Consumer Rights: Bank charge misery - £66 for nothing

Q. I opened a NatWest current account so I could transfer money from my PayPal account.

On one occasion there wasn't enough money in the PayPal account to pay my eBay fees, so eBay tried to take it out of my NatWest account. The bank refused to pay the debit of £28.88 and hit me with £38 in charges.

Two weeks later, I got a letter from NatWest saying I owed a £28 "maintenance charge". It had taken the £38 out straight away, so making me overdrawn and triggering the £28 charge. I pointed out that it was charging me £66 for not paying anything on my behalf, but it would not budge. I closed the account but am still very angry about it. RB, Northampton

A. Although it may seem outrageous that banks have been levying these sorts of charges, Brian Capon at the British Bankers' Association confirms it has been standard practice: "Typically, banks charge a fee when considering whether or not to pay items when there's not enough money in the account."

The legality or otherwise of these charges has been brought into sharp relief by Martin Lewis at advice website Money-SavingExpert.com, who has fought a high-profile campaign.

The dispute is now the subject of a court case between the Office of Fair Trading and a number of banks. The banks lost the first round but appealed.

With the case continuing, City regulator the Financial Services Authority (FSA) has ruled that claims lodged with banks are on hold pending the outcome, unless disgruntled customers can show they are in real financial difficulty.

All you can do is lodge your claim and wait. MoneySavingExpert has template letters and provides regular updates on the court case. This is probably your best first port of call.

Q. Just over 10 months ago, I joined the Men at Work agency as a male escort and chaperone. It claimed (verbally) that once I paid the £225 joining fee, I would be working the next weekend. I wasn't – and haven't done so since joining. I would like a full refund as I believe I was misled.

The terms and conditions on the agency's website state that after the statutory "cooling off" period, no refunds will be given. But is there such a thing as an unfair contract? I'd like to clarify my legal rights. SK, London

A. This is a similar situation to one that used to occur at modelling agencies, which charged to have photographs taken on the promise of getting work, which never materialised.

Ingrid Gubbay, consumer law consultant at Cohen, Milstein, Hausfeld & Toll, says there were a couple of warning signs: "The first thing to note in the terms and conditions is that it does not (they say for security reasons) conduct transactions by credit card." Section 75 of the Consumer Credit Act provides protection to the purchaser for sums between £100 and £30,000.

"Second, while the terms and conditions comply with the Distance Selling and Unfair Terms in Consumer Contracts Regulations to the extent of informing you of your right to cancel the contract within a seven-day cooling-off period, other more ambiguous terms make it hard to understand when that period begins. This ambiguity may be unfair under the regulations."

Ms Gubbay believes you may have a legal case. "It appears you relied on the verbal statement, and so this statement would become a core term of the contract if it was misrepresented to you. There may be an inconsistency between the terms and conditions, which say Men at Work will endeavour to find work "as soon as possible", and the statement given to you.

She says you should write to the agency asking for a refund. If there is no response, you could issue a claim at moneyclaim.gov.uk, which will take you through the steps to reclaim the fee, or speak with your local Trading Standards Authority or the Office of Fair Trading, which may follow this up for you.

A Spokesman for Men at Work says: "We charge to put people's profile on the website. In effect they are paying to rent space on the website. We do our best, but some people get a response and some people don't."

Q. My building society is keen for me to buy into its guaranteed equity bond product. Given the volatility in the market, I like the idea of a safety net, but I have read bad things about these products in the past. TM, Brighton

A. Advisers within building societies can generate tidy commissions from selling guaranteed equity bonds, a type of structured product that typically offers 70 to 80 per cent of the growth in a major index such as the FTSE 100 over a fixed time, plus a return of the capital. And amid the market volatility, the guarantees have helped these products find a receptive audience.

A certain type of structured product, "precipice bonds", became famous earlier this century for all the wrong reasons. Investors found that as markets turned, the products were anything but "guaranteed", and they ended up losing significant amounts of money.

But the market has changed. As Colin Jackson, managing director of financial adviser Baronworth, says: "There are no duds anymore. These products are now very carefully vetted and FSA-regulated. You won't be sold a dud but you may be sold something you don't want or understand."

Mr Jackson says that a guarantee now means your money is safe as long as the provider stays in business. Even in that case, you are protected by the Financial Services Compensation Scheme up to £35,000.

There are a lot of these products on the market and the terms will vary significantly, so compare a number of them, possibly through a specialist adviser.

Mr Jackson says: "Make sure you're talking to an adviser who knows what he is doing. Also ask for a discount, as you would with a new car. The building society won't give you a discount but most advisers will. Don't be shy."