If you have already paid credit card charges then you are likely to have a claim for compensation going back as far as six years in the UK, five years and a maximun £750 if you reside in Scotland and £2,000 if you reside in Northern Ireland.

Question & Answers

Why can I reclaim my bank or credit card charges?

A contract between you and the bank / credit card provider, usually in the small print, must be drawn up within the law and be fair for both parties. For the bank to fine you for going overdrawn, bouncing a cheque, going over your overdraft limit or returning a direct debit is okay providing the fine is reasonable, i.e. a few pounds for the cost of a computer generated letter and postage.

What is not acceptable is for the bank / credit card provider to fix the fine at £35, thereby imposing a penalty. This is seen as the bank / credit card provider making a profit from your demise because the fine does not reflect the true cost of the work involved them - in other words it becomes a penalty; which many say is unenforceable by the courts.

Has there been a court ruling on this?

Bank Charges

The Office of Fair Trading has won its High Court claim that charges levied by banks for unauthorised overdrafts are subject to "unfair contract" rules.

There could now be another hearing for the court to decide whether the charges are unfair and, if so, what a fair charge should be.

This was the most important round to win as a loss for the OFT would have ended the case immediately.

It is envisaged that banks and building societies may eventually have to pay back billions to customers.

Credit Cards

This test case by the OFT does not affect your claim for unfair credit card panalties.

What charges can I claim?

CAN BE CLAIMED

• Account misuse fee
• Cheque return fee
• Card misuse fee
• Direct Debit/Standing Order/Cheque returned fee
• Exceeding Authorised Overdraft Limit
• Exceeding Unauthorised Overdraft Limit
• Irregular fee
• Paid referral fee
• Total charges (HSBC personal accounts only, not business accounts)
• Unarranged borrowing fee
• Unauthorised overdraft fee
• Unpaid DD fee
• Unpaid cheque fee
• Unpaid standing order fee

• Late payment fee (credit card)
• Over limit fee (credit card)

CANNOT BE CLAIMED

• Account Service Charges
• Cash Machine Withdrawal Fees (ATMs)
• Charges related to foreign currency transactions and conversions.
• Monthly account fees on certain type of accounts
• Service Fee / Annual Fee

Contractual interest

This is what you see on your bank statements charged by the bank when you go overdrawn. It appears on your statement as 'INTEREST', or 'INT'.

There are normally two different interest rates charged. When you go overdrawn a lower rate is charged provided you are still within your agreed overdraft limit. This interest cannot be claimed.

There is a higher rate of interest and this can be as much 30% charged when you go over your overdraft limit (unauthorised overdraft). This is a bit more involved to deal with as you cannot claim any of this interest if you’re spending has caused you to go over your overdraft limit, but you can claim this interest on any bank charges that have caused this.

The problem you will have is calculating the interest only on the charges. You will have to be very precise with your figures in case the bank at any stage challenges them. Generally, most people don't claim this interest.

Can I claim for credit card charges?

Yes, the recent High Court case with the the OFT does not affect credit card charges this is totally separate, however, the Office of Fair Trading, OFT, ruled in April 2006 that £12 is a fair charge for late payment; therefore, you may wish to deduct this amount from any charge that you deem to be unfair over the past 6 years.

An interesting point to remember is that this £12 is NOT a High Court ruling but it is suggested as a guide by the OFT to cover the credit card company costs, but if you do not deduct the £12 then I am pretty sure the credit card companies will soon remind you of the so called ‘ruling’.

You will need to apply for the statements the same way as bank charges.

I feel I have a claim, where do I start?

First telephone your credit card provider and ask them to send the last 6 years worth of statements, or go online if this is possible and see what data you can find.

If you still have no joy then write to the credit card 'Data Protection Officer' - if you are not sure who to write to have a look at our list of Data Protection addresses, if it is not listed, call the credit card provider for the address details *.

You will need to send a payment of £10 with the request. Make the cheque payable to the credit card provider that you are claiming from. If you don't have a cheque book, you can send a postal order instead.

A few things to remember:

• The credit card provider has up to 40 days to supply you with the data (they may choose to wait this long)
• You can claim on accounts that have been closed
• You cannot claim on any charge that is more than 6 years old

* You can help out DebtWizard and all the other users by contacting us about any DPA address you find that we do not have - we will put it up on the site for everyone to see.

