Frequently Asked Banking Questions

Frequently Asked Questions

· What sort of charges can be challenged?

· What has the Consumer Council done to help consumers?

· Can banks continue to charge unauthorised overdraft charges?

The OFT are confident that the test case will prove that these charges do have to be fair charges under the Unfair Terms in Consumer Contract Regulations. If the court decides that the Regulations do apply then the banks will have to prove that the amount they charge is fair.

When will the result be known?

The trial is expected to start on 14 January 2008 and the OFT expect it to last eight days. However, it is possible that the judgment may be appealed, in which case it is uncertain when the result will be known.

What sort of charges can you challenge?

You can challenge any unauthorised overdraft or returned item charge applied to your account. Banks give these charges different names but they are charges for not having enough money to pay a direct debit, for instance, or if they pay a direct debit on your behalf. They are not charges for setting up a direct debit or any other normal account service. If you are not sure what a charge is for, contact your bank and ask them to explain the charge.

The law allows the bank to chargeyou what it cost them to put the wrong to right if you break a term of your contract with the bank, for example going into the red without permission but they are not allowed to charge more than that. (Unfair Terms in Consumer Contract Regulations, 1999).

The Consumer Council believes that charges like account maintenance and transaction charges have the effect of being penalty charges and we suggest you claim for them as well. If your bank says they are not penalty charges we suggest you include them anyway and let the Financial Ombudsman Service or Court decide. The Office of Fair Trading says charges that have the effect of penalty charges may be challengeable.

If you have spoken to your bank and you still not sure which charges to challenge contact the Consumer Council banking team on 0800 121 6022.

What has the Consumer Council done to help consumers?

The Consumer Council has worked on two fronts. Firstly, we have helped consumers challenge their bank charges and regain more than £160,000 for Northern Ireland bank customers.

Secondly, we asked the Office of Fair Trading (OFT) to investigate unfair bank charges. Three weeks later, the OFT began an investigation process which has now resulted in them taking seven of the UK’s biggest banks and a building society to the High Court. This is known as “the test case” and will establish some of the important legal principles, i.e. are the penalty charges banks are placing on customer accounts fair.

Can banks continue to charge unauthorisedoverdraft charges?

Yes, they are still allowed to make these charges but if the OFT test case proves that the charges are unfair you will be able to ask for a refund of what you have been unfairly charged plus an interest payment. You should keep all your bank statements as proof of these charges.

How do I make my complaint?

To begin with you must find out how much you have paid to the bank in unauthorised overdraft and returned item charges. Once you know this you should write to your bank to complain. If you have already written to your bank and you have decided to reject their final response then you can take your complaint to the Financial Ombudsman Service or to the court.

Click here to download our pack which has all the information you need to make your claim.

If you would like to speak to someone about how to make a complaint about a bank, contact the Consumer Council banking team on 0800 121 6022 or e-mail: bankinfo@consumercouncil.org.uk.

Other useful websites:

Financial Services Authority:

http://www.moneymadeclear.fsa.gov.uk/news/product/unauthorised_overdraft_charges_test_case.html

Office of Fair Trading:

http://www.oft.gov.uk/advice_and_resources/resource_base/market-studies/personal2

Financial Ombudsman Service:

http://www.financial-ombudsman.org.uk/faq/bank-charges.html