YES, YOU CAN RECLAIM BANK CHARGES

 HERE’S HOW!

Something like one in five of us incurs penalty charges on our bank account at some time or another. You go a few pence over your limit and not only do the banks then block your standing order or return your cheque, they charge you £25 and upwards for doing so.

Everyone thinks this is outrageous, but hardly anyone is aware that it is actually illegal as well. Yes, that’s right – it’s against the law! In English and Scottish law, penalty clauses for breach of contract cannot exceed the actual cost of that breach to either party. And we all know it doesn’t cost a bank £25 to return a cheque.

This comes under the 1977 Unfair Terms (Contracts) Act and it’s the sheer fact that ALL banks levy these charges that makes it a contravention. It’s also a breach of the 1999 Consumer Credit Act (Unfair Terms in Consumer Contracts) and possibly the Sale of Goods Act, and many others. The banks rely on our ignorance of the law simply in order to make money and they make a lot! It’s estimated that the top four high street banks have raked in something like £3 billion from these charges.

Given that this is the case, people are legally entitled to reclaim these charges from their bank. And people are doing it. It’s a growing movement. Some just ask, some send threatening letters, some start legal action. And virtually everyone succeeds in getting their money back before the process reaches court. It works because the banks do NOT want to go to court, it’s the last thing they’re looking to do. First, because they’d lose -- if they were legally entitled to the money they’d defend these actions, not least to forestall any kind of snowball effect – secondly, to avoid damaging publicity, and lastly because the cost of defending a claim will always outweigh that of just paying up.

So – if you want to reclaim these illegal charges from your bank, what do you do? Here’s a step-by-step guide.

(1)     Send a Letter.

Here’s a standard form.

[your address]

[their address]

Request for repayment of charges

Dear Sir/Madam,

ACCOUNT NUMBER: xxxxxxxxx

My request

I am writing to ask you to refund to me the charges which you have levied from my account over the last XXXX years.
I have now come to understand that the regime of “fees” which you have been applying to my account in relation to direct debit refusals, exceeding overdraft limits and so forth are unlawful at Common Law, Statute and recent Consumer regulations.

Your responsibilites

It is an implied term of the contract which you agreed to when I opened my account that you would conduct yourselves in a manner which complies with UK law and I am frankly shocked that you have operated my account in this way.

    
What I require

I calculate that you have taken £XXXXX plus £XXX which you have charged me in overdraft interest for the sum which you have taken. Total £XXXXX

 
My targets to resolve this matter

I hope that you will enter into a sincere dialogue with me about this matter and I am writing to you on the assumption that you will prefer to do this rather than merely respond with a form letter.
I will give you 14 days to reply to me accepting unconditionally my request in principle and letting me know a date by which I will receive payment.
If you do not respond within this time, I shall send you a letter giving you a further 14 days in which to reflect before taking further action. I believe that these targets are more than sufficient for a large and well-staffed company such as yours.
After that will be no further communication from me and I shall issue a claim at the expiry of this second deadline.

Yours faithfully

Notes

(a)   If necessary, include the following under ‘What I require’:

You have also entered a default notice against my credit record. This default occurred merely in respect of unlawful charges levied by you. In addition, therefore, to full payment of the sum mentioned above I require that you remove the default entry from the register. Mere correction or amendment to the entry will not be acceptable.

(b)   The statue of limitations means that you can only claim for the last six years

(c)    If you don’t know all the charges you’ve paid in the last six years, then send the following letter initially:

Data Protection Act disclosure request

Dear Sir/Madam

ACCOUNT NUMBER: xxxxxxxxx

Please supply me with a complete list of transactions and charges relating to my bank account since ... Alternatively a complete set of bank statements for that period will be acceptable.

Additionally where there has been any event in my account history over this period which has required manual intervention by any member of your staff or any other person, I require disclosure of any indication or notes which have either caused or resulted in that manual intervention. If you are unable to supply data relating to manual intervention because there has been no such intervention then please be kind as to confirm this in your response to this request.