Can I employ a firm to do this for me?

Yes. If you don't feel up to doing it yourself or you just don’t have the time then there are several companies on the internet that will do this for you. They usually ask for a percentage of your claim as their fee so in effect they will charge you for their services.

Why pay a firm to act on your behalf and pay them a fee as well as VAT when you can use the Financial Ombudsman Service, FOS, for free! Please continue reading this article and you we will explain more.

The credit card provider has failed to send me my statements within the 40 days, what’s my next move?

Telephone them or write a letter threatening to report them to the Information Commissioner for breach. Offer them a further 7 days to respond, and if you write a letter keep a copy for the Information Commissioner, their helpline number is 01625 545 745..

The Information Commissioner has a good article on "When and How to Complain".

We have outlined some sample text for the letter should you wish to write again - in particular please note the last paragraph of article regarding recorded delivery.

Letter text

What can I do if the credit card provider writes to me rejecting my claim as a complaint?

You can either go along the ‘complaint route’ and after 8 weeks if no settlement then refer to the Financial Ombudsman Service, FOS, or you can respond by recorded delivery with the following letter - remembering to quote your account number and any reference numbers they may have given you. You may need to modify the following to suit your circumstances. At the top of the letter you must put ‘WITHOUT PREJUDICE’:

What can I do if the credit card provider refuses to acknowledge my claim or just dismisses it?

If your credit card provider refuses to acknowledge your claim or dismisses it, then you have three options

• Option one - You will need to write a letter to the credit card provider bank and send it recorded delivery

• Option two - Start proceedings through the small claims court.

Check further down to see how much it will be to file your claim in the small claims court. You will get this back once you win your case.

It may be prudent to keep your claim just below £5,000, (if need be remove the interest to keep just below this amount)... the reason for this is simple - if the claim exceeds this figure and you lose, you will be liable for the credit card provider's legal fees which could run into several thousands of pounds. If your claim is above £5,000 then still claim for the higher amount, as you never know - they may offer a sum near to what you are claiming and without having commenced court proceedings.

You will need to consider your position in relation to such costs when you begin court proceedings and seek legal advice from a qualified solicitor before commencing this action. An alternative would be to use the Financial Ombudsman Service, FOS, see why below.

• Option three – Use the Financial Ombudsman Service, FOS.

FOS was created by Parliament to help settle disputes between financial companies and their customers. It is completely free to use and totally independent. Click here to find out more on their services, they will help you with credit card charge claims. Basically, after you have given them authority to act on your behalf, they will take from you what paperwork you have and will then deal directly with the credit card provider. They will then be in contact with the outcome and any offers made by the credit card provider to settle.

• Overview of the three options

Option one – This letter may just do the trick and reach a settlement without having to start court proceedings or involve the FOS, many of our members have been successful with this approach.

Option two – Court, this is more aggressive on your part and will carry a slight risk in that you may be unlucky and lose if a judge decides in favour of the credit card provider. If this were the case then you would lose your court fee. On the plus side, if you win, which many are then you would also claim the filing fee and interest. Most credit card providers simply pay because of the OFT ruling on this back in April 2006.

Option three – Financial Ombudsman Service, FOS, by using the FOS you remove the risk of losing in court and you do not have to pay a fee! As yet we have not heard of any reported cases whereby the individual has lost. The only small downside is that it can take a few months. The suggestion is to use the FOS for bigger claims, say above £5,000 or if you feel you are unable to start court proceedings.

If you have already been to court and the credit card provider won then it is most unlikely that the FOS will take on your case. However, one important point in your favour is this, if you are not happy with the outcome of the FOS then you do not have to accept this and can still instigate court proceedings, but if you win through the FOS and decide to accept the FOS decision then it becomes legally binding on you and the credit card provider and the they cannot elect to disregard it and go to court. The FOS therefore is looking to be an attractive way of reclaiming those credit card charges.

How do I actually start my complaint to the Financial Ombudsman Service, FOS?

There’s a simple two-stage process:

• Stage one

Complain to the credit card provider you think is responsible – and give them the chance to put things right.

• Stage two

If the credit card provider hasn’t resolved your complaint within eight weeks – or if you’re unhappy with their decision on your complaint – they can get involved more formally. You will need to fill in and sign their complaint form.
You can print it off from their website: word document | PDF document.
Alternatively you can call them on their consumer helpline on 0845 080 1800 (open office hours)

The ombudsman hasn’t yet had to make any official decisions on disputes about credit card charges. Instead, credit card providers have preferred to settle the complaints that consumers bring to the FOS – by making “goodwill offers” to their customers.

