Don’t get done over by bank charge claim companies
January 7, 2008
The story relating to reclaiming bank charges has been plastered all over the financial headlines for much of the past year and a half, and only when financial regulators announced that there was to be a test case held at the beginning of 2008 did the headlines relating to bank charges start to subside.
The whole thing kicked off when financial regulators in the UK stated that the charges banks applied to customers’ accounts for exceeding the overdraft limit, for bounced cheques, and for returned direct debits, were unfair and unjust, and that the actual cost incurred by the banks was minimal compared to the amount that the banks were charging customers.
Campaigners claimed that the cost of administration to the bank in such situations was around £2 - £5 pounds. However, some banks were charging customers close to £40 per fee, sending them into spiralling debt that became increasingly difficult to get out of. After regulators ruled that the charges were unfair and unlawful many banking customers from across the UK successfully reclaimed their charges going back up to six years, with some in line to receive thousands of pounds each in returned charges.
However, where there is a quick buck to be made there is always someone lurking in the shadows, and sure enough it was not long before a batch of ‘bank charge reclaim’ companies appeared on the scenes. These companies claimed that many people that were owed money from the banks may find it a difficult and time consuming process to try and get their bank charges refunded. These firms offered to do all the legwork on behalf of the customer for a percentage of the amount received back from the banks.
Although this may sounds like a valuable service, consumers need to bear a couple of things in mind. Firstly, claiming back bank charges involves filling out some simple forms and sending off a couple of letters, which does not really take long to do, so it is possible to actually claim back the charges yourself, even if you are working and lead a busy lifestyle. Secondly, the amount that these reclaim companies often charges can come to a fortune, with some taking close to half of the amount that you receive back from the bank – you have to ask yourself if it is worth paying that much for the sake of getting someone to fill in a few forms and send off a few letters.
One woman that used a reclaim agency to help her reclaim her charges recently stated: ‘…I’m still angry that they didn’t advise me of their level of charges from the outset when my claim was first initiated with them. I feel a 40% charge is an extortionate amount to pay, just for having them write a few letters on my behalf. My claim never went to court so I really do not feel that the work Charge Claims did on my behalf warranted such a large fee. I now just wish I had been more circumspect when I was signing the original agreement. If I had known then that I could have handled the whole claim myself in a couple of hours, I would never have gone through a third party agency.’
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