BACK in January, Your Money ran a piece about bank charges and how to reclaim them.
Since then, the campaign to stamp out excess bank charges has mushroomed. At one stage in February over 5,000 people a day were calling the financial ombudsman for advice.
As yet there has been no formal advice from the authorities to banks to trim their charges but, as anger grows, two powerful new forces have entered the fray on consumers' behalf.
The Office of Fair Trading (OFT) is due to issue a report shortly in which they are expected to say that bank charges are far too high. It's unclear what ceiling they will attempt to set although when you consider that the actual cost of a bounced cheque or a customer going beyond their overdraft limit is somewhere between £2.50 and £4.50, and charges can be as high as £35, there is some room to manoeuvre. In a situation where city bank Credit Suisse estimates banks make over £1.2bn from charges, few customers will shed tears, particularly when you consider that profits at high street banks have surged to £40 billion - an increase of 40%.
Any changes to charges will not happen retrospectively of course, and if you're still unhappy with the way the bank is responding to your complaints, then a phone call to the Office of the Financial Ombudsman might be in order. They have proved extremely helpful to many consumers not just in claiming back unfair charges, but also interest accrued on those charges
As the number of consumers protesting against these charges has grown, so have the banks' defences. In order to claim back charges, customers need a list of them and banks are allowed to charge up to £10 for six years' worth. However, although the maximum amount payable to obtain this list is covered under the Data Protection Act 1998, statements are not. And according to thisismoney.co.uk, banks have taken to offering customers their old statements instead of the charge list and charging £5 for each one. This can lead to a bill running into hundreds of pounds.
Other ways banks have started to fight back include threatening to close customers' accounts, or even switching accounts away from free banking to accounts which have standing charges even if you stay in credit. So before you embark on trying to reclaim your original charges, it might be worth opening an account elsewhere just in case the worst should happen.
And do check your bank statements for any evidence of new fees.
The OFT report comes hard on the heels of their success in limiting fees for late payment of credit card bills to £12 and is perhaps at last a sign that the financial regulators have teeth.
Away from bank charges, another regulator has been getting busy with mortgage exit fees.
Whether it's repaying a mortgage early or simply switching provider, mortgage companies are allowed to charge a fee for the privilege of you closing your account with them and moving it elsewhere.
Concern has been raised that exit fees or early redemption fees have been raised out of all proportion as lenders try to claw back money they lose when customers switch to another company.
While the practice of making these fees higher than those agreed in the original contract has yet to be tested legally, research from L&C Mortgages shows that the average exit fee has more than doubled from £115 in 2003 to £239 today (Tuesday, 20 March). In many cases, as the exit fee is not normally fixed at the time the mortgage offer is made, many lenders have taken advantage of this to hit borrowers with big increases that they can do nothing about. The fact that switching also triggers arrangement and administrative fees means that taking out a new deal now costs many borrowers more than £500.
Now the FSA has said that some fees must be cut and indicated that borrowers who were unfairly charged should be compensated. Most of the big banks are implicated as are many of the building societies. Any lenders that plan to continue charging high fees will have to justify their actions. And this new rule also applies to past customers, so those who have already paid the charge should be entitled to a refund. If you think you might be one of those entitled, you should contact the FSA
Since then, the campaign to stamp out excess bank charges has mushroomed. At one stage in February over 5,000 people a day were calling the financial ombudsman for advice.
As yet there has been no formal advice from the authorities to banks to trim their charges but, as anger grows, two powerful new forces have entered the fray on consumers' behalf.
The Office of Fair Trading (OFT) is due to issue a report shortly in which they are expected to say that bank charges are far too high. It's unclear what ceiling they will attempt to set although when you consider that the actual cost of a bounced cheque or a customer going beyond their overdraft limit is somewhere between £2.50 and £4.50, and charges can be as high as £35, there is some room to manoeuvre. In a situation where city bank Credit Suisse estimates banks make over £1.2bn from charges, few customers will shed tears, particularly when you consider that profits at high street banks have surged to £40 billion - an increase of 40%.
Any changes to charges will not happen retrospectively of course, and if you're still unhappy with the way the bank is responding to your complaints, then a phone call to the Office of the Financial Ombudsman might be in order. They have proved extremely helpful to many consumers not just in claiming back unfair charges, but also interest accrued on those charges
As the number of consumers protesting against these charges has grown, so have the banks' defences. In order to claim back charges, customers need a list of them and banks are allowed to charge up to £10 for six years' worth. However, although the maximum amount payable to obtain this list is covered under the Data Protection Act 1998, statements are not. And according to thisismoney.co.uk, banks have taken to offering customers their old statements instead of the charge list and charging £5 for each one. This can lead to a bill running into hundreds of pounds.
Other ways banks have started to fight back include threatening to close customers' accounts, or even switching accounts away from free banking to accounts which have standing charges even if you stay in credit. So before you embark on trying to reclaim your original charges, it might be worth opening an account elsewhere just in case the worst should happen.
And do check your bank statements for any evidence of new fees.
The OFT report comes hard on the heels of their success in limiting fees for late payment of credit card bills to £12 and is perhaps at last a sign that the financial regulators have teeth.
Away from bank charges, another regulator has been getting busy with mortgage exit fees.
Whether it's repaying a mortgage early or simply switching provider, mortgage companies are allowed to charge a fee for the privilege of you closing your account with them and moving it elsewhere.
Concern has been raised that exit fees or early redemption fees have been raised out of all proportion as lenders try to claw back money they lose when customers switch to another company.
While the practice of making these fees higher than those agreed in the original contract has yet to be tested legally, research from L&C Mortgages shows that the average exit fee has more than doubled from £115 in 2003 to £239 today (Tuesday, 20 March). In many cases, as the exit fee is not normally fixed at the time the mortgage offer is made, many lenders have taken advantage of this to hit borrowers with big increases that they can do nothing about. The fact that switching also triggers arrangement and administrative fees means that taking out a new deal now costs many borrowers more than £500.
Now the FSA has said that some fees must be cut and indicated that borrowers who were unfairly charged should be compensated. Most of the big banks are implicated as are many of the building societies. Any lenders that plan to continue charging high fees will have to justify their actions. And this new rule also applies to past customers, so those who have already paid the charge should be entitled to a refund. If you think you might be one of those entitled, you should contact the FSA
1 comment:
Another load of recycled rubbish.
Cant wait for this OFT report....
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