Claims firms slap on 'bank' charges
'No-win, No fee' claims handling firms are billing customers whose disputes over bank overdraft charges have been put on hold because of the ongoing High Court case.These so-called 'ambulance-chasing' firms promised to win back thousands of pounds of charges incurred when customers accidentally went into the red. Their price was a cut of any money reclaimed.
However, all bank charge complaints have been on hold since July 2007 until a High Court case between the Office of Fair Trading and the major High Street banks and Nationwide building society is resolved.
The OFT won the first round two months ago - the next round began in the High Court this week.
The point of the case is to discover if unauthorised overdraft charges, which can be as high as £39 at a time, are fair.
Campaigners hope if the OFT finally wins then anyone who has accidentally gone overdrawn in the past six years will automatically get their charges refunded.
Because the outcome of this case rests solely in the hands of a High Court, and after waiting for more than a year, customers have told the claims handlers their work is over. However, when they cancel the claim they are told there is a fee of up to £35 a time to get back their paperwork.
Other companies which are still offering to win back charges have started asking for a £30 deposit before starting their case.
One reader told how she had paid this to Claims Justice, which cold-called her and persuaded her to hand over £30 for taking on her case. This would be deducted from the 25px plus 17.5pc VAT the firm would take of any money she reclaimed. She says "I realised i had made a mistake and i wanted to cancel the claim.
"I have rung them fire and sent three e-mails and left messages, but to no avail. They have not responded."
Financial Helpline has always advised never to use these banks reclaims companies. This is because you would still need to fill out exactly the same number of forms as if you were claiming charges yourself, and your chances of winning are just as great.
Furthermore, any claim you win would only reimburse you for money lost - It is not compensation. So, if a claims-handling firm takes a percentage of your winnings you are worse of than you should be.
Despite all this, the promise of no-win, no –fee proved too great for many.
Some also found themselves signing up for a claims-handling service when they thought they were actually taking part in one of the many free consumer groups that can be found on the internet.
Marc Gander, from the campaigning Consumer Action Group, says: "There has been absolutely no need to use one of these claims handlers and especially now there is a court case.
"If you think you are owed overdraft charges, complain now- the bank is under no obligation to resolve your case until the court case is over."
Cirty watchdog the Financial Services Authority granted banks the waiver, allowing them to hold off overdraft charge disputes 12 months ago.
This does not mean that you can not incur more overdraft charges for new borrowing, though your bank should not charge you extra on the disputed amounts.
Following Money Mail`s Fair Play on Charges campaign thousands of bank customers successfully reclaimed unauthorised overdraft charges in the two years leading up to the court case.
The banks and the Office of Fair Trading went back to the High Court on Monday. The heading into whether you can get a refund for charges dating back six years was expected to last until today.
If you have a complaint about a claims-handling firm then check if it is regulated by the Ministry of Justice. You can see the register of firms at www.claimsregulation.gov.uk
If it's not listed, then the firm is acting illegally and you should report it to Trading Standards and the police.
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