Nobody likes a tyrant, so here are five ways to get your own back on bullying banks.
As a revolutionary communist, I strongly believe that all money-lending is theft from workers by capitalist banks. Hence, I urge all men and women to rise up and smash this corrupt system!
I'm kidding, of course. In truth, my personal politics are decidedly moderate, plus I'm a shareholder in big bank HBOS. Then again, it really annoys me when banks and other financial firms penalise customers so heavily for their mistakes. However, when the boot's on the other foot, these companies are quick to deny responsibility and routinely refuse to pay out compensation when they mess up.
Thus, if you've got a grievance, then don't get mad, get even. Here are five ways to fight back against bullying banks:
1. Recover unauthorised overdraft charges
If you go overdrawn without permission, exceed your overdraft limit, or `bounce' payments from your current account, then your bank will punish you for your mistake. You can expect to pay up to £40 per slip-up, even if your unauthorised borrowing is just a few pounds. However, the Office of Fair Trading (OFT) believes that these punitive charges are unfair, so it has taken legal action against eight banks and building societies.
Of course, this court case will run and run, as I warned in Bad News For Banks And Borrowers. Nevertheless, a general `statute of limitation' in English law means that you can go back six years when attempting to reclaim these charges. So, if you've been fined for unauthorised borrowing at any point since late July 2002, submit a claim now in writing. Then, when the OFT finally wins its case, you'll already be in the queue for compensation.
2. Claim back credit-card fines
The same goes for fines levied by credit cards, although the outcome here is much more clear-cut. Until two years ago, most credit-card issuers would charge fines of £20 to £30 for bounced, late or missed payments, or for exceeding your credit limit. However, in April 2006, the OFT decided that these penalty charges were unfair. In response to this ruling, card issuers reduced their charges to no more than £12 a time.
Again, if you've been fined by your credit-card company at any point in the past six years, then apply for a refund. Don't be fobbed off with excuses, as many card issuers falsely claim that these refunds are, like bank-charge claims, on hold for the duration of the above court case. Also, demand full repayment of each fine -- don't allow your card issuer to pay only the difference between your fine and the `fair' (!) fee of £12.
3. Recoup mortgage exit arrangement fees
When I bought my first home in December 1992, I took out a mortgage with Abbey National (now Abbey, part of Santander Group). My mortgage contract included a fee of £50 to be paid when I redeemed my home loan. However, when I paid off this mortgage in April 2005, Abbey charged me a fee of £225, or 4½ times as much.
Clearly, this massive `fee inflation' is unfair and, in January 2007, the Financial Services Authority (FSA) agreed. So, if you have been charged a mortgage exit arrangement fee greater than that stipulated in your contract, then demand a refund from your mortgage lender. From feedback I've had from Fool readers, this is a fairly straightforward battle to win.
4. Demand mis-selling compensation
In my 21 years in financial-services, I've seen enough mis-selling scandals to last a lifetime. Off the top of my head, I can recall regulatory failures, mis-selling problems, FSA fines and compensation payouts to the public regarding (in alphabetical order):
- business bank accounts;
- Equitable Life;
- extended warranties;
- free-standing additional voluntary contributions (extra pensions);
- guaranteed equity bonds;
- hamper firm Farepak;
- high-income `precipice' bonds;
- home-income plans (investment mortgages in the Eighties and Nineties);
- maximum investment plans;
- mortgage endowments;
- payment protection insurance;
- personal pensions;
- secured loans (second mortgages);
- split-capital investment trusts; and
- store cards.
There are fifteen scandals in the above list, but perhaps the most significant is the widespread mis-selling of mortgage endowment policies. Indeed, the possible shortfall from these failing part-insurance/part-investment policies could exceed £50 billion. However, in Is Your Endowment A Letdown?, I listed five ways to tackle a failing mortgage endowment, one of which is sure to work for you.
5. Don't forget to charge for your time
In more than 5½ years as a Fool writer, I've helped many readers to claim compensation for financial losses caused by poor advice. One thing I always insist on is that your calculations should include amounts for inconvenience, distress and time wasted. So, if your bank charges you £35 for a computer-generated letter, return the favour by charging a similar sum for each of your notes. Fair's fair, tit for tat, and quid pro quo, as they say!
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