Banks Still Owe Thousands of Consumers A Refund
Liberal Democrat social exclusion spokesman Matthew Taylor claims that penalties imposed for bouncing cheques and direct debit payments over the taking accounts past their overdraft limit earned the six High Street banks £4.5 billion in 2006.
Mr Taylor addressed Westminster Hall in debate. He said: “This is a major contributor to the UK debt crisis and to social exclusion.
After a movement by the Office of Fair Trading (OFT) last year, many people are fighting the banks. In most cases the banks backed down when threatened with court action.
“Most importantly of all, these bank penalty charges are more than inconvenient, more than unfair, they are illegal.”
“For all other items, the absolute maximum in this electronic age where it’s all done automatically through computer is £2.50.”
This is a case of UK banks profiteering from the current debt problems. Currently, the law allows banks to impose a penalty to cover the administrative costs incurred by bounced cheques, exceeding the overdraft limits, or the rejection of a direct-debit payment.
While the current fee averages £30, Mr Taylor believes “The absolute maximum it costs the bank in these cases is £4.50 for a bounced cheque.
With the government investing millions into solving the debt problem, it is only a matter of time before the OFT addresses this problem. Until then, consumers who are paying exorbitant fees are reminded that they are entitled to a refund, but they must initiate the action, the banks will not give up the money willingly.
Mr Taylor added: “They know it’s an illegal rip-off of trusting and often impoverished customers.
“They are mugging their customers and the Office of Fair Trading and the Government are letting them get away with it.”