Banks' appeal comes off its hinges

By Martin Lewis, Britain's money saving expert , 28/02/2009

THE bank charges gates have been unbarred and are creaking loudly as hordes of reclaimers pushing to get their money back are now restrained only by the smallest of latches.

The biggest consumer revolt since the poll tax riots is nearing its conclusion, and hopefully it won't be long before millions claw back £2-3 BILLION unfairly snatched from them.

HISTORIC DECISION

THURSDAY was a momentous day in bank charges reclaiming history, and I was privileged to be sat at the back of the test case courtroom to listen to the Court of Appeal's Sir Anthony Clarke read out an unequivocal statement.

His words? That banks' attempts to overturn the original victory for reclaimers and the Office of Fair Trading (OFT) had been dismissed.

It was so final, he said, all the judges considering the case had unanimously decided NOT to grant banks permission to appeal to the House of Lords.

At that moment, it was all I could do to stop myself cheering to avoid the frowns of gowns and grey suits.

Yet sadly, the judge clarified that banks could ask the Law Lords DIRECTLY for permission to appeal- and now it's confirmed they will do so.

A THREE-YEAR BATTLE

I FIRST heard about bank charges reclaiming in January 2006, after a couple of clever chaps approached me for support after spotting lenders' hidden law-breaking.

I took up the cudgels after witnessing the hideous damage being done by these charges-when people get caught and can't repay, penalties may snowball into thousands, with charges added to charges.

Within two years, the revolt exploded: 5.6 million template letters for how to reclaim charges have been downloaded from my website alone. The banks paid out an estimated £1 BILLION, with some people getting back £30,000.

Then suddenly in July 2007, the test case was launched, and the Financial Services Authority regulator halted all reclaims. Now, after Thursday's result, that is closer to ending.

Q. DOES THIS MEAN BANK CHARGES ARE UNLAWFUL?

NO. Thursday's ruling was about deciding whether fairness laws apply to bank charges.

Campaigners have always argued that charging £35 for going a couple of quid over your overdraft limit isn't proportionate. But banks have pinned their hopes on the argument that "it doesn't have to be proportionate, as those laws don't apply". Now it's been confirmed again that the laws DO apply and bank charges must be FAIR.

Q. WHAT HAPPENS NEXT?

WE wait for the House of Lords to decide whether banks can appeal. Assuming they can't, the Office of Fair Trading (OFT) must decide whether charges actually are unfair-and judging by the smiles on it's representatives' faces as they left court I'm in no doubt that they will press on.

The OFT has revealed it has already written to banks setting out its concerns that charges may be unfair and expects to reach its final decision later this year.

Then it must convince banks to agree on a remedy. This will tend to be about future bank charges but it will also have a huge impact for reclaimers, as it should set out what's fair. If they can't agree, then it's back to court.

Q. HOW FAR BACK CAN I CLAIM?

YOU can claim back six years in England and Wales (five in Scotland), although when the test case began in July 2007, the clock was STOPPED. So you should be able to claim back all charges since July 2001. It could be more than you think-just two charges every year could add up to a total of £500.

Q. IS THIS THE END OF 'FREE BANKING'?

RECLAIM opponents argued this while the banks were paying out, but we still haven't seen it. Even if £3 billion is paid, it's a fraction of our taxpayer bill for bailing out the banks.

If anything sees off free banking, it will be SHAMBOLIC management decisions that cost hundreds of billions-NOT reclaiming. Yet we don't actually have free banking, we have 'fees-free' banking for customers in credit. And with the market hugely competitive (some banks offer £100 for switching) fees are still unlikely.

Q. IS THIS GOOD OR BAD FOR THE ECONOMY?

IT could be great. Imagine billions being taken out of banks' safes and put into the hands of rightful owners for them to spend. What a stimulus to the economy in times of need.

Q. CAN I RECLAIM NOW?

THE FSA-imposed hold on reclaims is still on and the judge said the court's equivalent should remain until the Lords decide whether to allow an appeal (and if they do, until THAT decision is made). I think it's likely the FSA will follow their lead, keeping reclaiming on hold.But get in the queue to get your money sooner once it's all resolved. Free template letters at www.moneysavingexpert.com/bankcharges

Q. I'M IN REAL TROUBLE, CAN I RECLAIM NOW?

YES. There's an exemption for extreme hardship such as being unable to pay your main bills or being hit with more than £500 of charges in the last year. If that's you, go for it. Full rules at www.moneysavingexpert.com/bcnews

TV Money Guru Martin Lewis is the creator of the Consumer Revenge website www.MoneySavingExpert.com which is packed with info on how to get more money in your pocket.

