Customers trying to recoup unfair bank charges should stay clear of firms which offer to do the work for you – but take a cut of any refund.
A plethora of these companies has sprung up offering to represent customers on a ‘no win, no fee’ basis. But some of these firms will take almost half of any refund as commission, while others charge up front fees to cover admin costs.
If you want to claim a refund of unfairly high ‘default’ charges – charges made for bouncing a cheque, say, or for exceeding your overdraft limit – Which? advice is to lodge a claim against your bank for free, using the Which? banking charges site. Tens of thousands of consumers have already used our website in their battle to claw back unfair charges.
Complain for free
Which? Principal Researcher Mike Naylor said: ‘There’s no need for anybody to pay for this service. Current account holders can complain for free by contacting their bank. You can handle the complaint yourself and any money awarded will be yours.
‘If the complaint is rejected, you can forward it to the Financial Ombudsman Service (FOS), which will investigate.’
In June this year, Which? calculated that bank customers pay £4.7 billion a year in default charges. Many complainants have received refunds, but some banks have been shutting the accounts of complainers, so our advice is to open an account elsewhere before you make a complaint.
Which? has produced a complete set of web resources to help consumers win their money back. Our banking charges site includes:
- information on why the charges may be unenforceable in law
- a fact sheet on how to use the small claims court to gain redress
- template letters to challenge the banks.
Big companies such as banks might test your staying power by ignoring your letters or taking as long as they can to respond to your court claim, so be persistent.
Your bank may also attempt to put you off by threatening you with huge court costs (charges for its barristers, for example). However, if your claim is reasonable, it’s highly unlikely that you’ll be charged so don’t be put off.