If a credit card provider offers to settle a complaint in full – and the consumer accepts the settlement – the ombudsman doesn’t need to get involved.

If the credit card provider doesn’t settle your complaint, they will investigate your case and will write to you if they need more information.

What can I do if the credit card provider asks for more time to consider my claim?

You can either agree to wait or write to the credit card provider, remember to send any correspondence by recorded delivery. You may wish to say;

What can I do if the credit card provider makes a part payment as a goodwill gesture?

I advise sending them a letter with the following content:

Can I add interest on the money I am claiming?

Yes, the suggested guide is 8%. In many cases the credit card providers will offer you a settlement figure minus the interest.

Should I accept an offer to settle my claim?

This will always be difficult. To negotiate successfully, both parties have to compromise in some way. One way to help you consider your position is to remember that initially the amount you are claiming had been written-off by you, and now you have an opportunity to get some, if not all of it back. Is it reasonable to settle for 70% - 80% without the hassle? If you battle on then the prospect of getting it all back will be determined on how much you wish to fight, issue Court proceedings and hope the credit card provider will not try to defend itself. The choice is yours... and there is always the small risk that you could lose in court. Remember back in April 2006 the OFT ruled that they thought that £12 was a reasonable charge for late payment or exceeding the cards limit, therefore expect the credit card provider to take this into account when assessing your case. This ruling is a guideline to the credit card providers and you could challenge this in a Court. Each case must be based upon its own merits.

Will my credit rating be affected by claiming back charges?

No. Credit card providers cannot update your files with credit reference agencies just because you have claimed back charges. However, they may have notified these agencies previously if you were over your limit(s) because of their charges; and this is something you will need to address when writing to them.

How much will it cost to file a claim?

County Court Fees as from 1^st October 2007

To issue a claim form where your claim is for money only and the amount is:

What do you mean by 'Claim issued in Court'?

This is where you personally go to the Court and file your claim.

What is 'Claim filed online'?

Money Claim On-line is Her Majesty's Courts Service's internet based service for claimants and defendants. You can use this simple, convenient and secure process to make a money claim up to the value of £100,000 on the internet and pay a reduced court fee.

For more information ask court staff or visit their website www.hmcourts-service.gov.uk/onlineservices/mcol/index.htm.

Preparing for hearing

Allocation Questionnaire fee, this is applicable if the bank/credit card provider decides to defend the claim.

• If your claim is for money of £1,500 or less then no fee
• Small claim for money where the claim is between £1,500 and £5,000 then £35
• All other claims £200, (not normally applicable for bank/credit card claims)

This fee is payable by the claimant except where the case is proceeding on a counterclaim alone, when it is payable by the defendant, (e.g. the bank).

Hearing Fee (NEW)

This will be applicable if the matter has not been settled 'out of court' and a court hearing date is set.

Although this is an additional cost for the claimant it can be a bargaining tool against the defendant (bank) as it is payable by the defendant if the claimant (you) win. Downside, you meet the bill if you lose.

How can I make payment to the court?

You can make payment to the court by cash, cheque or postal order. Cheque and postal orders need to be made payable to HMCS. Please note that courts cannot accept payments by credit or debit cards.

Warning: if you do not pay the required fee, you may be unable to commence or continue with your claim.

What if I cannot afford the fee?

You do not have to pay a court fee if you receive one of the following means-tested benefits:

• Income Support; or
• State Pension Guarantee Credit; or
• Income-based Job Seeker's Allowance; or
• You receive Working Tax Credit with a no element of Child Tax
  Credit - court staff will explain this to you; or
• Your gross annual income does not exceed a specified limit.
  See leaflet EX1 60A for more details.

If you show that a payment of a court fee would involve undue hardship to you, you may be eligible for a part remission. The amount decided will be based on a detailed means-test to assess your disposable income. Court staff will calculate what contribution you should make towards the fee.

For further information, or to apply for a fee concession, ask court staff for a copy of the combined leaflet and form EX160A – Court fees – Do I have to pay them? This is also available from any county court office, or a copy of the leaflet can be downloaded from their website www.hmcourts-service.gov.uk.

