Dear all,
I saw this article in todays"The independent"
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Britain's biggest banks are facing an unprecedented people's revolt as millions of ordinary customers prepare to claim back illegal charges.
Internet-based campaigners plan to use the annual bank profits reporting season, which takes place over the next fortnight, to trigger a massive round of complaints about unauthorised overdraft charges.
Martin Lewis, the founder of the campaigning internet site Moneysavingexpert.com, said: "For years, all the high street banks have routinely ripped off millions of customers and now they are going to pay the penalty."
Thousands of customers have already won compensation since an Office of Fair Trading ruling last April, which caused panic among leading banks. The OFT said penalty charges in the credit card industry were illegal and warned it would investigate almost identical fees levied by banks. The regulator is expected to announce its verdict within weeks.
Last night, however, consumer groups said there was no need for customers to wait for the OFT's ruling.
Helen Ainsworth, of the consumer group Which?, said: "We believe bank customers paid £4.7bn in unauthorised overdraft charges last year alone - many have already claimed back some or all of this money, with awards ranging from £70 to thousands of pounds."
Mr Lewis predicted the next two weeks would represent a watershed for customers who felt furious about bank charges. He said: "These banks are set to announce they are making billions of pounds of profits and there are many angry people out there who are now realising that it is remarkably easy to claim back unfair charges."
Barclays Bank, the first large high street bank to announce its results for the past year, is expected to reveal today it made about £7bn of profits in 2006. Banking experts believe that once all Barclays' rivals have declared their results for the year, the industry's total profits will be close to £40bn.
Ms Ainsworth said it was not possible to say exactly what proportion of those returns was accounted for by the £4.7bn in revenue raised from unauthorised overdraft charges, because the banks had repeatedly refused to open up their books. But she said: "It is clear a very large proportion of this figure is profit because it costs very little to send a customer a letter about their unauthorised borrowing."
Bank customers are entitled to claim refunds because under British law, lenders are not allowed to charge more than the costs they have actually incurred when processing instances of unauthorised borrowing.
While they may ask customers to pay the cost of issuing standard letters or computer processing time, say, they cannot legally make a profit on the transaction.
However, leading banks routinely charge up to £35 each time customers exceed overdraft limits. Similar fees are charged for bounced cheques or honouring payments for which customers do not have sufficient funds.
In its credit card ruling last year, the OFT said an unauthorised borrowing fee of more than £12 was almost certain to be illegal. All four of the biggest banks - Barclays, HSBC, LloydsTSB and NatWest - have overdraft charges well above that level, as do most rivals.
Publicly, the banking industry has consistently insisted that penalty charges do not break the law.
Angela Knight, chief executive of the British Bankers Association, said: "Fees are fair and transparent; the banks make it very clear to customers when they open their accounts that there are fees that they will pay in certain circumstances."
Ms Knight also rejected consumer groups' accusations that banks were profiting from the late payment fees. "These are fees charged in return for a service," she said. "The fees reflect the work involved for the banks."
In private, however, the banks have settled almost all complaints about bank charges, or been forced to do so by challenges in the small claims court.
In some cases, banks have refunded charges in full as soon as customers have complained about them. In others, customers have had to send several letters in order to secure a refund, or even to issue proceedings in the small claims court.
However, in every single case filed, customers challenging unauthorised borrowing fees have eventually won at least a partial refund.
A spokeswoman for the Financial Ombudsman Service (FOS), an independent complaints system that arbitrates in disputes between customers and financial services companies, said it was intervening in more cases related to bank charges.
The service now receives 1,000 inquiries every day on the issue and processes 150 formal cases each week. In every case in which it has become involved, the bank in question has refunded charges in full before a formal judgment has been issued.
Last night, the FOS also warned banks that they were not entitled to close the accounts of customers who complained, as some have attempted to do.
'We were paying £150 a week' - Michelle Atkins, support counsellor
Michelle Atkins had always assumed she had no choice but to wave goodbye to thousands of pounds three banks had taken from her in the form of unauthorised overdraft fees and borrowing charges.
Ms Atkins, from Derby, now works as a breastfeeding support counsellor, but had spent much of the past five years trying to keep a small business afloat. "It was hugely stressful - we just wanted to hide away," she said. "It got to the stage where we were paying £150 a week in bank charges and we dreaded seeing the postman."
