this could include areas such as the amount of interest paid to current account customers, which can be as low as 0.1 per cent.

The facts behind the figures
What has happened?
The OFT triggered a wide-ranging debate on bank charges last April when it ruled penalties charged on credit cards were "unfair" to customers and should be no higher than £12.

It suggested the same principles could be applied to penalty charges on current accounts.
Last year it instigated a review in conjunction with the British Bankers Association to investigate this further. This week it decided the issue was complex and it needed to do more work rather than make a ruling.

Why are the banks so alarmed?
Because any reduction in charges could reduce their profits. Banks make an estimated £1.4bn to £3bn of profits from overdraft charges each year, far outstripping income from credit card fees.
Will this end free banking in the UK?

Banks have privately warned that if the OFT dramatically changes their charging model on current accounts, they might have to recoup lost income by scrapping free banking to customers who stay in credit. - Here we see the "moral high ground" that sleazy companies like Barclays etc use, the threat to end free bank accounts for customers if they don't get what they want.

Why has all this led to a rise in consumers reclaiming past charges?
The fact that the OFT is questioning bank charges has led consumer groups to urge customers to reclaim them. Indeed, many banks have been paying out such claims until the Office of Fair Trading makes its ruling.

**Now for some advise from yours host, first off chargeing customers £30 or more - for going over drawn is wrong plain and simple, lets look at how this happens. If you have an overdraft and one withdrawl or payment slips you over that limit, a computer generates a letter and sends that out chargeing you a referal fee. Hardly costing the bank thirty plus pounds in costs to send out an auto generated letter advising that you are overdrawn.

The banks argue thats all in the T&C, but £30+ for a computer generated letter, no wonder people are angry about it. If the amount they charged was a more realistic amount of say 5-10 pounds then fair enough I say. In fact a recent report by BBC2's The Money Programme, got a group of former senior bank staff together and they estimated the real cost, even being generous to be only somewhere between £2.50 and £4.50.

Reasons why the banks wont defend their position: Banks don’t want a precedent. If the High Court ruled bank charges are unlawful, the floodgates will open to millions. Possibly there’d even be a simple ‘reclaim process’ established. The risk of this happening therefore means even though the total banks’ settlement is currently in the millions, it’s better than billions.

They don’t want to reveal their costs. Banks are massive international companies for whom UK personal banking is just one element of the business. For a court to fully decide on whether the cost is proportionate, it’d need to order the banks to reveal their full internal cost structures. This could put a bank at a major competitive disadvantage, hence the reluctance to do it.

So what to do? First off write and let them known that you are not happy, oh and you can request all your statements from the bank for the last six years. They will most likely charge you a small amount for that, then tally up all the charges yourself and download a template off of the internet and print it off and post a request back to your bank requesting they settle up.

Now they may argue, whine and gripe but stick to your guns and lo and behold they will pay you the monies back. So far as far as I tell the treat of taking them to court has resulting in the banks not defending a single charge. Thats right not one - if anyone knows any different then please let me know.

To help use this: Sample Letter Template(Right click this and save the file) or to view copies of the Daily Mail letter templates you can edit to include your own details and print off, click HERE (opens new window). The Daily Mail has been running a rather good campaign about this.

only has a maximum 40 days to respond. If you don’t get a reply, follow up with a phone call and then report it to the Information Commissioner for a breach.

More links and tags etc later: However this does work, your not so humble host got 900 quid back of the thieving bastards at Barclays Bank Plc, hurrah for me.

**Just in - Halifax customers call in bailiffs:http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=446766&in_page_id=1770

Tags: Bank Charges, Banking, Information Commissioner, Charges, The Financial Ombudsman

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