Banks have paid out £200 million this year

According to the latest statistics banks in the UK have already paid out over £200 million this year in the form of repaid bank charges to customers that have made claims for any charged imposed over the past six years.

The study shows that over £200 million has been paid out in just the past seven months alone reflecting the financial problems that have resulted for banks as a result of these bank charges.

The report was put together by Credit Suisse, and suggests that around 1% of the profits of the major groups will be lost as a result of repaying these bank charges, which have been dominating the financial headlines in the UK over recent months. In addition to having to repay these charges, which have amounted to thousands of pounds for some customers, banks have also had to take on extra staff to deal with the flood of claims, which has cost even more.

Although banks have been doing their best to get out of having to pay these charges back to customers, they have also been unable to justify the charges to courts and regulatory authorities. Banks have traditionally charged up to around £35 for exceeding an overdraft limit and for returned cheques and direct debits. However, the cost actually incurred by the bank is though to be around £2-£5, which means that the banks have been making hefty profits from the charges.

A decision with regards to bank charges, and what can be classed as a fair fee, is expected at the end of the year. It was expected earlier but was postponed so that further reviews could be carried out following concerns that free banking in the UK could come to an end as a result of these bank charge claims.

Tom Smith
13th September 2007

Tags: lost, claims, bank, court, charges, fee, high, reclaim

Banks warned by judge over unreasonable behaviour

A judge in the UK has issued a warning to banks in relation to unreasonable behaviour in cases where consumers try to claim back charges that have been deemed unlawful and unfair.

Many consumers in the UK have made claims for bank charges going back up to six years, and although in all cases but one the claims have been successful a number of banks have been acting in a manner deemed unreasonable, using retaliatory measured such as account closures to get back at the consumer.

And another tactic being used by some banks is the pretence that they will be defending claims in court, when in actual fact they have no intention of doing this at all.

It is this tactic that is being objected to by the High Court judge, David Mackie, who claims that the banks are wasting court time and resources with this pretence. He further stated that he was looking into awarding damages against the banks if they continued to do this in instances where a consumer has filed a claim in court.

The London Mercantile Court has had hundreds of these bank charge cases referred through lower courts this year, and the hope is that at some point one of the cases will be heard, producing a test decision.

Judge Mackie stated: “If the banks had won, many fewer customers would have sued. If the banks had lost, the claims would have been much easier to sort out than they are now.”

With banks deciding to settle the claim at the last minute before a case is heard, the likelihood of a test decision is a slim one.

Judge Mackie added: “On the face of things each case raises serious issues which the court would permit to proceed to trial. But this is fantasy because, at least for the moment, we all know that there will be no trial.”

Tom Smith
30th May 2007

Tags: case, challenge, fees, claim, judge, bank

Bank charge firms to be investigated

On the back of current investigations that are being carried out into the charges applied to customers’ accounts by banks in the UK by regulatory bodies, a further investigation will now be carried out into the various firms that have sprung up claiming to be able to help consumers to recover these charges – for a fee.

Regulators will now be looking into and scrutinizing these firms amidst fears that many consumers may be wasting their money on paying unnecessary fees for a task that they can carry out themselves free of charge, other than paying for copy statements.

UK regulators have been looking into unfair and unlawful charges that have been charged to customers’ accounts by banks for some months, and as a result of this many consumers have managed to claim back charges and fees going back up to six years, which in some cases has amounted to thousands. However, in light of the increasing number of people attempting to claim back fees from their banks a number of companies have sprung up with offers of assistance in exchange for fees.

These companies will now be investigated by the Ministry of Justice, and amongst the practices that will be looked into by the ministry is cold calling, where company representatives phone up consumers to try and talk them into letting them help claim back charges. However, consumers can just as easily do this themselves for the cost of a duplicate statement, and without having to pay any further charges.

In a recent case Lloyds Bank won a case where a man had tried to make a claim for his charges, and this was the first case to be won by a bank in relation to these charges. In other cases banks have failed to justify the charges, and consumers have been able to reclaim them. 

Tom Smith
24th May 2007

Tags: charges, costs, case, unfair, claim, bank, regulators, won, penalties, reclaim

Over two billion still to be claimed in bank charges

According to figures released by the price comparison website Uswitch, over two billion pounds worth of bank charges are yet to be claimed by consumers that have been hit with hefty and unlawful penalty fees over the past six years.

The topic of bank charges has exploded over recent months, with regulators claiming that the charges imposed for exceeding an overdraft limit and for returned cheques and direct debits are unlawful and unfair. As a result many people have claimed back these charges going back up to six years, but Uswitch officials claim that around £2.12 billion has still yet to be claimed.

The figures from Uswitch suggest that around four billion pounds in charges have been netted by banks that have applied these charges to the accounts of around nineteen million consumers in the UK. So far, over half of that amount has not been reclaimed by consumers.

So many people are now being encouraged to reclaim their fees from banks that there are a number of financial services available that can help consumers to try and reclaim their fees if they are unsure as to what they need to do. However, the clock is ticking, as an impending decision from UK regulators with regards to what is construed as a fair fee may reduce the amount that claimants can file for.

Many consumers have already threatened to take their banks to court for not repaying the fees, and in most cases the banks have paid up on a last minute basis, with no banks actually having gone to court to justify the amount that they charge.

However, it seems that many consumers are frightened of the consequences of making a claim, with a number of banks having threatened to close consumers’ accounts if they try and reclaim their fees.

Tom Smith
10th May 2007

Tags: claim, fees, close, charges, time, threats, bank