Last month’s ruling by the Office of Fair Trading (OFT) that many bank penalty charges of more than £12 are unfair could generate a flood of compensation claims.
These penalty charges are those enforced for late payments on credit cards, unauthorised overdrafts, unpaid direct debits and standing orders and missed payment fees on store cards and mortgages.
The ruling, which extends back six years, is seen by lawyers and consumer groups as a green light for customers seeking redress for hefty charges and penalties over that period.
The first step is to write to your bank asking for your money back (you might even consider adding a £35 admin fee).
Under the Data Protection Act, your bank is obliged to supply a list of all charges you have paid in the past six years. You may get a refund without too much quibbling.
If you don’t, then, as step two, a stronger letter is required, warning of court action or threatening to refer your case to the Financial Ombudsman Service (FOS).
Which option you take will be determined by personal circumstances. If it is the latter course of action, once you complain to the FOS, your bank has eight weeks in which to resolve the dispute or incur a £360 fine.
This fact alone may lead your bank to settle your claim. At present, there are no published FOS decisions relating to bank charge cases, so it is difficult to ascertain its view on such a situation, although it will undoubtedly evaluate the administrative burden the bank has incurred.
An FOS application must be made within six months of your bank’s final rejection of your friendly overtures about returning unfair charges.