You have 40 days in which to comply

Yours faithfully

Under the Data Protection Act they have 40 days to provide the information. Don't worry about the wait - you can legally claim 8% APR on each charge for the full period, so the longer it takes them the more money you will get back. If they still refuse to give you the information within 40 days, report them to the Information Commissioner (http://www.ico.gov.uk/eventual.aspx) for a breach of the DPA.

(d)   Don’t claim for more than £5000. In the exceptionally unlikely event that things ever get to the point of a court case, this means that it would be heard in the Small Claim Track, so that in the even more unlikely event of you losing, you wouldn’t be liable for the bank’s legal costs.

(2)     Enter the details in a spreadsheet.

Download a sample Spreadsheet here.

This will allow you to calculate the interest at 8% APR as allowed by the County Courts Act (1984).

(3)     Wait.

One of four things will happen.

(a)     You will get a refund. (Some banks will do this.)

(b)     You will be offered a partial refund. Refuse it - the money is legally yours. You will receive a letter offering a full refund next.

(c)     You will get a standard letter saying 'sorry you're not happy, we'll get back to you.’ They won’t.

(d)     They will deny that the charges are unlawful (about 50% do this).

(4) What to do if you don’t get a refund.

Go to the Moneyclaim website (www.moneyclaim.gov.uk) and fill in the form. Moneyclaim is the internet-based court system which allows you to easily claim back money you’re owed. There are fees, (ranging from £30 - £120 depending on how much you are claiming), but you’ll get them back from the bank when they refund your money, and if you’re receiving benefits of any kind, you may be exempt.  If you don't have a credit or debit card then go to your nearest county court and pick up an N1 form - it's exactly the same as their website, but on paper, and you can pay in cash when you return the form. (Online is cheaper, though.)

(5) Now wait again.

Again, one of four things will happen.

The bank will:

(a) Pay the claim in full, including interest and court fees. If they offer to settle for anything less, refuse – they will pay the full amount in the end.

(b) Ignore the claim completely. This is their best bet - they can claim incompetence as the reason for not attending court. But if they don’t enter an acknowledgment of the claim you win by default after 14 days.

(c) Acknowledge the claim - this buys them a further 14 days to enter a defence. Some banks acknowledge the claim and then pay up. They know you mean it by now! They normally rely on the fact that for every claim that gets this far, there are probably 10 that give up. Some acknowledge the claim, and then 'forget' to enter a defence. In that case, you will win by default 28 days from the date you started proceedings and get your money back. If you don't, you have every right to send the bailiffs in!  (This can also be done from the moneyclaim site.)

4) Acknowledge the claim, and then on the 26-28th day, enter a defence. (Don't worry, they're still trying to scare you off).

If the result is anything other than the bank entering a defence, you’ve won.

(6)  If you still haven’t won.

It’s incredibly rare for events to reach this point – only one case has ever been taken all the way to court -- but here’s what you do if it happens.

To start with – nothing. Wait again. If the bank’s going ahead, you’ll receive a Court Allocation Questionnaire. Fill this in (it’s very short and easy) and return it to the court within 7 days. Pay any additional fees – you’ll get them back. And send a photocopy of the questionnaire to the bank – this may not be necessary, but better safe than sorry.

If the bank hasn't already given your money back by this point - and most will have done -- the court will now set a date.  The one bank that ever took things this far claimed that the charges were for an extra service and therefore not a penalty, and thus legally enforceable.  If you’re faced by this, you’ll need to take professional legal advice, but remember – all the authorities agree that The Law Is On Your Side!

Also, it’s worth opening another account somewhere else in case they turn nasty and close your accounts and/or demand overdrafts be paid back immediately. Most banks won’t do this, but some do. If you have the choice, stay with the same bank – they’ll think twice next time before they charge you for going 10p over your limit!

To stress it again – 99 times out of a hundred, things will never get this far. At some point in the process, virtually every bank will throw in the towel and acknowledge the simple truth – that the money is legally yours, you’re entitled to it. And you should have it.

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