PPI – Bank Charges

Would banks be successful without the overdraft charge system that is incorporated into most financial institution’s banking strategy? A banking study conducted for the year 2007 revealed that about 25% of people use what banks describe as an “unauthorised overdraft facility.” Banks administrators have expressed that this revenue which is generated from consumers is legitimate because they are legally entitled to collect penalty fees from customers who breach their overdraft agreement or who have no agreement at all. This ongoing scheme devised by banking establishments creates approximately L5bn in revenue annually!

Understanding Unauthorised Overdraft Facility
‘Unauthorised Overdraft Facility’ is often a misleading banking term used by financial institutions. It leads the consumer to believe that the fees collected relate directly to their own irresponsible banking habits. The truth is that this term allows the banking institution to charge penalty fees for various reasons that do not relate to unauthorised overdraft facilities in any way. Not-so-perfect banking habits is not a green light to impose unfair penalty charges to customers for the purpose of generating a large scale of revenue. An average fee of up to L4.00 is considered a reasonable fee, but some institutions may charge as much as L35.00!

Reclaiming Unfair Bank Charges
Ongoing claims against financial institutions are filed with the courts to reclaim unfair bank charges. In some cases, up to 8% statutory interest charges imposed on your account within a six year period can also be reclaimed if the claim falls within the guidelines of the court. Banks avoid the act of going to court because the burden of proof lies on them and courts usually rule in favour of the claimant. In the coming months, UK High Courts will prepare to clarify and define fair vs. unfair bank charges.