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12 December, 2006

Bank robbery?

The BBC's 'Money Programme' reports that penalty fees charged by UK banks may be illegal, and that customers have a very good chance of reclaiming them successfully.

Apparently, the Unfair Terms in Consumer Contracts Regulations (1999) state that penalty charges have to truly reflect the cost of administering them; they can't be punitive or profit-making. Understandably, the high street banks are unwilling to reveal the true costs of administration, but experts consulted by the BBC estimate a reasonable maximum of £4.50 per transaction – the banks are charging an average of £30.

The BBC explains the procedure, including how to file a claim with the Small Claims Court. There's a fee for that claim, but note that at the time of writing, the BBC was unaware of a single instance of a bank defending such a court action, and uncontesting defendants have to pay plaintiffs' fees.

I'm in the happy position of having fairly stable finances at present, and I haven't been charged any bank fees within the past six years (the legal maximum period in which money can be reclaimed in the UK), but others might be interested, and I'm partly posting this entry for my own future reference.

[Important update 19/01/07: do not pay for the assistance of a 'claims-handling agency', even on a 'no win, no fee' basis. One should never pay any intermediary to reclaim bank charges.]


I joined a forum on a website called bankchargeshell which is now closed, but the members set up their own site & I got letter templates, help from the guys on the forum & everything I needed to get my charges back, and it was all free :)
The idea of taking a bank to court is quite daunting but with help & advice from people on these sites it's a lot easier than you think. The power of the internet is now helping out the little guy!

Posted by Bob at December 19, 2006 04:23 PM
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