Reclaiming+Charges

Reclaiming Charges

Step-by-Step Guide to Reclaiming Charges

The following steps detail how to reclaim charges and include all the template letters for different scenarios. However the bank charge landscape changes frequently, so what's correct now, can change.

Step 1. Set up a parachute bank account

 Sadly some banks will close down your account when they pay out the cash – a bit of a "we'll pay up, but get lost" gesture. This may lead to a financial nightmare (and possibly breaks the Banking Code), so it's very important that before you begin this process, you set up a bank account elsewhere to ensure you're not left out in the financial cold (read Best Current Accounts). The Financial Ombudsman has recently ruled against a bank for doing this. If your bank is ultimately closed it is worth making an official complaint and you may be due even more compensation. If you've got an overdraft, the risk of having your account closed is a little more scary. Overall it's probably not likely to happen, so don't let it put you off reclaiming too much. Yet as it's always possible, it's worth taking a few preventative steps just in case.
 * What if you're overdrawn? **

 If you've only a small overdraft, which would easily be covered by a bank charges pay out, or you've got funds elsewhere that could cover the overdraft, then don't worry about this. Yet if you've a sizeable overdraft, that a bank charge payout wouldn't come close to clearing, then it's worth considering some preventative action. The easy option is to simply get a new overdraft elsewhere, yet those without great credit histories or with large overdrafts may find that difficult. Don't let that put you off taking on the banks though; to help there are more hints and options in the full Overdrawn? Don't Be Scared To Reclaim! article. Many people worry about the impact of reclaiming charges on their credit score/rating. In fact, banks can't put a note on your credit reference files about this, though of course the fact you were over the limit in the first place will have affected it. Yet while it won't be on your file, individual bank may keep its own notes on you as a ‘difficult customer' and this may impact any future applications you make to it.
 * The impact of reclaiming charges on your credit score **

Step 2. Find out and total all your charges

 We need to know all the fines you’ve been charged by each bank or credit card, including charges from now closed accounts, over the last six years (the time period is limited by law). Now, do note we’re only talking penalty charges/fines, not normal account fees

 **What if I don’t have the details?**

 Let’s be honest, how many people have all their statements for six years? If you’ve online banking access, first see what’s available there, if not send a letter to your bank requesting a fully comprehensive list of all past charges. You’ve a legal right to do this under the Data Protection Act. If you don't know where to write to, MoneySavers have compiled a list of [|data protection addresses] which should help. Unfortunately they are legally allowed to charge for this info, the maximum amount is £10 and, banks being banks, they tend to charge the full amount. So to save time, enclose a cheque for a tenner in your letter. <span style="font-family: Arial,sans-serif;"> The bank only has a maximum 40 days to respond. Sadly, many are now failing to do so, citing the fact they’re overloaded with claims. Yet don’t be put off, you have a legal right to this information within 40 days. If you don’t get it, regardless of the banks excuse, follow up with a phone call and then report it to the [|Information Commissioner] for a breach. <span style="font-family: Arial,sans-serif;">If you won via the courts, you would be entitled to add 8% interest (not compounded) on top from the date you were ‘first deprived’ of the money (i.e. the date of each charge). Therefore you may want to ask for the interest as part of the initial claim. It's important to understand that you are not legally entitled to interest unless you win in court, yet all prior letters are a tool of negotiation; think of it a bit like haggling.
 * <span style="font-family: Arial,sans-serif;">Charge interest on top **

<span style="font-family: Arial,sans-serif;"> You may get lucky and get the interest on top, but even if not, the legal feedback I've had is that it’s one route to pushing the bank to settle quickly so it can offer to pay you without the interest. Of course there is a risk that asking for too much makes them less likely to settle too - sadly this is an art not a science. <span style="font-family: Arial,sans-serif;">For those who do want to ask for interest, I’ve had the calculator below specially built to work it out for you and included it as an option in the template letters later. However, if you'd prefer to play safe simply ask for the charges without interest in the early stages.

<span style="font-family: Arial,sans-serif;"> When you click ‘print’, a new window will pop up with a schedule of your charges. To save the list and avoid typing it in again, highlight the text in the window, then copy (Ctrl + C) it and paste into Word.

