Banks make billions from illegally charging customers “penalty fees” (for bounced cheques, overdrafts, etc). BBC2′s Money Programme (12/12/06) investigated this scam and revealed the following:
You can claim back all the penalty fees you’ve been charged over the past six years (the legal maximum period for reclaiming). You can also charge your bank interest on this. They may object at first, or offer only a partial refund, but eventually they will cave in, because:
• Under the “Unfair Terms in Consumer Contracts Regulations (1999)” penalty charges have to reflect administrative costs – profiting from them isn’t allowed. The banks make an estimated £4.5 billion in profit from such charges each year.
• Penalty charges are often £30 or higher, but the cost of processing overdrafts, bounced cheques, etc, is estimated at between £2.50 and £4.50, depending on the amount of manual intervention. In 80% of cases there is no manual intervention.
Although your bank may initially threaten to defend itself in court against your refund claim, no bank has done so to date. This is because they know they have little chance of winning, and they are petrified of bad publicity. In practice, people determined to be refunded have been fully refunded (in some cases by thousands of pounds).
Watch the BBC programme here.
More details here.
Full details on how to reclaim your money here.
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