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How to Reclaim Your Business's Unfair Charges

By: Lucy Debenham BA (hons) - Updated: 9 Sep 2012 | comments*Discuss
Claim Refund Fees Charges Unfair Charges

There has been an exceptional amount of media coverage over the last year or so reporting on the penalty charges dispute between banks and their customers. Many customers and consumer groups claim that the penalty fees imposed on banking customers by the banks, largely for unauthorised overdrafts, are unfair, disproportionate and a blatant money-making tactic. However, the banks have remained resolute and still maintain that the penalty charges are not unfair.

A Freeze on Reclaiming

In response many banking customers that have incurred these penalty fees have made moves to reclaim their fees. Thousands of consumers have written letters threatening court action if they do not receive a refund of any charges they deem unfair or unlawful from the past 6 years. The types of fees being reclaimed can include PPI fees (payment protection insurance), mortgage exit fees, credit card overlimit charges and business banking charges.

The reclaiming process can be lengthy and a successful result is not always guaranteed - however, many individuals have managed to secure refunds. Despite the hundreds of millions of pounds refunded to their customers, the banks are still taking the stance that their charges are proportionate and reasonable.

Recently the Office of Fair Trading made the decision to take the major banks to the High Court in order to address the matter once and for all. The OFT wanted to establish the legality of these high charges. In light of this case, the regulatory body the FSA (Financial Services Authority) has, for the time being, frozen the reclaiming of bank charges until the High Courts make their decision. Although individuals cannot currently pursue the reclaiming of these bank fees, small businesses are still able to proceed.

How to Reclaim Unfair Charges

It is thought that business account holders and credit card customers ought to swiftly submit their complaints regarding unfair charges. This is because an outcome that rules against the banks by the High Court could spark a surge in claims, which could in turn see a considerable delay in the refunding process.

There are also some important points to consider, and especially in the case of business accounts, so it may be worth seeking expert advice. For instance, if you have previously included your bank charges in any tax deductions, you will have to declare this to your tax office. Businesses (not including sole traders) are also not able to request previous bank statements via the Data Protection Act. You should also bear in mind that if your case goes to the Small Claims court (where you will not be liable for the bank's fees), you might find that the bank decides to close your account. For this reason, it may be worth opening a new business account before you proceed with your claim.

Before you make your claim you will obviously need to calculate how much you are owed for unfair fees and interest. This will involve going through your last 6 years worth of statements, if you don't already have the statements on file, obtaining them from your bank. Bear in mind that as a business, you will not be able to cite these statement requests as unfair charges.

You will then need to send a preliminary letter to the local branch of your bank requesting a repayment.

Further Action

Usually the banks will either ignore your request, or respond by stating that they will deal with the matter at a later date. You will need to send a follow up letter reiterating the main points, such as how much you are requesting is refunded, and a reminder that if they do not refund you within 14 days, you will be making a claim against them that will include interest and all of your costs.

If you still do not receive a refund, then if your claim is under £5,000 you will be able to take the claim to the small claims court. You can either attend your local County Court in person, or if applicable (for refunds amounting to between £30 and £120), make your claim via an online court provision known as the Money Claims service.

At this point the bank may acknowledge your claim and defer another 14 days to enter a defence, but any action beyond this point is extremely rare. You should bear in mind that if the bank does not acknowledge your claim within the initial 14 days of the claim being made, then you will have won by default.

Of course, if you stay on top of your finances and manage your accounts properly, the chances are that you will not have to pay these fees - however unfair they are judged to be - in the first instance. However, if you have fallen foul of unfair bank charges, or your bank takes action in response to your claim, it's definitely worth seeking advice from the Consumer Action Group as well as an independent financial advisor.

This article is written as a guideline only.

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