Make £4000 in half an hour

The idea of spending a lunch hour trolling through old bank statements admittedly will not sound like most women's idea of a great time. But if you are the type of girl who constantly sails close to her overdraft, sometimes straying over, then chances are you will be well rewarded for your trip through your statements, possibly to the tune of thousands of pounds.

Banks generally charge between £25 and £39 every time they do not pay something on an account because there is not enough money in the account. On top of these 'returned item charges' some banks also levy an additional charge for exceeding an overdraft limit. Lloyds TSB charge £30 for straying by more than £10. An investigation by consumer watchdog, the Office of Fair Trading, found that UK banks make 30% of all the profit they make from current accounts by applying these charges. That is about £2.6 billion each year.

Fight back
Since we first wrote about banking charges in April 2006, a wholesale consumer rebellion has unfolded with at last count somewhere between one and two million people writing to their banks to demand the money taken from their bank accounts in penalty charges back. Because the big banks have been getting so many letter they agreed to a ‘test case' being brought by the Office of Fair Trading.

The OFT believes that bank charges are illegal and has asked the Courts to rule on the matter. A preliminary ruling came out earlier this year in the OFTs favour, but the banks - who will have to return billions to customers if they lose - have decided to appeal, so it will be 2009 at the earliest before we know which side has won.

In the meantime the Financial Services Authority has granted a Waiver to the banks with regard to refunding bank charges, until the Court has ruled. However it is vital that anyone  thinking of reclaiming bank charges still contacts their bank, even though the Waiver is in place.

This is because under English Law penalty charges can only be reclaimed for the preceding six years. So it is incredibly important to lodge a claim in order to ensure there is a timeline for your claim.

How to claim
First dig out all your old bank statements going back that far. Then go to the final page of each statement, where you will usually find the amount of penalty charges applied for that month. Then simply add up all the charges.

Women who do not have all their statements can get these from their bank, some banks have been quoting outrageous sums for duplicate statements, but a charge of anything more than £10 (for a complete set of statements) should be queried.

Armed with this information go online. The Govan Law Centre, and Which are among those which have a template letter quoting all the relevant bits of information required on their websites. Download the form and once you have put in your specific details, this can then be posted off to your bank's head office. For anyone who thinks this sounds like a lot of work, when tested for my book 'A Big Girl's Guide to Finance', it took just half an hour from getting out the bank statements to printing off the letter.

Wait for a reply
You should then get a reply back from you bank acknowledging your letter and parking your claim until the outcome of the OFT case is known. Don't lose heart remember that before the OFT went to court some banks were returning as much as £4000 to customers. And if, as seems likely, the OFT wins then it could impose a similar solution as occurred with credit cards (where it rules any charge above £12 unlawful) on the banks. This would mean they would have to return all the money they have raked in above this to their customers.

Do not be bullied
Some banks, including Lloyds, have previously sent letters to customer suggesting that should the customer decide to pursue a claim through the small claims court then the bank could decide to close their account or demand repayment of an overdraft. This is bullying and the Financial Ombudsman forced through a change in the Banking Code (the rule book on behaviour all UK banks have to abide by) which says ‘we promise not to close your account if you complain about us'.

The Financial Service Authority, is also keeping a close eye on how banks are dealing with customers who attempt to reclaim bank charges. In particular on how it is handling claims from consumers experiencing financial hardship. Women in this category do not have to wait for the outcome of the OFT court case to have their claims decided. Likewise women in Scotland (who can only claim for five years of charges) can still pursue claims as some courts in Scotland have decided to ignore the Wavier.

Useful websites:
www.bankcharges.info
www.moneyclaim.gov.uk
www.which.co.uk/bankingcharges