Step 3. Write to the bank and ask it for your money

<span style="font-family: Arial,sans-serif;"> It’s time to contact the bank and ask for your money back. Simply write and say you believe all the past charges (and detail them) were disproportionate and you want all the money back with interest. <span style="font-family: Arial,sans-serif;">There can be a variety of outcomes. > > These are all common tactics using spin, spiel and carefully written scary notes to put you off. Don’t be worried though, hundreds of thousands have already had these letters and carried on. > > It’s all just another step in the dance. If the summary of the letter is 'no you're not having your money back', however it's dressed up, .... then in the words of Kenneth Williams..... carry on regardless.
 * **<span style="font-family: Arial,sans-serif;">VICTORY. **<span style="font-family: Arial,sans-serif;"> You get all your money back. For a rare few, the bank will simply write back and offer to pay you the money. If this happens, congratulations.
 * **<span style="font-family: Arial,sans-serif;">You’re ignored or refused. **<span style="font-family: Arial,sans-serif;"> The most common outcome is you get a letter explaining that the charges are lawful, and that you don't know what you're talking about, or even that it is prepared to fight. Yet these are one of a myriad of tactics that banks will try to dissuade you from carrying on. It may suggest you go to the Financial Ombudsman; it may tell you that you’ve no case; there’s been a ruling; that it can’t comply with your details; that it’s satisfied with the way it's acted; it may even quote legal precedents at you.
 * **<span style="font-family: Arial,sans-serif;">It makes a partial offer. **<span style="font-family: Arial,sans-serif;"> There is a chance it’ll offer some or all of the money you want. If so, you need to decide whether it’s worth continuing or just taking the cash.

<span style="font-family: Arial,sans-serif;"> Remember. In the letters, YOU set the timetable, so stick to YOUR timetable and don't allow the bank to dictate.

<span style="font-family: Arial,sans-serif;">Step 4: Threaten to take it to court

<span style="font-family: Arial,sans-serif;"> If, as is likely, your enquiry was rejected, deemed invalid or you didn't receive a response, write to inform it that you’ll be taking court action if it doesn’t settle. In many ways this is a repeat of step three, but in more militant fashion. Include a strict limit of the time you give it to respond. Some people skip this step, but it’s often worth a shot, as if it works it saves actually having to start the court process. <span style="font-family: Arial,sans-serif;"> //)//  <span style="font-family: Arial,sans-serif;">If you want a speedy settlement, one tactic is to offer the bank the option of settling for a lower amount if it pays out now. How much lower depends on you, but 25% less is a good rough guidance. There’s no need to do this, it’s your choice, though if you choose to the letter below is drafted to help. Do note the phrase ‘without prejudice’ I’ve used, it’s crucial. It means that the offer isn’t binding or admissible in any further legal process. <span style="font-family: Arial,sans-serif;">At this point the likely outcomes are still similar to Step 3. The chance of getting a better settlement is improved though.

<span style="font-family: Arial,sans-serif;"> **Should you accept a partial offer?**

<span style="font-family: Arial,sans-serif;"> This is a tough decision at any stage in the process. Whilst there’s a temptation to say ‘fight the good fight and take ‘em on’, what’s actually more important is protecting your pocket. Let’s say you’ve £2,000 of charges and are offered £1,200; the first thing is try not to think “I’m £800 short” but instead that you’ve got £1,200 you thought was gone forever.

<span style="font-family: Arial,sans-serif;"> The ultimate decision is yours. It’s a combination of whether you want the hassle of continuing versus getting the cash. The likelihood is that if you carry on you will get the money, but it will take longer; then again it’s not guaranteed and there’s always a chance (however small) you’ll lose and not get anything. <span style="font-family: Arial,sans-serif;">There's nothing wrong with calling the bank at this point and telling them what amount you'll settle for, e.g. "I believe you owe me £1,400; you're offering £1,000, I'll take £1,200". It can work: remember the whole thing's about negotiating. <span style="font-family: Arial,sans-serif;">This is your personal decision and depends on your circumstances, such as how much you need the ‘certainty of the cash’.

Step 5: Go to court or the Financial Ombudsman

<span style="font-family: Arial,sans-serif;"> Most people don’t reach this stage. If you’ve received a full or nearly full settlement then there’s no need to read on, just take the money. If you’ve not, you now have two choices and need to either consider getting legal on their backsides or going to the Financial Ombudsman (FOS), which also has power over these cases.

<span style="font-family: Arial,sans-serif;"> It may seem strange that having threatened court action, to now consider a change of tack and going to the Ombudsman. The reason is simple, threatening court action in the earlier letters is more likely to push the bank into offering a settlement; yet remember this guide is a negotiation path designed to get you your money back as easily and swiftly as possible.

