Fears of 'reprisals' stop bank customers reclaiming charges

Millions of bank and building society customers are being deterred from claiming back unfair charges because they fear retribution from the institutions.

A poll for Which? revealed that two thirds of people charged excessive penalty fees by banks have yet to lodge a claim for a refund. One in five (21 per cent) of those said they had not asked for their money because they were worried how the bank would react.

Twenty-two per cent felt the process would be too complicated, and a third said they did not know how to complain.

The Independent has exposed how the banks have engaged in dubious tactics such as breaking data protection rules, closing accounts and obfuscation to deter claimants. We have been encouraging people to reclaim money paid for penalty fees widely deemed illegal because they are disproportionate to costs.

Banks still face paying out tens if not hundreds of millions more in the overcharging scandal. There are believed to be 38 million current account holders in Britain. It is not known how many customers have been charged penalty fees. But financial institutions are estimated to make up to £4.75bn a year from fees for bounced cheques, unauthorised overdrafts, late credit card payments and mortgage exit fees. The Office of Fair Trading (OFT) has ruled that the charges are unfair, and banks have paid out to customers before eachcase comes to court.

Although the cost of dealing with an overdraft or bounced cheque is thought to be no more than a few pounds, banks charge up to £39 a time. The OFT is expected to give its opinion on a fair level of charges within the next few weeks.

Publicity about the opinion could trigger a new avalanche of claims. Which? said that of those who have already demanded a refund, as many as 85 per cent had got money back. It says the figures would be almost 100 per cent if claimants persisted when their bank did not immediately hoist up the white flag.

Emma Bandey, the personal finance campaigner at Which?, said claiming back charges was a "simple process"."[But] it is terrible how poorly some banks have been treating customers," she added.

How to claim your money back

Step 1: Request details of charges. Write to your bank asking for a list of charges for the past six years. Cite the Data Protection Act. The bank has 40 days, and may charge £10.

Step 2: Ask for your money back. Once you know your charges, demand a full refund on the basis that they exceed the bank's costs and therefore breach the Terms in Consumer Contracts Regulation 1999. Give 14 days to respond.

Step 3: Don't be intimidated. Consider if half your money back is satisfactory, given that banks have so far paid up in full.

Step 4: Start court action in the small claims court. You will not be liable for a big costs bill. Begin the case online at moneyclaim.gov.uk

Template letters are available at which.co.uk, moneysavingexpert.com and consumeractiongroup.co.uk