Get your money back

BEEN stung by hefty bank charges? It's easily done. You slip into an overdraft. They charge you for the privilege, which sends you deeper into the red, which means a cheque bounces, which means the bank charges you, which means. And so it goes on and on. It doesn't seem fair. And it's not.

Time to fight back. Thousands of people have already got money back from their banks. It has to be worth a go.

Banks are not charitable institutions. They are in the business of making money, which is why there is no such thing as free banking. For those of us who pay nothing, there are many who pay over the odds on excessive bank charges.

The simplest way to avoid bank charges is, of course, never to get overdrawn or default on a payment. Sadly, not all of us live in such an ideal world.

While it's fair enough to charge, you are, after all, using their money, it's not fair to charge excessively. £12 might be reasonable. £50 isn't. The brilliant news is that you stand a very good chance of getting the money back. It is fairly straightforward, and you can go back six years.

STEP ONE

Write to your bank asking for a printout of statements from the past six years. They must provide these within 40 days and charge you no more than £10 for the privilege.

Step Two

Highlight the charges, write to your bank and point out that the charges are excessive and ask for your money back. In the majority of cases, that is all people have had to do. At that point, banks have said 'Ok, it's a fair cop', and handed back all or most of the money. If they don't, or don't reply within eight weeks, then you can move on to

Step Three

Take them to the Small Claims Court or to the Financial Ombudsman Service. Still fairly straightforward, but you will need more detailed help than we can offer here. Most banks are keen to settle before cases get to court. If they offer you a partial settlement, then you can always push for more. Or again, you can take the case further.

There have been exceptions. Last month a case went to court in Birmingham and Lloyds Bank won. And some banks immediately fired off letters to customers warning that the bank charges would stand. However, don't let that put you off. That decision is very much the exception and is being challenged. More relevant is a survey by Which? earlier this year which showed that 85 per cent of those who challenged the charges had received a refund. And Which? maintained that if people had taken their cases further, the figure could have been closer to 100 per cent.

So it's definitely worth a shot.

But remember, if banks can't get their fees from charging for overdrafts, they will get their money from elsewhere - which probably means the end of free banking for us all, even those of us who have never strayed anywhere near the red. Earlier this year, First Direct, the online arm of HSBC started charging some customers £10 a month. To avoid the charges you have to have at least £1,500 in your account, or get paid that much in each month or have other accounts with the company as well.

Getting your excessive bank charges back is a great idea. But someone has to pay and in the end it is we, not the banks, who will suffer.

In response, the British Bankers Association says that fees are "fair and transparent", that they are charged in return for a service and that banks make it clear to customers when they open an account if there are fees.

IT was only a penny, but it ended up costing Lucy Stenger more than £900. Lucy was working for the RAC, had banked with Abbey for years with no problem. Then in April 2004 the bank offered her an overdraft.

"I didn't ask for it. They offered it to me."

Everything was fine until Lucy went one penny over her overdraft limit, and was charged £30.

"When I went in to see them, they told me they would extend my overdraft to cover the bank charges."And so it went on. In the meantime, Lucy was made redundant from her job and the overdraft and bank charges kept on growing.

"Yes, I was going over my limit, but we're talking a penny, 3p, 70p. In all that time, I was never more than £1 over my overdraft limit. But then they started charging me £50 or £60. I just couldn't keep up."

Eventually the charges amounted to £900 - from that initial penny.

"It was horrible, I was so miserable. When I saw what they'd done I got really angry."

Once, she admits, she was like "a deranged woman" in the offices of Abbey when she saw how the charges had mounted. "The women in the Darlington branch were really nice, sat me down and tried to explain and help. But they couldn't do anything. I had to deal with Abbey head office and I just got nowhere. They wouldn't help, wouldn't listen, didn't want to know."

Eventually, with the help of her mother's boss, "He was really helpful and I couldn't have done it without him", she sent a standard letter to Abbey. There were a few more ups and downs, but eventually Lucy had her money back, £900.

"I thought it was brilliant. It took four months, but it was worth it. I was so relieved it was all over." But it wasn't quite.

"Somehow while all that was going on they'd managed to charge me another £250. This time I didn't challenge it. I just paid it and took what was left.

"I closed my account and don't intendto have anything to do with Abbey ever again. It's a great feeling."

Abbey announced earlier this year that profits had risen to £661m.

In a statement the bank said: "Abbey is up front and transparent about all its banking charges as set out in its Tariff of Charges. For most people, banking is free. They do not incur charges. We do not charge fees to people who contact us and ask to borrow money, only customers who go beyond their agreed limits and who do not contact us are charged.

"It is the customer's responsibility to ensure there are sufficient funds in the account or an arranged overdraft in place to cover any direct debits, standing orders, card purchases or cheques.

"If a customer has made a mistake and it is the first time they have incurred a charge, we will refund it. If a customer would like to discuss the charges they have incurred, they should talk to their branch or call us."

* For more details on how to reoucp charges, including template letters to download and copy, try www.which.co.uk

www.bbc.co.uk

www.thisismoney.co.uk