Those of you who are fed up with being on the receiving end of extortionate penalty charges levied by banks and credit card companies, may be interested in the following.
In 2005 the top six High Street banks in the UK made an estimated £4.5BN from penalty charges. These charges are imposed by the banks when the account holder actions unauthorised overdrafts, bounced cheques and clears Direct Debits when there are insufficient funds in the account.
It seems that, according to Stephen Hone, these charges are in fact illegal. He argues that, under the Unfair Terms in Consumer Contracts Regulations (1999), all penalty charges have to truly reflect the cost of administering them.
They are not permitted to be a profit making enterprise for any business. He believes if a penalty charge is higher than its administrative cost, it is illegal.
Mr Hone managed to successfully claim back £840 in bank charges from Abbey. The BBC then asked a few other people to try the same. To see how they did, visit the BBC site.
The BBC have even set up a set by step guide, with pro forma letters, helping people to claim their charges back. To view the guide, visit Bank Robbers.
However, I would caution against undue and exuberant optimism, the banks will not take a mass "reclaim of charges" lying down. They are already arguing that the "penalties" are not "penalties", but "service charges"; this would, in the banks' opinion, exempt them from the Unfair Terms in Consumer Contracts Regulations.
I would also note that the banks may decide to become even more disagreeable, and simply stop honouring cheques and direct debits that push people into the red.
Remember, the banks are here to make money; they are not a charity.