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Do you feel you have you been unfairly charged by your bank? Would you like this money back?
When you open a bank account you are entering into a contract with the bank. When you go into an unauthorised overdraft or bounce a cheque or direct debit you are breaching this contract. Your bank can therefore charge you for this mistake.
The banks should charge you what it costs them to rectify your mistake. So for each incident this should average about £2; the cost of sending out a few letters to notify relevant parties.
However banks are still charging up to £30 to £40 for such incidents. These are 'penalties' and as such it can be argued are unlawful.
Customers no longer willing to stand for this, have been fighting back against the banks. They have been writing to the banks to ask for the money back and when necessary filing claims in the county court. The banks have generally been settling claims before they get to court or failing to turn up to defend their claims meaning the claimants win.
However on Thursday 26th July 2007 it was announced that a test case was to be heard in the High Court with the Office of Fair Trading and seven of the major banks. The case was to determine whether the Office of Fair Trading's consumer credit regulations could apply to banks. If ruled they could then the Office of Fair Trading could rule that high bank charges are unfair. The Financial Services Authority gave the banks a waiver on bank charges meaning they did not have to respond to complaints until the case was over. Cases in court were also suspended.
On Thursday 24th April 2008 the case was heard in court and the High Court Judge ruled that the consumer credit regulations could apply to banks. This was a major victory for those trying to claim that high bank charges are unfair.
The banks are now trying to appeal this decision. If they loose the appeal and the judgement stands the Office of Fair Trading will then have to decide whether or not the charges are actually unfair (as they are the ones that took the banks to court in the first place they are likely to rule they are). They are also waiting to hear from the judge as to whether under historic terms the charges can be classed as unfair, as the judge has ruled they can under the banks current terms.
On 22nd July 2008 the waiver was extended for six months meaning that the banks, courts and financial ombudsman still do not have to deal with bank charges complaints.
This page will be updated so if you are in the process of reclaiming or thinking about reclaiming keep checking it for developments.
If you have any questions or are still considering going ahead with the reclaiming process contact Vicki Kirby in the Student Advice Centre at v.j.kirby@leeds.ac.uk.
Please be aware that we are only able to advise current or prospective students of Leeds University.
These pages are for guidance only and are not a substitute for diverse legislation that they cover. The information was checked and correct at the time of writing.
If you have any comments or queries about this page please email advice@luu.leeds.ac.uk.
© LUU Student Advice Centre August 2006.
