Time is ticking for people who want to reclaim bank charges, as the OFT is due to make an announcement about what it considers is a fair charge for dealing with current account defaults.A spokesperson for the OFT told This is Money they still didn't know exactly when an announcement would be made, but it is likely to be made within the next month. The OFT's decision is likely to affect the amount that individuals and businesses can reclaim.
The OFT's announcement will detail the amount that it considers banks can reasonably charge customers to deal with unauthorised overdrafts, cancelled cheques, returned direct debits, and various other defaults.
The charges, which are currently as high as £39, have been deemed to be unlawful because banks are not allowed to profit from dealing with penalty charges. While banks say they stand by their charges, none of them have yet defended them in court for fear of having to justify them.
Instead, they are routinely refunding them in full, but that is very likely to change once the OFT states its opinion on what is a 'fair charge'. It is likely that customers will only be refunded their bank charges, minus the cost of what the OFT says is fair.
For instance, if the OFT says it is fair to charge £10 for going into unauthorised overdraft, and the customer has been charged £25, they might only get the difference of £15 returned to them.
So if customers want to have all their charges refunded, they need to make a claim now to ensure they receive the maximum possible refund.
The OFT announcement is likely to be the catalyst for other changes in the industry as well. This is Money believes it's very unlikely that the banks will simply accept the limits imposed by the OFT without seeking to claw back the losses. So it could also be the time when we see higher rates of interest on credit cards and overdrafts, and possibly the more widespread introduction of monthly fees on current accounts.
Some analysts believe this would be a fairer system, but the prospect has angered people who are sensible and responsible with running their current account and who never run up charges.
3 comments:
So here is another story that makes out that we all have to claim now or we may lose out,
its so good Mr Money Saving could have written it.
Lets clear this up.
The oft decision on credit cards was only last year, remember it?
Their decision of £12 has only changed how much you can claim if using the ombudsman.
So this decision will not change how much you can claim if you are using the county courts to recover your money.
As a follow up. The basis behind claiming these fees back is that they are unlawful at common and statute law.
A penalty for breach of contract can only be for the amount it has cost the non-offending party when the offending party breaches the contract.
In these cases, issuing a cheque or allowing a Direct Debit to be presented etc with insufficient funds available are seen to be breaches.
The banks levy a disproportianate charge for the above, disproportianate in law, and it would take a change in the law to prevent people from reclaiming.
That is a matter for the Courts, (case law), or an Act of Parliament, (statutary law), and if such a law was passed it would have consequences for a huge many other contracts, not just those related to banking charges.
The OFT does NOT make the law, it can issue guidlines and reccomendations.
If a case ever got defended in court, (not happened yet) it would be up to the judge to decide if the penalty was justified or not, and that would depend on the defendant's proof, not a figure suggested by the OFT.
Claiming through the courts will get ALL your money back.
well said.
so dont use the ombudsman as you may get alot less than doing it yourself.
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