Just when it seems that you cannot fall further into debt because of a slow economy and a few poor financial decisions, you are hit with unfair bank charges. UK banks make an estimated £4.7bn profit a year from unfair charges to their client’s accounts. These charges have been a cause of much anger for many Britons as some have been charged as much as £39 for a slew of banking reasons including going overdrawn, having returned cheques, unpaid direct debits and standing orders.

The good news is no longer do you have to stand a victim to these unfair banking procedures. You can get your money back. In fact, it’s estimated that UK banks have already paid out nearly £1 billion in unfair bank charges.

The core argument is that banks should only impose charges which are in proportion to their costs. This is because under the Unfair Terms in Consumer Contract Regulations, it is clearly stipulated that bank charges in respect of personal current accounts should not exceed the cost to the provider. A report by a professor of banking estimated these actions cost the bank only between £2.50 and £4.50. Yet the banks charge unfair, unlawful and unreasonable penalties for having to send a computer-generated automatic letter with a franked stamp. This means that bank charges are effectively unlawful, and you’re entitled to get a full refund.

The banks’ primary argument has been that ‘unfair contract’ terms don’t apply to bank charges, but the Office of Fair Trading (OFT) disagreed, and so started the test case to find out. For the moment, banks have been given the right to put bank charges reclaim complaints on hold by the Financial Services Authority while the outcome of the High Court test case is sought by the Office of Fair Trading and banks. However, the on-going waiver does not apply to credit card and business bank charges which can still be reclaimed.

In addition, you are entitled to reclaim all charges dating back to July 2001. The standard rule is that you can claim back six years, however according to the FSA, the clock stopped when the hold on reclaiming started in July 2007, and this is six years before that.

Here are some ways to reclaim your bank charges:

Write them a letter or call. Wait for a reply. The bank should send you a reply within two weeks. If you do not hear back within two weeks, make a follow up communication. If your bank ignores you, write again to your bank to say you’ll be starting court action if it doesn’t settle. Threatening court action is more likely to push the bank into offering a settlement; In addition, visit Consumer Action Group’s websites and see what other people are saying. Their experience is that this action works, and both have others’ experiences and cases that form precedents. If it offers only a partial refund, refuse it and write back demanding payment in full.

Alternatively, your bank may send you a letter promising to respond at a later date. If so, write and call back, stating that a set two-week period has already passed and if you do not hear a definitive answer within a further 14 days you will take court action. The best result at this stage is the bank deciding to give you a full refund.

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