Penalty Charges And Other Banking Tricks!

An undercover report shows that a vigorous cynicism about banks is well-founded and not sensationalist media hype.

The Motley Fool hasn't gone guns blazing for any specific financial company for a while. The reason for this is that we usually find that they all suck in equal measure, so what's the point in naming and shaming? In fact, doing this may encourage people to switch to a competitor when it's financially unsound to do so. So us writers have to be careful. It's like juggling a load of juggling balls. Well, two anyway.

That's why we have to treat the following case with care, and not draw too much attention to the name of the company involved.

Barclays.

Whoops. But it doesn't matter. This case adds some valuable evidence to The Fool's cynical opinions about all big banks.

The BBC sent someone to work undercover at Barclays for a month. She reported that staff lied to customers, mis-sold products, stole from customer accounts and used unscrupulous sales tactics. She also produced video evidence. You can read her cautionary tale and see a clip from the follow-up programme, 'Whistleblower'. Don't forget to come back here to read the latest on bank charges when you've finished...

...Are you done? So, that explains a lot, doesn't it? Don't let banks force products on you over the phone. The instant they mention some 'fantastic' product, tell them you don't want it, or ask for details by post or email, so you can think about it at your leisure.

These awful tactics go some way to explain why banks are so intractable and aggressive in their defence of unlawful penalty charges. (See The Ultimate Guide To Reclaiming Bank And Card Charges.)

Unfortunately, after its excellent Whistleblower report, the BBC let me down by stating that '85% of people who have demanded a refund have been at least partly successful'. This may be true, but it's also misleading.

The thing is, the 85% figure of 'at least partly successful' claims is distorted by people who make a tentative claim, but lack the confidence to follow it through when they're not immediately given a full settlement.This is backed up by comments from the Whistleblower report:

With a touch of glee, my bank trainer told a classroom full of call centre trainees that he "loved" getting customers complaining about bank charges.

"They'd phone up, start crying and blaming you and telling you their kids are going to starve. And I'd be like, 'I don't know you -- I don't care'. I was just thinking 'you're not getting it back'. I was a right git."

Don't let them do this to you. If you do more than simply demand a refund, if you stick to your guns as well, you are very likely to make a full recovery of your charges.

On a related note, the Office of Fair Trading has made an announcement today about its enquiry into overdraft charges. The gist was: further study required; answer by end of year. What does this mean for claimants?

To anyone who has already been hit by unfair bank charges, or is hit by more before the end of the year, it doesn't matter. And unless the OFT takes the banks to court, it probably won't matter what it decides in future either! Whether it says that charges must be reduced to £12 or says that the charges are 'alright by us', it doesn't matter. Personally, I think it'll be quite soft. But that doesn't matter either.

What matters is the law. The law is that businesses are not allowed to penalise you financially for breach of contract. But the banks are doing this. If the OFT's eventual response is soft, hard or just damned peculiar, that doesn't mean you can't take your own action to get money back, either through a complaint to the Financial Ombudsman Service, or through the courts, or possibly even both.

> They're as bad as each other, but at least some banks offer better deals. Compare current accounts and switch through The Fool.
> Read The Ultimate Guide To Reclaiming Bank And Card Charges.