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The charges banks levy on customers who exceed their overdraft limit have made headlines recently, with a test case in the High Court determining whether banks will have to refund excessive fines to customers in the future.
Although thousands of customers so far have been successful in their claims and won back money from their banks, credit card customers seem to be more unwilling to do so. Depending on the card provider you are with, you could be charged for any number of things including paying off the debt late, exceeding your card limit, or paying off the amount all at once. Some of the charges will be perfectly fair, but if you feel you have been unjustly fined, it is possible to get the money back in a similar way bank customers did. For both bank and credit card charges, the basic principle behind claiming back money is the same: there is a difference between charges that result as a breach of contract and penalty charges.
While bank charge-related complaints have been put on hold by the FSA while the test case determines whether unauthorised charges are illegal, this is only applicable to: “providers of current accounts with overdraft facilities”. This means that credit card holders who have been levied with unfair charges can still complain to their provider. If the credit card provider will not deal with the complaint or does not respond in an adequate manner, it is then possible to transfer the complaint to the Financial Ombudsman or even the courts.
So what constitutes a fair charge? The basis for charges arises from contract law, in other words if you breach a contract then you can be charged. For instance, if you make a late payment on a credit card then the company can fine you and use the courts to enforce that fine. The amount charge, however, must be a reflection on the charge incurred by the company and not simply a punishment for late payment. The Office of Fair Trading (OFT) said last year that the default charges should not be more than £12 and card companies should provide evidence why they needed to charge more than that. Should you be charged unfairly, there are a number of steps you can take.
Firstly, credit card companies will not exactly be phoning you up to tell you they have charged you. They will, however, usually put them in the “new transactions” section of your statement so it is up to you to look through and spot them. If you have been charged, it is a good idea to try and speak to the company before lodging a complaint. For instance, if you make a payment just before the deadline but it doesn’t clear on time, most companies will clear the charge if you ask. If a phone call does not work, try writing a letter stating clearly that you would like a refund. It is a good idea to keep a copy of the letter and follow it up with a phone call to make sure it has been received. Give the bank 2 weeks to answer when they will either give you a full refund, a part refund or refuse your request. If you have been charged unfairly and are refused a refund, do not be put off; it is still possible to claim the money back.
If unsuccessful when dealing with the bank, it might be worth taking the case to a small claims court. You will have to pay in order to start making a claim, but if the case is worth less than £5,000 and is held in a small claims court, you will not be liable for the bank’s legal fees. It is now possible to start the case over the internet using the court’s Money Claims service. Often, if you inform the bank you are starting claim proceedings, they will be far more willing to give you a refund. If they do not respond to your claim within 14 days, you will win the case by default and can then demand a refund. At the last minute, however, the bank may decide to defend itself against the claim in which case you will probably have to go to court.
If you do decide to make a complaint make sure you know exactly how much money you are owed. Bank charges dating back to the last six years can be claimed and the same goes for credit cards. You can ask for a list of charges from your card provider which they should give you within 40 days.
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