You will have to make a separate application for each fee that is payable.

Click to view full details of charges, pages 9 -16 are relevant for county court fees for bank charges claims

www.hmcourts-service.gov.uk/docs/fees/Guide_to_Civil_Proceedings_Fees_October-2007.doc

Source: www.hmcourts-service.gov.uk - 28 September 2007

What if I win my case and the credit card provider still refuses to pay?

Send in the bailiffs - see link to money claim below for more detailed advice.

The credit card provider has now filed a defence what do I do now?

You will be sent an uncomplicated form called the ‘Court Allocation Questionnaire’ which you will need to complete and return to Court. You will then receive ‘Small Claims’ hearing date, this is when the credit card provider will most likely make an offer to settle. Some credit card providers may adopt this style in the hope you get uncomfortable and withdraw your claim, if you feel unsure or need help then try this link www.consumeractiongroup.co.uk and if need be consult a solicitor, remember to claim your legal costs.

When entering a claim for under £5,000 this will not guarantee it will be heard as a ‘Small Claim’; if it is contested and viewed as a difficult case then it may go before the County Court as a ‘Non Small Claim’ on either a fast track or multi track, this could involve further costs but does not happen very often.

Will the credit card providers try to clamp down on this?

They cannot as the OFT ruled that £12 was deemed to be a reasonable and accepted charge for late payment.

What is the OFT doing about this?

Credit cards - In April 2006, the OFT stated that credit card charges were too high and set a limit of £12 for the companies to levy on late payments. Many consumer groups believe this should also apply to banks and believe it is only a matter of time before it does.

Bank charges - On the 27th July 2007, The Office of Fair Trading, OFT, has, without consultation with ‘consumer groups’, agreed to a test case in the High Court to settle this matter once and for all. The banks involved are Abbey, Barclays, Clydesdale, Nationwide Building Society, the HBOS group, which includes Halifax, HSBC, Lloyds TSB and the Royal Bank of Scotland Group, which includes NatWest. Together these banks represent around 90% of the current account market in the UK. The general feeling in the industry is that the banks credit card companies do not want a precedent as this could open the floodgates... instead of having to pay out millions to individuals that make a claim for a refund of charges - the banks could end up having to pay out billions.

Can a credit card provider close down my account because I have entered a claim?

In theory yes, however, the Financial Ombudsman Service (FOS) recently warned the banks that they are not entitled to close those accounts of customers that have complained about unauthorised charges... and in the past one individual received compensation from the bank after they closed his account. You may however be regarded as a ‘difficult customer’ which could have an impact on any future relationship with your credit card provider e.g. you may be refused to increase your limit, although I would be surprised as they make so much money out of their cards.

Posting letters

An important point to remember - when posting your letter(s) to the credit card provider, send them by recorded delivery and be persistent, especially if you seem to get a negative response. Also claim back the postage and £10 payment in your DPA letter.

If you send the letter by recorded delivery then trace the serial number on the Post Office website - that way you will get confirmation of receipt which you can save and print off as proof of postage.

You will need to go to this page on the Royal Mail website and once there just enter your 13 digit reference number similar to e.g.: AA 0001 0001 9GB.

If you come under Scottish law/ Northern Ireland law

In Scotland you can claim back five years of credit card charges not six. You need to fill out a ‘Small Claim Summons’ document and take it to the Sheriff Court. There will be a charge for filing the claim. The maximum you can claim is £750. Further information can be found here; www.scotcourts.gov.uk/sheriff/small_claims/guidance_notes.asp

However, you may well be better off by first complaining to the credit card provider, request 6 years payments, wait 8 weeks then go direct to the Financial Service Ombudsman, FSO, for they tell me they will claim for the full 6 years for you! You then don't have to go to Court and pay any filing court fee. The procedure for the FSO is covered in one of the questions above.

Northern Ireland the maximum claim is £2,000. Further information can be found here; www.bbc.co.uk/northernireland/oyb/legal_financial/small_claims_court.shtml.

However, you may well be better off by first complaining to the credit card provider, request 6 years payments, wait 8 weeks then go direct to the Financial Service Ombudsman, FSO, for they tell me they will claim for the full 6 years for you! You then don't have to go to Court and pay any filing court fee. The procedure for the FSO is covered in one of the questions above.

The process is virtually the same as under England / Wales law.