Millions of victims of excessive bank charges have been offered a glimmer of reclaiming hope in the wake of the Conservative/Lib Dem coalition.

The new deputy prime minister Nick Clegg told (MSE) before the election that banks and building societies should pay back much of the huge fees, often around 35 a time, levied for exceeding your overdraft limit (see the MSE Leaders' Debate guide).

However, Clegg stopped short of promising legislation at the time.

This is despite current account providers winning the test case on charges in November (see the Bank Charges Reclaiming guide).

'Banks should pay'

Clegg said last month: "As for charges from the past, while it's usually a very bad idea to pass retrospective legislation, I believe the banks have a moral obligation to pay them back.

"The idea that chief executives taking home millions of pounds a year can begrudge people struggling to get by a few hundred pounds simply beggars belief."

Meanwhile, Clegg's number two within the Liberal Democrats, Vince Cable, has become secretary of state for business, innovation and skills, which may strengthen that position.

A Liberal Democrat spokeswoman says such finer policy detail has yet to be ironed out in the new coalition.

Yesterday, the Financial Services Authority revealed 1.1 million bank charges claims were re-opened following the test case result, having been on hold in some cases for two-and-a-half years.

However, hundreds of thousands more who did not make claims have also received huge fees.

'Fairness and transparency'

The previous Labour administration said it would force banks to ensure charges are fair in future if they do not do so voluntarily. The new Government is expected to follow the same line.

Prime Minister David Cameron did not specifically reply to questions on past bank charges from MSE when asked before the election.

On future charges, he said at the time: "We have called for a competition review of the banking sector, including a close examination of bank charges. We need much more fairness and transparency when it comes to these issues."

Clegg added last month: "Bank charges really are a scandal. The UK banks only exist because they have been bailed out by British taxpayers, yet financial service companies are still ripping people off I don't think that's putting it too strongly.

"Legal action against the banks hasn't worked, so we will legislate to end unfair bank charges on unauthorised overdrafts, bounced cheques, or failed direct debits."

'Chink of light'

Martin Lewis, MSE creator, says: "This could just be a chink of light for the millions of people with past bank charges.

"The Liberal Democrats have said they believe the big bank bosses should be asked to pay back these charges and now the hope is they can deliver.

"The fact Vince Cable has such a prominent role couldn't be any better, as he's put in early day motions on this in Parliament.

"Time for all bank charges reclaimers to cross their fingers."

Are you in hardship?

Even without new legislation, those in hardship can try to reclaim past charges.

The Financial Ombudsman Service stresses such cases tend to involve many more issues than charges, so any redress, if successful, could be due to other circumstances (see the Bank Charges Reclaiming guide).

Further reading/Key Links

Reclaim: Bank Charges Reclaiming, Bank Charges Court guide

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