More than one million bank charges victims have claims to get their money back on hold.
Campaigners say it’s time the banks and building societies finally admitted defeat and paid up to spare reclaimers more pain.
Figures from City regulator, the Financial Services Authority (FSA), show 972,500 claims were placed on hold between July 2007 and November 2008. However, five months on, it is likely that figure has passed the one million mark.
Of the total, the FSA reveals almost 27,000 have been suspended by the courts. The Financial Ombudsman Service says it is sitting on 14,000 claims. This figure is up-to-date though the majority are included in the FSA's total.
Some 98,000 consumers submitted claims insisting they were in financial hardship between July 2007 and November 2008. However, banks are only hearing around 25% of these.
Crucially, banks have to consider cases from those in financial difficulties. This was a strict condition of the waiver, put in place by the FSA in July 2007, which allowed banks and building societies to sit on most claims, pending the result of a landmark test case to determine whether default charges of up to £39 a time are fair.
However, the test case is still ongoing. In the latest twist last week, the House of Lords granted banks the right to contest February’s Court of Appeal ruling that their charges can be subject to 'unfair contractual terms' laws.
The upshot of this is that if the banks win the appeal, they win the test case, barring a possible further appeal to the European courts, and consumers will have to find new avenues to get their money back.
If the banks lose the appeal, the Office of Fair Trading (OFT) will decide whether their charges are unfair. If that’s its conclusion, as the OFT's provisional findings indicate may be the case, this should re-open the reclaiming floodgates. However, the banks could still contest any ruling in the courts.
The OFT announced last Friday it is investigating three banks’ charges to help it determine whether they are fair. It’s scrutinising those from HSBC, Lloyds TSB and Clydesdale Bank. This doesn’t let the others off the hook, just that the OFT thinks the trio’s charges are representative of the rest of the market. A decision on fairness is expected later this year.
Wendy Alcock, banking analyst at MoneySavingExpert.com, says: "It’s time the banks finally paid up. They are dragging this issue out and forcing consumers into waiting an age to get THEIR money back, while also continuing to charge these ridiculous fees. Importantly, if you’re in hardship, get your claim in as banks have to hear your case."
The FSA figures came from a Freedom of Information Act request from the website LegalBeagles.info.