Money matters

Bank Charges Reclaiming - in a nutshell

We believe bank charges of around £35 a pop for going beyond your overdraft, bouncing a cheque or direct debit are unfair, so you should be able to claim the money back you paid out over the last six years or more - often adding up to thousands.

In 2007, after banks paid back roughly £1 billion, they finally agreed to go to court against the Office of Fair Trading (OFT). The case looked at whether, under a specific European regulation, it was possible for bank charges to be legally unfair. If so it'd then be the OFT's job to decide if they actually were unfair - and provisionally it said they were.

The banks first lost in the High Court and then in the Court of Appeal, but in a shock decision in November 2009, the new Supreme Court overturned this on a technicality and it was decided that 'fairness rules' didn't apply (see Shock Bank Charges Loss news archive). Yet it wasn't 100% clear cut, as the court prominently stated the ruling didn't stop the OFT assessing fairness on other grounds. 

However, in late December 2009, the OFT decided it wasn't going to fight on; having looked at its options under the limited scope of the UTCCR investigation and deciding that it did not think it appropriate to continue (see OFT gives up the fight news story). It's another major blow, but it doesn't close down all avenues for reclaimers.

The next steps...

After the Supreme Court decision, we hired a top banking QC (see MSE hires top QC archive news story) to examine what the new legal grounds for reclaiming could be, and potentially redraft the template letters in light of them (see the new arguments question).

We now believe there are still strong arguments to assess charges' fairness that haven't been tested yet; however, these are complex, and it'll be tough for individuals to argue them in the small claims court, but there are still some easier arguments to be put through the Ombudsman.

Following the 22 Dec 09 announcement by the OFT that it doesn't intend to continue the fight, we're looking at publishing direct guidance of consumers' options by the second or third week of January. Unfortunately, the timing of the announcement over the Christmas period makes it difficult to get advice and collect info quickly.

To stay up to date on that, ensure you get the free weekly MoneySaving email. Though at this point, it's important to say no one should be planning or managing their finances around getting money back, this is a cross your fingers only situation. Yet all hope is not lost.
   

What about other reclaiming?

It's important to understand the legal test case only impacts bank charges for going beyond your overdraft limit, or bounced direct debits and cheques. It has no impact on any other type of reclaiming as they use different pieces of law. This includes reclaiming credit card charges even though some courts mistakenly put these cases on hold. There are lots of other reclaiming campaigns worth looking at including mortgage exit fees, payment protection insurance, council tax (see the reclaim section for more).
   
Source: Moneysavingexpert.com