It's Vital You Still Claim Your Bank Charges

The implications of the FSA's recent actions are even worse than we first thought.

I had a nasty shock this morning when I was talking with a colleague. She had read my article about a terrible decision by the FSA, which was, apparently, supposed to be to help bank charges claimants. For many it's done quite the opposite.

My colleague asked me if she should bother beginning her claim. I told her that if she writes to the bank it should acknowledge receipt of her claim within five days. (Writing to the bank is the first step in the reclaim process, or second if you call the bank on the phone first.)

However, as a result of the FSA's recent actions, the banks no longer need to do anything other than acknowledge your claim. They don't have to deal with our bank charges complaints.

What's more, the FSA is hopeful that it can convince the Financial Ombudsman Service and the county courts to no longer deal with our claims.

These actions from the FSA are based on the fact that the Office of Fair Trading is launching a super-claim to deal with the vast majority of bank charges claims in one go. You can read more about it here.

My colleague then started talking about how old her charges were. It was then that I had a dreadful realisation...

The six-year rule

For bank charges claims, you can claim back no further than six years. The six-year point starts from when you make your claim with the courts. So, if you make a claim today, you'll be able to claim back till 31 July 2001. If you delay your claim for a year, you'll be able to claim back to 31 July 2002 only.

Now, the FSA's press release mentioned that the super-claim might take a year, although it acknowledged it could be longer. In my opinion, backed up by a solicitor I consulted, the FSA's estimate is highly optimistic. To quote my contact, the High Courts 'take forever'.

Not only that, but we can certainly expect the banks to drag out this claim for as long as it possibly can, and it has many opportunities to do that throughout the whole process.

So, if it takes, say, three years to finish this (although it could easily be longer), claimants will lose out on three-year's worth of claims.

What should you do?

Remember that the county courts and Financial Ombudsman, as far as I've seen, haven't yet agreed to hold off from dealing with claims. Until they do, you should continue to pursue your claims anyway.

However, if they do soon announce that they won't handle these cases any more, which I think is likely, there is a way to lock in your six year's worth of claims now.

To do this, you must register your claim through the county courts in the usual way -- even though the courts probably won't deal with it. This is because it is by issuing your claim that you fix the six-year period.

Simply writing to your bank won't do it: you must begin your court claim. However, as I advised my colleague, it's still important that you write to your bank first, because you must give it an opportunity to respond. Otherwise, it could argue that you issued without warning or attempting to settle out-of-court, which the judge will frown upon.

If you're contacting your bank for the first time, you could simply modify my letters in parts one and five of The Ultimate Guide To Reclaiming Bank And Card Charges.

When you have your bank's response, if it isn't satisfactory (which it probably won't be) then you begin your court claim. If it doesn't respond within two weeks you also simply begin your claim in court.

Now, it's possible that your claim will slip through the court system and be settled in your favour by default. However, if the bank responds to your claim in any way, it's likely the whole thing will be called off by the court, or you'll receive an 'allocation questionnaire'. (See part seven of the guide for more about this.)

If your bank responds to your claim, you should write to the court immediately, asking it to 'stay' your claim (put it on hold). I'm no lawyer, but I'd write something like:

The Office of Fair Trading has issued, or is about to issue, a claim in the High Court against the majority of high-street banks, and it is representing the vast majority of claimants who have been reclaiming bank charges. Therefore, I ask please that the court stays this claim pending the result of the High Court case.

If you receive an allocation questionnaire, you should put this, or a similar request, on it.

What else can we do?

Firstly, I, and many thousands of claimants, would be grateful if you signed this petition.

You could also complain to the FSA. (Thanks to Fool reader Sadie for pointing me to this page.)

I'm also getting legal advice on what, if anything, can be done to overturn the FSA's decision to stop banks from dealing with claims, and to reverse the FOS's and the county courts' probable decision to follow suit. But please don't raise your hopes.

Credit cards

I'm predicting queries about credit-card charge claims hitting my inbox. You should continue these claims as normal. The super-claim being made by the OFT, as far as I know, is purely on current-account charges, not on credit cards.

Finally

The risks haven't changed. The evidence, and the overwhelming successes of previous claimants, strongly supports my view (and those of the Office of Fair Trading and consumer group Which?) that these charges are unlawful. However, success isn't guaranteed if you make a claim. This means there is a small chance you will not recover your court fees. Just a warning to cover all bases!