The Birth Of The Reclaim Bank Charges Culture

                                                                                         

Poor old British banks. It seems that perhaps the shoe is on the other foot. They are being placed under siege by thousands of customers who are rightfully claiming back charges taken from them during the past 6 years. This stems from last years case, whereby a customer took a bank to court to get his charges back. The bank failed to show up, and the court defended the claim. Ordering the bank to refund the man his money. The story soon went all media madness, which informed everyone else just what he or she was missing out on.

The ensuing media circus also led to The Office of Fair Trading (OFT) launching a full-scale investigation into these absurd quantities. It was The OFT that implemented a long awaited restriction on how much credit companies could charge people for late payment and over limit fees. The said amount, £12.

It was a solicitor who took the banks to court in the original case. His claim was that the costs imposed by the bank were actually a financial penalty that is illegal in the U.K. in regards to a non-negotiated contract. This law dates back to 1915. The terms and conditions applicable to a bank account make up a non-negotiable contract. The law means that banks can only claim back actual financial loss that is relative to the breach in contract. So if a customer becomes overdrawn and a computer generated letter is sent out, the bank are only supposed to charge for the cost of producing and posting the letter. This charge generally lies between £28-£40. The charge is often repeated for every single day that that person is overdrawn, and every cheque or direct debit that is not paid during that period. The distorted amount of these charges is thought to be unfair, and dissimilar to the cost of managing an overdraft. This therefore, is an unlawful penalty.

U.K. law lets people claim money owed to them, through the courts, for a period of 6 years. Banks have been swift enough to stand up in the media, and defend the amount they charge people, but less swift to stand up in court. This is due to the fact that they have to show in court, their actual financial loss, for every single charge that they applied. If just 1 case were found against them, they would have to refund every single customer. And for the whole of the 6 years. Their fee charging structures, which serve as nothing but racketeering, would be completely destroyed. The banks last year, netted £4.5bn from their aggrandised charge system, so they aren’t going to risk going to court. It is far more beneficial to pay back the odd complaining customer.

It isn’t just a case of sending the bank a letter though. What the banks are doing is waiting until they are summoned to court. They then play with their valued customers, to see who will pull out first. All very moralistic. This does not seem likely to stop. The only thing that is likely to stop it is if the banks go to court, which they will not, or if The OFC bring in restrictions to stop the banks from being able to charge people so much. So the needy people who are experiencing financial difficulty will just have to carry on suffering.

About the author:
This article is written by Jonathan L Walker, on behalf of Claims Management UK, specialising in helping people with their Reclaim Bank Charges

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