Bank charges - what now?
Today, the UK's banks have won a significant victory against attempts to have their overdraft fees ruled unfair.
The Supreme Court has decided that the Office of Fair Trading (OFT) does not have the powers it thought it had to scrutinise the fairness of bank charges.
"The result is that banks can continue charging high fees for customers who go overdrawn without authority to subsidise the cost of providing current accounts to other customers who stay in the black." said BBC personal finance reporter Ian Pollock.
Ian told BBC News: "What is not clear yet is what happens to the refund claims that have been on hold since July 2007,"
"They may stay that way if the OFT attacks bank charges another way, perhaps by triggering a full Competition Commission inquiry. Alternatively, the judicial authorities may simply invite local judges to dismiss the claims that have stacked up before them."
Those who received payments from banks before the test case started will keep their money, because these pay-outs were made as "goodwill gestures".
Hard up? How to claim back bank charges
People in financial hardship can still continue to request a refund of their bank charges.
Hardship is defined as being unable to meet priority financial commitments; these are things like utility bills, rent, council tax, and food. When contacting your bank, you should also highlight any change in lifestyle such as relationship breakdown, death of a partner or starting a lower paid job.
As was the case before today's Supreme Court ruling, there is no guarantee they will receive their charges back but the bank is still required to treat cases of financial hardship in a sympathetic and positive manner.
People in financial hardship should write a letter of complaint to their bank as they would have done before today's ruling.
Template letter
Here is The One Show's template letter to help you with your claim:
Your bank has eight weeks to resolve your complaint. If you're unhappy with their response, contact the Financial Ombudsman Service who will look at your claim and decide whether the bank should award you some or all of your charges.
More information
- Banks win Supreme Court case on overdraft charges
- Q&A: Overdraft charges and your claims
- 'No free lunch' on bank charges
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Comments
Why should I subsidies those people who cannot manage their money. Thank goodness the banks won. I don't want to be charged for using a cash machine so they can recoup their money.
Alan Plumpton
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Those of us who manage our bank accounts properly are delighted with this Supreme Court ruling. Why should we and the banks subsidise those who cannot manage their money correctly and are looking for a free ride at the expense of others.
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Yippee. A victory for all the people who manage their current accounts correctly. Yes the charges are a bit extortionate but we all sign up to them when we apply for the account. I've been caught out myself in the past, but rather that than adopt the European system of charging for everything.
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I dont mind paying charges on any unauthorised borrowing, but I do object paying £30 for them to send me a letter to advise me. Then charging interest on the £30, which subsequently generates another letter so another £30 and on and on.
You cannot select not to have this letter sent but using email or text for free.
This happened to my daughter and the charges for the letters and the interest on the charges escalated so much (£2000) that she was near suicidal and depressed as her student income was being swallowed before she could pay her rent or buy food! Disgraceful!
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I am once again annoyed at the way the BBC have misrepresented the charges case.
I am old enough to remember when we all had to pay for statements and letters from our banks as well as having no interest on bank accounts. Those days will return if we allow people to misuse their accounts and then we reward them for it. The majority of bank account holders, that is around 75 - 85% of customers, have never had a bank charge! The facts are straight forward. If you manage your account and stay within your budget you will never receive a charge. If you do not pay close attention to your account and overspend you will be charged. If you do this continually you are taking money from the good customers, that is most of us. The lady who was featured on the Breakfast News this morning summed up the whole situation. She said that she budgeted her account and so could not afford the charges. My contention is that if she remained within her budget she would never have had a charge! People behaving in this way will cost the rest of us a fortune.
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I could not disagree more fundamentally with Christine's view. As other bloggers; this is the correct decision for 4 out of 5 customers who operate their accounts properly.
Would Christine like someone to help themselves to money out of her handbag? Just because Banks are big makes no difference; taking money, which is not yours, is stealing and a criminal offence; thank goodness for sound judgement, at last!
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I am staggered that the media coverage seems to favour people who are unable to manage their finances against the banks. What has the country come to when there is outrage at people withdrawing money that they do not have!
