Firms cashing-in on bank charges are held to account

PRESS RELEASE

Scots are being warned against paying commercial firms fees to help them reclaim extortionate bank charges.

The same support is available absolutely free from local Citizens Advice Bureaux and other advice agencies, points out Govan Law Centre and Citizens Advice Scotland.

By contrast, some firms are demanding as much as 40 per cent of any money reclaimed.

The prospect of reclaiming bank charges – penalty fees levied on unauthorised overdrafts along with charges for reminder letters – has become a live issue in the past few months.  Bank charges have long been criticised by bodies such as the CAB service for being excessive.  Last year, the Office of Fair Trading ruled that default charges over £12 are automatically presumed to be unfair, making them legally unenforceable.

The move has given a green-light for account-holders to demand that their bank reimburses them for charges now deemed to be too high. 

To help them do so, Govan Law Centre and the CAB service have compiled model letters which clients can send off to banks requesting details of all charges levied over the past few years, along with follow-up letters to reclaim these.

Both organisations doubt that a commercial firm will offer any meaningful extra support that could justify charging a fee.

Mike Dailly, principal solicitor at Govan Law Centre, said: “We see no need whatsoever for anyone to go to a firm that charges for a service that is freely available.  I know of several companies that charge between 25 and 40 per cent of money recovered!  That is money for old rope.  I doubt, for instance, these companies would run a court action if needed.

“We have a network of Citizens Advice Bureaux or local law centre that can provide free help and assistance.   Or if people have access to the internet, they can get advice from www.bankcharges.info. 
 
“Even if someone is worried about threatening a small claims action they can simply go down the complaint route to reclaim excessive bank charges - the Financial Ombudsman Service has won full refunds for people, although it may take a bit longer. 

“I’d question whether charging for a service that is available free elsewhere is any less immoral than the extortionate charges set by the banks.”

Steven Purcell, leader of Glasgow City Council, said: "It's only right that people receive the full amount of money they are due.  The council supports groups that provide free legal and money advice, including local Citizens Advice Bureaux.

“I would urge anyone pursuing a claim on charges to use these services, rather than middle-men which will only reduce the money they eventually get."

Yesterday, the Office for Fair Trading announced it would carry out a further investigation into the profits made by banks on current accounts.

Notes for News Editors

1. Each CAB is an independent charity, run by a committee of local people, and responsible for raising its own funding.
2. 85 per cent of CAB workers are trained volunteers – if you’d like to help your local community for just a few hours each week, contact your local bureau manager, or volunteer through the CAS website – www.cas.org.uk
3. The first bureaux in Scotland were established in 1939 as a wartime information service.  There are now 76 CAB offices across Scotland, which operate from over 200 service points, and which form the country’s largest independent advice network.
4. CAB advice services aim to be freely available and accessible to everyone in the community.
5. Consumer debt is now the single biggest issue that CABx deal with.  Last year, CABx in Scotland dealt with debt totalling over £211m.
6. Images and logos of the CAB service are available from the CAS press and communications officer (see contact above).
7. Practical and up-to-date information is available online from Adviceguide (www.adviceguide.org.uk), including factsheets you can print off.