<span style="font-family: Arial,sans-serif;"> So once we’re at this point, even though we’ve threatened court action, there’s no need to follow through, if the right move is to change tack, that’s not a problem. <span style="font-family: Arial,sans-serif;">The two choices are as follows: **<span style="font-family: Arial,sans-serif;">Choosing between the court or the Ombudsman **
 * **<span style="font-family: Arial,sans-serif;">Small Claims Court System. **<span style="font-family: Arial,sans-serif;">Don’t automatically think judges and wigs, this is actually about filling out a claim form online. There’s a fee from £30 to £120 depending on how much you are claiming, but it's refunded with successful claims. Most people win by default and get an automatic payout as the banks don’t defend, but there is a chance it will get to a judge. To find out exactly what to do read the going to court section.
 * **<span style="font-family: Arial,sans-serif;">Financial Ombudsman Service. **<span style="font-family: Arial,sans-serif;">This is a free and independent service created by parliament to help settle disputes between financial companies and their customers. It will deal with bank charges complaints, and you will need to sign a consent form and send copies of your documents but you then hand over contact with your bank to the Ombudsman. To find out exactly what to do read the [|going to the Financial Ombudsman] section.
 * <span style="font-family: Arial,sans-serif;">The Background **

<span style="font-family: Arial,sans-serif;"> From the first publication of this guide in Feb 06, the step by step plan focused solely on going to court, and it's been incredibly successful. Over 3 million template letters have been downloaded and until May 07 everyone who followed the path through was successful as the banks never show up in court.

<span style="font-family: Arial,sans-serif;"> In May the loss in the Berwick case was a surprise. The bank didn’t turn up, but a maverick Judge took it upon himself to decide the case and ruled the bank needn’t repay the charges. As it was only in a district court, this wasn’t a precedent setting decision, so it doesn’t bind any other court and thankfully the vast majority of judges have continued to order the banks to pay-up.

<span style="font-family: Arial,sans-serif;"> Even so this means going to court no longer has a 100% success rate and while most people are fine, there’s a tiny chance you’ll lose in this judicial lottery. This is why I’ve now introduced the alternative strategy of going to the Financial Ombudsman Service (FOS). If you're already in the court process don't worry, you've not done the wrong thing; this is just an alternative. <span style="font-family: Arial,sans-serif;">Originally the FOS was slower and more cumbersome than going to court; and it still can be slower, yet it’s risk free (as you can’t lose your fee) and so far there’ve been no reported failures; plus there’s no risk that you will need to go in front of a judge and argue the case. <span style="font-family: Arial,sans-serif;">Yet put a bank charges claim to court and if, as is common, the bank doesn’t acknowledge the claim (see later for more details on this), you’ll win by default in 14 days and get your money back speedily and with the 8% interest added on top, while the FOS will take a few months. Yet if the bank does acknowledge the claim the court process could take a lot longer and you could get involved in a fight. <span style="font-family: Arial,sans-serif;">There’s no hard or fast rule as to which is better. If your claim is smaller, for example under £1,000 it’s more likely the bank won’t be keen to see the process through; so the court is likely to be speedier. For bigger claims the more limited risk of the FOS becomes more favourable. Court is the more aggressive process the FOS the safer.
 * <span style="font-family: Arial,sans-serif;">Pros and cons **

<span style="font-family: Arial,sans-serif;"> Before deciding why not read through the detailed description of each process below. <span style="font-family: Arial,sans-serif;">Going to court

<span style="font-family: Arial,sans-serif;"> In the main this is a simple online process, and in most cases the banks will not contest your case.

<span style="font-family: Arial,sans-serif;"> **It’s all about the small claims rules** <span style="font-family: Arial,sans-serif;">In a standard court, the losing party may be asked to pay the legal costs of the winners. This can be very expensive, yet if a case is heard under the ‘small claims’ system in the vast majority of cases, costs are not awarded, making it a much less risky bet.

<span style="font-family: Arial,sans-serif;"> Small claims in England and Wales are cases under £5,000, that’s before any statutory interest is added. Try to keep claims below this if possible, either by making a separate claim for each different account with the same bank, or if you're just a few hundred above the limit you may want to consider lowering the asking amount down to £5,000 (even if your earlier letters demanded more) to minimise the risk.