It seems however that commonsense has prevailed. If the BBC are to give this sort of thing airtime on something like the One Show it should be encouraging people to people to be responsible and not that someone will always fight bail them out.
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I was £111-63 in credit on my credit card for several weeks. I eventually withdrew £110-00 cash from a cash dispenser leaving a credit balance of £1-63. I didn't receive any interest on this amount, which I expected, but was very surprised to see that on my next statement (without any other transactions) I was £4-37 overdrawn (ie owing them money). They had the audacity to charge me interest on withdrawing my own money. WHY? Instead of being in credit I was now owing them money. A fair society? I think not!
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is it banksgiving day again?
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my daughter had £300 agreed over draft limit and when she went on marternity her income became unstable as a result she started to incur charges she phoned them and asked them not to pay bills over the agreed overdraft limet she would agree payment direct with them eg telephone gas rent but it carried on for over 9 months as a result it as cost her hundreds of £s surley this is not right as she has told them not to
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Thankfully, the Supreme Court ruled in favour of the banks rather than awarding the irresponsible.
Admittedly, there were some very high charges but this has been partly/largely resolved. Banks, surprisingly, are businesses and thus aim to make a profit but cannot do so if people renege on their loans.
Additionally, people who are prudent will suffer higher charges to cover the banks costs but then this is typical of today's society in that there appears to be little to no personal responsibility, this latter encouraged by the media, including the formerly prestigious BBC.
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alan people have asked hsbc not to pay bills over there overdraft limit but to no avail are you saying thats fare grow up
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I think Christine should pick up on the important word "Unauthorised", why should the majority of us who take the trouble to manage our accounts have to pay for withdrawals from cash machines and be charged for accounts in credit
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andrew and rob are you bankers big bailouts big charges big BONUSES
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I agree with previous comments regards people going habitually O/drawn,but not when banks put you deliberatly O/d. when your wages go in on the same day to suit their purpose.We were charged £30 for going over by £16.
Also I would like to bring to their attention that all savers who played by the book, paid their dues, and saved have been penalised through doing the right thing, dont forget it was the bungling banks that put us in the dire situation we are in now, and being given a bad return for our savings.Where would the banks be if every saver in the country went down tomorrow morning and withdrew their savings from the banks, because we are not getting a good return for it at the moment, we would not have to worry about with-drawal charges then?
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(SANDY) she dident ask for a unauthorised payment it was in hsbc best intrest to do so eg £30 fine good night sleep tight
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I have always been a big Christine fan but no more. Why should I have to pay for those who live beyond their means?. Dont tell me that I must earn big because my husband and I are pensioners. If we cant afford it we dont have it as simple as that!
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they will be no pension money left by the time we get old you will have used it all it cost me £55 a week just to get to work how much dose it cost you to go shopping with your interest that you get with the help of overdraft charges
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Chris - you appear to be one of the people to whom I refer in my post in that you don't appear to bear any responsibility for your actions. You don't appear to realise that an overdraft is putting you in debt and any responsible person pays off their debts rather than blaming everyone but yourself.
I, like Vicki Carter, am on a small pension and agree with Vicki in that,if we can't afford it, we don't buy it. In fact, like many males, I detest shopping and I'm happy as long as I've some food, water, air to breathe and my bicycle. I better add that my wife and family are also important so, rather than shopping, I prefer to spend time with them.
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Chris - For goodness sake if you don't want the bank to pay for things then cancel the standing orders or direct debits and manage your money yourself. We seem to want to devolve all responsibility for our own actions now a days. Banks need to make a profit - they are not charities.
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Wow Chris - sad person !!! can't see your conection between your going to work and people getting pension - other than ... people have historically payed a portion of their wages to the goverment for a pension in old age and are now getting what is rightfully theirs.
Nothing to do with the banks. It's strange how people with unauthorised overdafts feel it their right not to pay charges when they have spent money which is not rightfully theirs. They probably apply the same logic to receiving pensions - I've not contributed, but I'll expect a nice big payout when I retire - dream on!
