The last thing you probably need to see on your bank statement each month is yet more bank charges for going overdrawn or bouncing a cheque. Indeed there are cases where the imposition of one bank charge puts you outside your overdraft limit and automatically triggers even more charges! For those people with major debt problems who are constantly battling to satisfy many creditors, bank charges can amount to a significant amount of debt over a period of time, sometimes running into a few thousand pounds.

One of the most recent business phenomena has been the growth in companies willing to support people who have had lots of charges imposed on their bank account. Such “bank claim” companies will approach your bank to recover wrongly applied bank charges in return for 15 -20% of the amounts recovered. All these claims companies rely on the fact that the banks are deemed only able to charge for the actual cost incurred in administering any bank charge rather than “profit” from a person’s financial misfortune. The difference can be quite staggering; a £30 charge for breaching an overdraft limit actually only involves about £5 work in sending out the notification letter leaving £25 in actual profit and penalty which may be subject to recovery. Moreover an individual unfairly penalised by bank charges can go back over the previous six years banking to determine the total potential claim.

A recent report by the consumer group Which has shown that at least 85% of people who have actually made a claim to their banks have succeeded either in whole or in part, and that the Financial Services Ombudsman should be called in to adjudicate in the event that there are disputed cases. The Which report also suggests that many more people may be prepared to claim refunds but are concerned as to how their bank may react. In one recently reported case a customer obtained a refund of charges (the total claim being less than £200) from his bank but was then advised that his bank account was going to be closed within 30 days. An appeal by the customer to the Office of Fair Trading resulted in the bank having to pay the customer £1000 compensation and the automatic reinstatement of the bank account. None of the banks have so far asked the Courts to judge on whether the fees charged are fair or not. At the moment they are settling claims as they arise and appear to be hoping that the majority of people don’t claim.

A person with £20,000 debt across credit cards, loans and overdrafts is likely to have incurred significant bank and credit card charges associated with these debts. If the debt problem has endured for a period of time then the charges could easily run into thousands of pounds. Even if you no longer bank with the institution which originally charges you then you should still contemplate a claim even if you do it yourself.