en-us http://backend.userland.com/rss Your Friends @ Myvesta.org.uk (stever@myvesta.org) myvestaukblog_archive.html stever@myvesta.org 114547067175540554 Following the Office of Fair Trading's ruling on unfair bank charges, John Greenwood details how to make a claim

The Office of Fair Trading's ruling that bank penalty charges of more than £12 are unfair could spark a flood of complaints from customers seeking compensation for unjustified charges over several years.

Earlier this month the OFT ruled that penalty charges for late payments on credit cards, unauthorised overdrafts, unpaid direct debits and standing orders and missed payment fees on store cards and mortgages were deemed unfair if they exceeded £12.

Last weekend, this paper revealed that this could lead to redress for bank customers who have been erroneously charged for the past six years.

The OFT's initiative strengthens the case of anyone who has seen penalty charges automatically deducted from their accounts after falling foul of bank and building society small print. As with any legal proceedings, there is not a 100 per cent guarantee that you will win, but lawyers and consumer groups reckon the OFT's position means judges will be far more likely to accept arguments that penalties of more than £12 amount to unfair contract terms that cannot be enforced.

The process for reclaiming the unfair charges from your bank is straightforward.

First your bank is obliged to supply you on demand with a list of all charges you have paid in the past six years under the Data Protection Act. You then need to write demanding the bank repays the unfair charges. If that is not successful, you can take the matter further by either going to the small claims court of the Financial Ombudsman Service (FOS).

More details on how to claim and pro forma letters are available on the website of Which?, the consumer group.

"Claiming back these unfair charges from the banks is a relatively straightforward process," says Emma Bandey, a personal finance campaigner at Which? "These charges are nothing but an easy money-spinner for the banks."

Here's how to fight back against onerous bank charges.

Avoid unnecessary charges in the first place

If you think you are about to go overdrawn or exceed your agreed overdraft for any reason, contact your bank to agree an overdraft extension.

Assess the size of your claim

You can make a claim for the recovery of any unreasonable charges incurred in the past six years. If you do not have all your bank statements, write to your bank. It must provide this information under the Data Protection Act.

Ask your bank to refund your money.

Write to your bank, telling it that you are a loyal customer and that you are unhappy with the charges it has levied. It may agree to a refund.

Threaten your bank with legal action

If your first letter does not do the trick, send a stronger letter, warning your bank you will take it to court or to the FOS.

Decide how to take the matter further

If you have still not recovered what you are entitled to, you have two options - take your bank to the small claims court or refer your case to the FOS. Which option you choose will depend on your personal situation.

You do not need professional legal assistance to take your case to the small claims court and there is little risk of costs being awarded against you unless your case is unreasonable, such as where you have regularly gone overdrawn in a reckless way without ever contacting your bank.

While there is a fee for going to court, taking a case through the FOS will not cost you anything, although the bank will have to pay £360 unless it settles. Once you complain to the ombudsman, the bank has eight weeks in which to resolve the dispute or incur the fee. This cost may encourage some banks to settle smaller claims early.

Taking your case to the ombudsman does not stop you from going to court at a later date if the FOS's decision is unfavourable. You are only barred from taking a case to court if you accept an ombudsman's decision, although if your case has been rejected by the ombudsman, a judge may take the same view.

To date there are no published decisions from the FOS relating to bank charge cases. This means there is no clear indication as to what view the FOS will take of your claim. However, the FOS will look at whether the charge reflects the administrative burden the bank has incurred or whether it is simply a punitive charge. Conversely, there have been many cases in the small claims court where bank customers have succeeded in getting penalty charges overturned.

Lodge your claim

Small claims court applications incur a fee of 10 per cent of the value of the claim, with a minimum fee of £50. This is paid by the bank if you win your claim. The maximum sum you can claim in small claims courts is £5,000 in England & Wales, £2,000 in Northern Ireland and £750 in Scotland.

You have to fill in a form to claim against your bank. You can do this online at www.moneyclaim.gov.uk, and pay the court fee by credit or debit card. Alternatively, you can fill in the form at your local small claims court.

The form will ask for the bank's name and address, the amount you are claiming and the reasons for your claim. The Which? website gives specific wording on how best to explain your case on the application form.

Once the court receives your claim, it sends details to the bank, which must respond within 21 days. If it does not, you can ask the court to make a judgment in your favour. The bank has three options - admit your claim in full, admit part of your claim or reject it.

If the case is disputed the court will set a date for you and a representative of the bank to attend and will tell you what papers to take with you. Hearings in small claims courts are informal to give ordinary people access to legal redress. Judges encourage use of simple, everyday language and will not penalise you for not having a lawyer with you.

FOS applications must be made within six months of the bank's final letter to you refusing your requests that it refund your bank charges. You must fill in an application form and send it to the FOS, which has a phoneline to help people filling in forms. Again, claims wording from the Which? website can be used.

Once the claim is received, the FOS will ask the bank to settle the dispute and if it does not, it will be referred to an ombudsman, who may request further information from both sides before making a decision.

The Telegraph

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