<span style="font-family: Arial,sans-serif;"> Yet even if your claim is much bigger for just one account, and you're not eligible for the small claims system, take it seriously but don't be unduly put off; though if this concerns you, you may want to consider seeking legal help ([|see later]).

<span style="font-family: Arial,sans-serif;"> For those in Scotland and Northern Ireland, while the law is similar, the small claims process works differently. In Scotland the maximum claim is £750 and you may only reclaim 5 years' charges, in Northern Ireland the maximum claim is £2,000. This article is written based on the process for England and Wales, so for more details see Northern Ireland Courts and Scottish Sheriff Small Claims.
 * <span style="font-family: Arial,sans-serif;">How to make your claim **

<span style="font-family: Arial,sans-serif;"> Use the Moneyclaim website in England and Wales (there's also the Northern Ireland Courts online) which can be used for starting most county court money claims, just go there and fill in the form. There’s a fee of between £30 and £120, depending on the size of your claim, which can be paid by a credit or debit card; though it’s refunded if, and hopefully when, you win. If you don’t have plastic to pay on, get the paperwork to start the claim from your local county court and pay there; it’s the same price. This may be waived if you’re on benefits.

<span style="font-family: Arial,sans-serif;"> Once the case is started there’s a race on between you and the bank; can they get in a defence or at least acknowledge they’ve had the paperwork within 14 days? If not you can ask for a judgment against the bank for the full amount of the claim without any hearing (see step by step guide below). <span style="font-family: Arial,sans-serif;">This is why it's an easier option to use Moneyclaim on the internet, as there your request is likely to be actioned much, much faster than by your local county court and as one eminent legal source said to me, with his tongue firmly in his cheek (never easy to talk that way) "there is no risk on the internet of a overworked county court clerk wrapping up his uneaten cheese sandwiches in your judgement request form and throwing it away." <span style="font-family: Arial,sans-serif;">As a technical note, while it’s rare with these cases, submitting a claim for no more than £5,000 doesn’t guarantee it’ll be heard as a small claim; if it’s contested and seen as a difficult case, it can be tried in the county court as a non-small claim (on what are called the ‘fast track ‘ or the ‘multi track'), which could imply costs, though this is very rare.

<span style="font-family: Arial,sans-serif;"> **What happens next**

<span style="font-family: Arial,sans-serif;"> After you’ve submitted a Moneyclaim, what happens next depends on the bank’s reaction. It takes five days for the claim to be ‘serviced’ and all deadline dates start from that point. > > <span style="font-family: Arial,sans-serif;"> For the sake of expediency the bank may settle in full as a ‘goodwill gesture’, including interest and court fees; though it almost certainly won’t admit it ever did anything wrong. This is most common for smaller claims. > > <span style="font-family: Arial,sans-serif;"> This is a very common outcome; often the bank simply doesn’t acknowledge the claim and this means you automatically win by default 14 days after the claim is served (which takes 5 days). At that point, you must request ‘judgment by default’, this can be done online, and you should do it as soon as possible (get it in your diary and plan around it to the second if possible) after the 14 days ends. > > <span style="font-family: Arial,sans-serif;"> Banks have 14 days to acknowledge a claim after it's served, if that’s done they have a further 14 days to respond and enter a defence. Commonly they do an acknowledgement, but no defence is entered. Again this means you win, though this time after 28 days. At that point, immediately request a ‘judgment by default’, this can be done online. > > <span style="font-family: Arial,sans-serif;"> I know this is the point where people get scared, which is what the banks want. If you’re one of the very few cases where the bank does enter a defence, don’t worry too much, this is pure posturing. In almost every case it's simply a way to try and make you settle, or argue that you've asked for too much (e.g. you've gone beyond six years or tried to claim compound rather than statutory interest). > > Yet, at this point you’re now in the proper court process. There’s a straightforward form called the Court Allocation Questionnaire which you need to fill out and return to the court. The next stage should be a small claims hearing date, yet this virtually never happens, as the banks
 * **<span style="font-family: Arial,sans-serif;">VICTORY. The bank settles in full. **
 * **<span style="font-family: Arial,sans-serif;">VICTORY. The bank does nothing. **
 * **<span style="font-family: Arial,sans-serif;">VICTORY. The claim’s acknowledged but there’s no defence. **
 * **<span style="font-family: Arial,sans-serif;">EVEN IF IT DEFENDS THE CLAIM, DON'T WORRY. **