Six months ago, some time after getting back on track with her finances, Ms Atkins read an internet article about people who had challenged the sort of charges she had been paying. She decided to write to three banks - Lloyds TSB, MBNA and First Direct - asking for a refund of the fees.
"I followed the instructions I found on the Web and used the template letters," she explained. "It was actually a remarkably straightforward process."
MBNA and First Direct admitted they were in the wrong within weeks and refunded Ms Atkins £500 and £400 respectively. Lloyds TSB, however, was slower to respond, ignoring her first letters and then issuing a standard reply to subsequent requests.
"After three months, I decided to commence proceedings in the Small Claims Court. All the information I needed was on the internet and in the event, Lloyds was so slow to respond to my claim that judgment was awarded against them."
Shortly after, she received a cheque for £2,200 from the bank.
How to beat the banks' unfair overdraft charges
* The best way to avoid penalty charges is not to exceed your agreed overdraft limit. However, if you find yourself in financial difficulties, talk to your current account provider as soon as possible. Banks now have a statutory responsibility to help customers avoid debt problems. The earlier you discuss the problem, the more likely you are to get a sympathetic hearing.
* If you have already paid unauthorised overdraft charges, you are likely to have a claim for compensation. You can claim charges going back six years, so the first step is to ask your bank for a list of charges over this period. It has to respond within 40 days, though it may charge you up to £10 for doing so.
* Once you've identified all unauthorised borrowing charges, write to the bank to say you are unhappy with the way you've been treated. Request a refund of the charges, with interest.
* Give the bank a reasonable time to respond - a month, say. If you do not receive compensation at this stage, write a second letter, restating your complaint and warning that you will take legal action if the matter is not resolved within a set time limit.
* The final step is to take your bank to the small claims court. Each claim costs about £80, a fee that is refundable if you win your case. The court's website (www.hmcourts-service.gov.uk) explains how to make a claim and provides all the forms you need.
* If you prefer, the Financial Ombudsman Service (at www.financial-ombudsman.org.uk) offers an independent complaints service that has so far ruled in favour of every customer challenging overdraft charges. This process may take longer than the small claims court, but is completely free of charge.
* Both Moneysaving expert.com and Which? publish a range of template letters and claims forms on their websites that you can download.
Also in this section
I saw this article in todays"The independent"
<><><><><><><><><><><><><><><><><><><><><><><>><><><><><
Britain's biggest banks are facing an unprecedented people's revolt as millions of ordinary customers prepare to claim back illegal charges.
Internet-based campaigners plan to use the annual bank profits reporting season, which takes place over the next fortnight, to trigger a massive round of complaints about unauthorised overdraft charges.
Martin Lewis, the founder of the campaigning internet site Moneysavingexpert.com, said: "For years, all the high street banks have routinely ripped off millions of customers and now they are going to pay the penalty."
Thousands of customers have already won compensation since an Office of Fair Trading ruling last April, which caused panic among leading banks. The OFT said penalty charges in the credit card industry were illegal and warned it would investigate almost identical fees levied by banks. The regulator is expected to announce its verdict within weeks.
Last night, however, consumer groups said there was no need for customers to wait for the OFT's ruling.
Helen Ainsworth, of the consumer group Which?, said: "We believe bank customers paid £4.7bn in unauthorised overdraft charges last year alone - many have already claimed back some or all of this money, with awards ranging from £70 to thousands of pounds."
Mr Lewis predicted the next two weeks would represent a watershed for customers who felt furious about bank charges. He said: "These banks are set to announce they are making billions of pounds of profits and there are many angry people out there who are now realising that it is remarkably easy to claim back unfair charges."
Barclays Bank, the first large high street bank to announce its results for the past year, is expected to reveal today it made about £7bn of profits in 2006. Banking experts believe that once all Barclays' rivals have declared their results for the year, the industry's total profits will be close to £40bn.
Ms Ainsworth said it was not possible to say exactly what proportion of those returns was accounted for by the £4.7bn in revenue raised from unauthorised overdraft charges, because the banks had repeatedly refused to open up their books. But she said: "It is clear a very large proportion of this figure is profit because it costs very little to send a customer a letter about their unauthorised borrowing."
Bank customers are entitled to claim refunds because under British law, lenders are not allowed to charge more than the costs they have actually incurred when processing instances of unauthorised borrowing.
While they may ask customers to pay the cost of issuing standard letters or computer processing time, say, they cannot legally make a profit on the transaction.