Your comments

This article has 11 comments

I have been trying for two years for my bank charges back am at a stage now that i have no income through bank charges. this is about 300 houndred pounds a month in bank charges. I have also claim for hard ship no reply, The bank is also not paying out the insurance what they should do through the bank am going to lose my house and car also what i have worked hard for

By caroline rennie.. Posted October 21 2009 at 9:35 AM.

John Dunce, whilst I agree in part with what you're saying, I too was hit quite heavily to the tune of almost a 3rd of my then student loans thanks to the natwest bank. It also leaves a nasty taste in my mouth that I can't claim back charges levied against me from back then and that people who seem incapable of living within their means have now been given a reprieve. But thinking back on my own experience, natwest levied charges against myself for them putting me into debt, such ludicrious acts as the SLC putting the money in my account, but natwest not allowing it to clear, so they charged me for that then levied even greater charges against me. It wasn't fair and when I mentioned it they gave me 'good will gestures', though they still put me in debt regardless. Fact is though, laws and contracts have to be equal to all concerned, the banks however don't like it when they find themselves having to play fair, they prefer their rule book, the one where they dictate the rules. So even though I cannot claim as my problems were greater than 6 years before, I am happy at least these banks are being taken to task, what upsets me however is Martin Lewis' inability to share credibility for this, he never mentions the names of those that brought the matter to his attention, instead prefering to put himself in the limelight as the person who brought this to the worlds attention.

By dave.. Posted September 6 2009 at 1:02 PM.

I posted my claim form last year. Since then I have incurred a couple more bank charges. Will I be able to re-claim them, and if so, do I have to do another claim or will they automatically put them on any refund they give me (if they actually get around to paying us!!!)

By Christine Ferguson.. Posted July 17 2009 at 4:00 PM.

I'd like to comment firstly to John Dunce who posted a comment on the 8th March.
Although I had a job with lots of responsibilty, two at the same time in fact, I was not previleged enough to attend University due to having to pay my way. All I can say about your comments about the hard working English class who find themselves in financial difficulty is... well, your surname says it all !
I'm now living in the USA but have kept my Halifax account open to continue paying my mortgage until my house sells, will this effect my claim at all?

By Dave Goddard.. Posted June 14 2009 at 7:48 AM.

I too am awaiting the final outcome of this court case. I have been waiting for almost 2 and a half years now and should get around £3000 back. Unfortunatley i had incurred alot of charges which could not of been helped due to circumstances back then, but thanks to Martins website it has bought me hope for a nice windfall to make me comfortable again.

By jason goddard.. Posted May 3 2009 at 2:26 PM.

great news so far,i just hope this comes to a close soon.I to have been waiting around 2 years now and with constant phone calls from bailiffs on the banks behalf wanting for me to pay them up front.

I really hope that this will be a case of david and goliath and we as a country show that we we not be a country of put up and shut up,that we have been for too many a year now.keep going martin your of great support to the public,thankyou.

By mrs clarke.. Posted April 26 2009 at 11:15 AM.

thanks martin I applied for a refund of charges through the financial hardship route, a route that I did not know was possible until I read your column in the NOTW I have just received over 3800 pounds in charges, my mortgage arrears are now paid in full and the re-possession order lifted, last night I slept well for the first time in 3 years thank you

By kathleen hewitt.. Posted April 22 2009 at 10:29 AM.

dose this apply 2 building society charges

By caroline davies.. Posted March 9 2009 at 5:54 PM.

Its a sad state of affairs when people that cant control THEIR overspending and living beyond their means, try to find a back door to try to get out of it. I've had charges myself (student years) and though they were a sting at the time it prevented me allowing myself to fall into the position of getting further charges ever again. I accepted them because I was aware they were there as per the terms and conditions of the account which I read before opening the account.
I personally hope they change the way they are applied from now on, but I hope they throw all the claims out or pay a nominal £1 for each charge incurred. Its time people accept the majority of the fault for their lack of financial awareness. Maybe its time schools run classes teaching people to look at their accounts more often and spend accordingly.

By john dunce.. Posted March 8 2009 at 4:42 AM.

This is fantastic news!!! I am one of the test cases awaiting a final decision and can`t wait for the day that I receive my money back plus the interest!!!! Almost at £12,000 in total now !

By Tracy John.. Posted March 4 2009 at 5:56 PM.

I have already submitted my reclaim form and had a response from my bank, going back about 18 months. I now live in the Netherlands, is it possible to speed up my claim on the grounds that I have moved abroad?
I do still have an open account with them.

By Mark Farman.. Posted March 3 2009 at 2:38 PM.

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