As for going shopping on interest from savings - Chris you really are out of touch with reality - have you seen interest rates recently?
But there again ... if you're habitually overdrawn saving is probably a word in your vocabulary.
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Sorry -- last sentance should read
aving is probably NOT a word in your vocabulary.
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Bank charges are needed as a way of controlling spending for those that can afford their current lifestyle. i.e people with regular incomes but over spend from time to time, this slap on the wrists is harmless to those. BUT banks shouldnt exploit the poor or feckless by letting them go overdrawn. I have a good income but when i asked the bank to stop my card or any transaction if it would push me into negative equity they said thats not possible. I personally think if the banks would as standard have a £0 means £0 policy people cant get into debt with the bank. Overdrafts are fine but you should have to apply like a loan and respect the charges if you go over. i.e. dip your hand in the pocket without asking.
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Personally I am glad with the court's decision and I would have loved to have been a fly on the wall and seen Martin Lewis's smug smile face get removed. His interfering and bickering will cause more uproar and disruption to the majority. Just who does he think he is helping?
Firstly if you are charged by your bank for something then it is quite obvious that you've possibly done something wrong, or in some cases the bank might have made an error which they would rectify. If you are charged then speak to your bank, see if they can help, I do not understand how people can be so blarzey about their bank account and going over their overdraft.
If you get charged/fined for going through a red light or speeding does that mean you'd be stupid enough to keep on doing it?
If you're charged for constantly going over your overdraft limit then you're quite clearly incapable of managing your finances on a regular basis and should not have such facilities. These people who have such astronomical amounts of charges are doing no favours for the majority of the British people who manage their accounts well. To be fair also a bank would reverse a charge if it was a genuine error or first occurance and you are probably more likely to get somewhere if you go to the bank cap in hand, nice and polite and try to be honest and sincere rather than being like Martin Lewis who thinks he can sole handedly take down the entire banking system.
If you don't agree with bank charges, then the answer is simple, don't pay by direct debit, don't have your salary funded to your account, don't have a bank account. Simply spend your free time queueing up in the post office paying ALL your bills via Giro in your time at your cost and your own convenience. All a bank asks is you have your money in your account so they can pay your bills for you, is that really so difficult?
Had the court ruled against the banks it would have been the end of free banking in this country as we know it and the majority would have been punished for the idiotic few.
An overdraft at the end of the day is a loan, it is not your money, a bank like any other business is there to make money, it is not a public service or charity.
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Why cannot people take responsibility for their finances. If you cannot afford something don't buy it. I'm fed up with people moaning about this, people borrowing beyond thier means has been one of the issues that caused the economic issues we face now. A mature approach to finances and a bit of effort can make managing finances quite easy.
If you don't like the bank charges you can vote with your feet and change banks or make sure you donl't get overdrawn
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I have to agree with many of the comments already on here. Your report tonight makes it sound like people have a right to spend money that is not theirs and then not have to pay for the privilege. Your guest even said something along the lines of 'we know that shopping around for bank accounts is boring, when you would rather be shopping around for new jumpers and clothes' - surely this is the problem? The lady featured in your report sounded like between her and her partner, they had active overdrafts on about 3 accounts! people have got to stop spending money that they haven't got and budget according to their income.And if they want to overspend then they should expect to pay for it!
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Since the banks want to charge us even more money for going overdrawn why don't we have the power to charge THEM for going overdrawn with us?
I believe the latest figures show that they owe us about £35,000.00 for every person in the UK. If I send them a letter to inform them of this can I invoice them for £35.00?
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Talking to them has worked every time for me [apart from once] where I had to fork out £20.
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in a typically english manner.. no wealthy judges are looking after us, and the banks are still raking in their profit and causing their staff to rush like cattle to canarywharf to line their wallets.
what about the suicide attempt by a young graduate at barclays that was covered up. we are all responsible - especially the rat run commuters who pretend to their children that they are nice people when they get home.
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