However, leading banks routinely charge up to £35 each time customers exceed overdraft limits. Similar fees are charged for bounced cheques or honouring payments for which customers do not have sufficient funds.
In its credit card ruling last year, the OFT said an unauthorised borrowing fee of more than £12 was almost certain to be illegal. All four of the biggest banks - Barclays, HSBC, LloydsTSB and NatWest - have overdraft charges well above that level, as do most rivals.
Publicly, the banking industry has consistently insisted that penalty charges do not break the law.
Angela Knight, chief executive of the British Bankers Association, said: "Fees are fair and transparent; the banks make it very clear to customers when they open their accounts that there are fees that they will pay in certain circumstances."
Ms Knight also rejected consumer groups' accusations that banks were profiting from the late payment fees. "These are fees charged in return for a service," she said. "The fees reflect the work involved for the banks."
In private, however, the banks have settled almost all complaints about bank charges, or been forced to do so by challenges in the small claims court.
In some cases, banks have refunded charges in full as soon as customers have complained about them. In others, customers have had to send several letters in order to secure a refund, or even to issue proceedings in the small claims court.
However, in every single case filed, customers challenging unauthorised borrowing fees have eventually won at least a partial refund.
A spokeswoman for the Financial Ombudsman Service (FOS), an independent complaints system that arbitrates in disputes between customers and financial services companies, said it was intervening in more cases related to bank charges.
The service now receives 1,000 inquiries every day on the issue and processes 150 formal cases each week. In every case in which it has become involved, the bank in question has refunded charges in full before a formal judgment has been issued.
Last night, the FOS also warned banks that they were not entitled to close the accounts of customers who complained, as some have attempted to do.
'We were paying £150 a week' - Michelle Atkins, support counsellor
Michelle Atkins had always assumed she had no choice but to wave goodbye to thousands of pounds three banks had taken from her in the form of unauthorised overdraft fees and borrowing charges.
Ms Atkins, from Derby, now works as a breastfeeding support counsellor, but had spent much of the past five years trying to keep a small business afloat. "It was hugely stressful - we just wanted to hide away," she said. "It got to the stage where we were paying £150 a week in bank charges and we dreaded seeing the postman."
Six months ago, some time after getting back on track with her finances, Ms Atkins read an internet article about people who had challenged the sort of charges she had been paying. She decided to write to three banks - Lloyds TSB, MBNA and First Direct - asking for a refund of the fees.
"I followed the instructions I found on the Web and used the template letters," she explained. "It was actually a remarkably straightforward process."
MBNA and First Direct admitted they were in the wrong within weeks and refunded Ms Atkins £500 and £400 respectively. Lloyds TSB, however, was slower to respond, ignoring her first letters and then issuing a standard reply to subsequent requests.
"After three months, I decided to commence proceedings in the Small Claims Court. All the information I needed was on the internet and in the event, Lloyds was so slow to respond to my claim that judgment was awarded against them."
Shortly after, she received a cheque for £2,200 from the bank.
How to beat the banks' unfair overdraft charges
* The best way to avoid penalty charges is not to exceed your agreed overdraft limit. However, if you find yourself in financial difficulties, talk to your current account provider as soon as possible. Banks now have a statutory responsibility to help customers avoid debt problems. The earlier you discuss the problem, the more likely you are to get a sympathetic hearing.
* If you have already paid unauthorised overdraft charges, you are likely to have a claim for compensation. You can claim charges going back six years, so the first step is to ask your bank for a list of charges over this period. It has to respond within 40 days, though it may charge you up to £10 for doing so.
* Once you've identified all unauthorised borrowing charges, write to the bank to say you are unhappy with the way you've been treated. Request a refund of the charges, with interest.
* Give the bank a reasonable time to respond - a month, say. If you do not receive compensation at this stage, write a second letter, restating your complaint and warning that you will take legal action if the matter is not resolved within a set time limit.
* The final step is to take your bank to the small claims court. Each claim costs about £80, a fee that is refundable if you win your case. The court's website (www.hmcourts-service.gov.uk) explains how to make a claim and provides all the forms you need.
* If you prefer, the Financial Ombudsman Service (at www.financial-ombudsman.org.uk) offers an independent complaints service that has so far ruled in favour of every customer challenging overdraft charges. This process may take longer than the small claims court, but is completely free of charge.
* Both Moneysaving expert.com and Which? publish a range of template letters and claims forms on their websites that you can download.
Also in this section
