Court out in the bank charges battle

Customers who have already complained about hefty overdraft charges can congratulate themselves on their timing.

They’ve pocketed payouts of up to £1,000 a time and in the process stung the big banks with a bill of up to £1 billion in the past six months alone.
HSBC has admitted to paying out £100 million on its own while Lloyds TSB has coughed up around £36 million.

But if you’ve not complained yet then you face a wait to get back any money owed to you. MoneyExpert.com can show you how to complain and explain what’s happening so far.

Court out

The major banks have taken the issue to court with the Office of Fair Trading seeking a ruling on the issue of whether bank charges for going into the red without permission are fair.

Banks claim they are offering a service to customers – but customers say being charged up to £39 a time for going into the red to the tune of £10 is unfair.

The City watchdog the Financial Services Authority has blasted the banks for not responding to complaints properly. However it has ruled that while the court case is running the banks do not have to pay out anything.

If you’ve already complained then they have to consider your case but don’t have to pay out. If you’ve not complained yet they have to note your case but won’t have to pay out until the court case ends.

On the case

The High Court won’t start hearing the court case until next year at the earliest. Then the court has to decide and that could take at least a year – and when it decides there are likely to be appeals.

If the banks lose they’re facing a £1 billion bill at least so will want to appeal in the hope they can win. If the banks win then consumer campaigners will go back to court.

A similar OFT court case against credit card firms about spending overseas has taken FOUR years so far – and should finish this year.

How do I know if I can claim?

The first thing to work out is whether or not you’re due some cash back. Penalty charges can be incurred for unauthorised overdrafts and unpaid items like bounced cheques, standing orders or direct debits.

You can claim if you think you have been charged for any of these over the past six years of charges (or five if you live in Scotland).

What’s the best thing to do?

If you’ve got all your bank statements from the past six years, you’re not only incredibly organised but also incredible fortunate. All that diligence will now pay off because all you have to do is highlight all the charges you’ve incurred, total it up and then fill in a compensation form, available from the BBC –

If you don’t have all your statements you can request them. The banks are legally obliged to send you your statements upon request though they are able to charge up to a maximum of £10 for this. If you enclose a cheque for £10 you won’t delay the process. If you have a large amount to claim back the £10 spent now is worth it!

Don’t take it lying down

It’s important to remember that you can switch current account at any time if you are unhappy with the service you get. Check our current account switching service for a better deal.

How to move bank

  • Look out for low overdraft fees. There are big savings to be made as rates can be as high as 18 per cent even if you’re overdraft is authorised. If it’s unauthorised rates can go to a shocking 29.9 per cent.
  • Look at the charges you might face. Is there an annual fee?
  • What about bonuses or cashback offers? Some banks will pay you to move bank so take advantage
  • You can earn money on your current account. If you’re always in the black it makes sense to make as much money as possible. Rates go as high as six per cent but as low as 0.1 per cent
  • Is it easy to get at your money? Does the bank have lots of ATMs or does it offer internet banking or phone banking?
  • Tell your new bank you want to switch giving account details of your old bank
  • Provide two forms of ID proving who you are and where you live
  • And that should be it

How long will it take?

There are strict guidelines to make moving as easy as possible. Your old bank has three working days to pass info to the new bank including all direct debits and standing orders.

Your new bank then has 10 working days after your application is approved to open your account.

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