Four rip-offs and how to get your money back!

If you've been caught out by one of these four common bank rip-offs, here's how to get your money back.

If you’re unhappy with the punitive level of fees and charges imposed by your bank, the time to fight back could be at hand.

Last week saw City watchdog the Financial Services Authority (FSA) open the door to help 185,000 consumers claim back premiums on insurance products bundled with loans and mortgages that they either didn't need or couldn't claim on.

And that's not all - the opportunity to reclaim current account charges imposed on unauthorised overdrafts could also be around the corner. A legal tussle between the big banks and the FSA has been making its slow progress through the courts over the past couple of years - and this month will see the newly-formed Supreme Court pass judgement on whether the bank charges imposed were legally unfair.

If the decision falls in favour of consumers, the banks won't be able to appeal the judgement - opening the floodgates for claims potentially worth thousands of pounds each. The past few years have also seen mortgage lenders forced to refund exit administration fees imposed when borrowers come to the end of their home loans. So, could you be due a refund? Find out...

Payment Protection Insurance (PPI)

Payment Protection Insurance (PPI) is a policy sold alongside loans, credit cards and other financial agreements that - for a small premium - covers the borrower's repayments if they fall ill or lose their job. Sounds great - except that the FSA found that thousands of policy-holders would never be able to claim if the worst happened. The watchdog forced providers to issue refunds on policies sold alongside personal loans and now plans to investigate sales of PPI on secured loans and credit cards.

What's more, the FSA has ordered 185,000 complaints previously turned down by banks to be re-opened. So, could you be one of those able to make a claim? Your cause for complaint will be on one of two grounds.

Did you understand what you were buying?

Firstly, you may have been mis-sold the product because the various exemptions and exceptions were not adequately explained at point of sale.

Indeed, many of the contested cases are being brought by self-employed workers or the unemployed who, under the terms of the cover, would never have been eligible for a payout.

Did you think it was compulsory to take out the insurance?

Secondly, it may not have been made clear that it wasn't compulsory to take out a policy - denying you the opportunity to shop around for a cheaper stand-alone product. This isn't illegal but it could be interpreted as a breach of the Banking Code.

What to do next

If you think you have a valid claim, first contact your lender in writing, outlining the grounds of your complaint in as much detail as you can. Keep copies of everything you send and always quote reference numbers. Financial services companies should respond to complaints within five working days, and resolve them within eight weeks.

If they fail to do either, or you're unhappy with their response, you can escalate your claim to independent arbitration body the Financial Ombudsman Service (FOS). To do this, simply download an official 'complaint form' from its website and send a signed copy in the post. The FOS pledges to settle a third of complaints within three months and most disputes within six-to-nine months.

Mortgage payment protection insurance

Mortgage payment protection insurance (MPPI) covers your mortgage payments if, for whatever reason, you're unable to. However, as a result of high unemployment levels, many MPPI providers have panicked about rising claims, and have increased premiums, cut the benefits on offer, and reduced their payouts in response.

Fortunately, however, the FSA has said that this goes against the principles that insurance policies and practices should be 'clear, fair and not misleading.' And as a result, the FSA has demanded that insurers reverse these charges.

What to do next

In theory, you shouldn't need to do anything. If you're monthly MPPI premiums have increased over the past year, your mortgage lender or insurer should contact you with details of your refund. What's more, if your cover has been downgraded, these changes should also be reversed. MPPI providers have said they will not increase premiums or cut cover at least until the end of the year. Refunds should be paid out by next June. You can find out more about this in Good riddance to this £60m rip-off.

Unauthorised overdraft charges

Charges on unauthorised overdrafts - where account holders breach their limits by sometimes just a few pence and incur often concurrent charges of £35 a time - are unsurprisingly deeply unpopular. Yet the more pertinent question is whether these charges are "fair" - and it is this question which is currently being contested in the courts between the banks and the FSA.

The banks argue that these charges are a fair and reasonable reflection of the administration costs involved and help subsidise the cost of other products and services. The FSA claims that these charges are legally unfair and should be lowered.     

Unfortunately, you can't currently claim for a refund as the FSA has granted banks a waiver on any individual cases pending the outcome of the court case - but a resolution could soon be at hand. The new Supreme Court is expected to rule on the case within a month - and that decision can't be appealed. As a last resort, the banks may opt to drag the case out by contesting the definition of "unfair" - but it's more likely that the opportunity to reclaim could soon be at hand.

If the decision falls in favour of consumers, the door will be open for claims potentially worth thousands of pounds each. So, how do you make a claim?

How to make a claim for bank charges

First, you'll need to scour your bank statements over the past eight years to July 2001 and document all the charges you incurred.

 If (like most of us) you don't have that paperwork to hand, ask your bank to send you a list of charges - they legally can't refuse your request, only charge £10 per request.

Then, as with PPI complaints, first write to your bank and - if you don't get satisfaction - escalate the complaint to the Financial Ombudsman Service.    

Mortgage exit fees

Mortgage borrowers can also contest the exit administration fees imposed by lenders when a home loan expires or borrowers switch to alternative deals. The contested fees are mostly those imposed between 2004 and late 2007, when low mortgage rates were subsidised by lenders by a sneaky increase in exit fees.

This meant that, when you came to the end of your deal, you were asked to pay a fee that was typically hundreds and hundreds of pounds more than you had been originally told you should expect to pay.

Lenders argued they had a right to increase the fees whenever they wanted - but it was eventually deemed "unfair" by the FSA, leading consumers to claim refunds.

You should only ever pay the exit fee that was stated in your original contract by the mortgage lender. If you paid more, you could be due a refund (plus interest on top!). Again, write to your lender and, if you don't get satisfaction, escalate your complain to the Financial Ombudsman Service.

More: The biggest financial rip-offs

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