Issue 78601 2012

GHF Focus finance

T H A N K Y O U F O R C H O O S I N G

WWW.GHFPUBLICATIONS.CO.UK INFO@GHFPUBLICATIONS.CO.UK

HAVE

YOU BEEN

CHARGED LOAN

BROKER

FEES? Reclaim your money

Loan Alternatives Page

Reclaim Your Bank Charges Page

Payday Loans– An Overview Page

CONTENTS BEEN CHARGED LOAN BROKER FEES? PAGE 3

YOUR FINANCIAL RIGHTS PAGE 4

PAYDAY LOAN– AN OVERVIEW PAGE 10

DEBT SOLUTIONS PAGE 12

BANK CHARGES RECLAIMING PAGE 15

CONSUMER WATCH PAGE 24

ABOUT US GHF Publications - A non advisory service, providing resources, links & information

to help you reach financial solutions. Dealing in areas such as:

Debt Management

Unsecured Loans

Pension Reviews

Life Insurance

Lowering Everday Bills

Council Tax Overpayments

Facts On Guarantour Loans

Unfair Loan Broker Charges

Bank Charges

Payment Protection Insurance

Mortgages

Been Charged Loan Broker Fees?

Firms that charge fees for finding hard-up consumers a loan will have their activities curbed, after the Office of Fair Trading (OFT) found some pocket cash without car-rying out the service.

Consumers may now have the right to their money

back where no loan is offered, while the OFT also wants the Government to consider banning up-front fees in the sub-prime market – for people with credit problems. Meanwhile, the watchdog will also publish guidance later this month to tackle other unacceptable practic-es in the debt management industry. The action comes after a 'super complaint' launched by charity Citizens Advice in March that the OFT is duty-bound to respond to. The complaint was specifically about credit brokers and debt management firms following concerns about their negative impact on vulnerable consum-ers. The OFT issued warnings to 129 debt management businesses in September 2010 as part of its crackdown on dodgy practices.

Fees Curbed

The OFT estimates 270,000 consumers

paid an up-front fee to a sub-prime credit broker in the last 12 months, typ-ically between £50 and £70, on the ex-pectation of being offered an unsecured loan. Complaints to Consumer Direct about these up-front fees more than doubled between 2008 and 2010. In addition, in the 2010/11 financial year, the inde-pendent Financial- Ombudsman Service received over 5,000 initial en-quiries and complaints to its helpline about credit brokers, more than double the 2,000 in 2009/10. The Ombudsman upheld around 70% of credit bro-king complaints in favour of the consumer in 2010/11. In the worst cases, firms take the money without finding any lender, the OFT says. In others, they find

borrowers a completely un-suitable loan. The OFT today says: Consumers may have a right to a refund of the up-front fee, under contract law, where no introduction to a lender is made. The OFT says it cannot be more definite as it is not judge and jury on matters of contract law. Where an introduction is made but no loan is taken out, the OFT expects brokers, six months after intro-ducing a consumer to a lender, to advise them of their right to a refund of the fee. The OFT says in the-se cases the law is clearer and borrowers are entitled to their money back.

John Fingleton, OFT chief executive, says: "Our evidence suggests some busi-nesses are deliberately taking people's money up-front with no realistic expec-tation of finding them the type of loan they need. "We will continue to take robust action

against businesses using unfair practices and we are providing new guidance making very clear the kind of behaviour we expect. We are also asking the Govern-ment to look at the impact of a ban on up-front fees."

“We will continue to take robust action

against businesses using unfair practices “

J. FINGLETON, OFT CHIEF EXECUTIVE

CONSUMER WATCH:

Save £60 on electricityPage 24

£134 million a year is wasted by overcharging

our gadgets, according to a

study by energy firm Eon.

Do you leave your mobile

phone or laptop plugged in

Your Financial Rights Complain, get help & compensation

What Is The Financial Ombudsman?

The Financial Ombudsman Service (FOS) is an independent official body, established by Parliament in 2001, for settling disputes between UK based financial companies and their customers. The service it provides is complete-ly free. It has legal power to adjudicate on individuals' complaints or complaints from small businesses and charities with turnover under €2 million (around £1.65 million) and less than 10 employees. Anyone that's ever had a financial product or service needs to know about the powerful rights all consumers have when dealing with financial com-panies. Regulations state these companies must "treat customers fairly" and if not the Financial Ombudsman Service is there to provide a free way to fight back. And there's no negative outcome, you cannot be awarded against, the worst that can happen is the Ombudsman says you've no case. The service is also not just for new complaints. In many circumstances you can complain about something that happened up to six years ago.

How Does It Operate?

While the ombudsman has the power to investigate cases, actually its primary role is in settling disputes between customers and companies, and while these may sound like they're the same thing, actually it can often solve the problem without an investigation.

Within these disputes it is impartial, neither on one side nor the other, yet its job is to ensure that complaints are dealt with and fair play happens. In a nutshell the process works like this:

You fill in a form. If you’ve already complained to your bank and it’s not helped, you simply go to the ombuds-man's website or call it up and fill out a standard complaint form, you don't need any legal help at all, it's all pretty straightforward.

It puts your case to the company. At this point it goes to the company and asks what happened and for the com-pany to solve the problem or pay the requested compensation. Companies can agree. It's quite common once the Ombudsman is involved for a company to just roll over and pay out what they owe at an early stage to avoid a full investigation.

If you have a problem, if no one else can help you, and if it's with a financial services company, it's easier to complain to the Financial Ombudsman for free. It can rule, order compensation and even pay out for your time on top.

If there's no agreement, it may carry out a formal investigation. The final decision is based on fairness, to try and ensure the customer hasn't been mistreated. It's done, roughly speaking, on the basis of the 'balance of probability' in other words on what it thinks is most likely to have happened from the evidence it is given. Using the ombudsman is a very powerful technique that in many cases is cheaper and safer than trying to get resolution via the courts. More importantly unlike the courts, which have to rely on whether the company has broken any law, a big ad-vantage of the ombudsman is it also follows the regulators “treating customers fair-ly” rules. This means making sure you’ve been dealt with appropriately, not just le-gally.

What Can The Ombudsman Decide On?

Its range is huge, not just regulated financial activity, but also the general operations of a financial company to see if it's treating you fairly. If you're not sure put your complaint in and the worst thing that can happen is the ombudsman tells you it can't adjudicate so you've lost the price of a stamp. Here's a quick list of typical things:

Bank Accounts

The big one here is of course Bank Charge complaints where the Ombudsman has played a big role. Yet anything from incorrect Direct Debits, cheque clearing, Setting Off or delays or mistakes in the administration of an ac-count are included.

Credit cards

The main one here is unfair Credit Card Charges, though that is starting to disappear from fo-cus now. Yet it could involve any inappropriate behaviour such as an increase in interest rate without any explanation being given, disputed transactions or failing to pay out Section 75 claims, amongst others.

Debt Collection

Since Apr 2007 the Ombudsman has been able to look at complaints about debt collection companies, for exam-ple if you feel they are harassing you or not treating you according to the OFT's Debt collection guidance. The Ombudsman will need to see you have tried to come to an arrangement about any debts but will investigate if you think you've been treated unfairly. Insurance

Perhaps the biggest category of them all is the dire selling of loan insurance, with possibly ten billion pounds of missold policies out there. Yet over the past few years Car, Home, Travel, Pet, Roadside Assistance, Income protection, Critical Illness and Private Medical have all moved under the Ombudsman's remit. Complaints can be to do with rejected, delayed and unpaid claims or non disclosure of information and more.

BANK CHARGES

Reclaim upto 6 years Page 15

Rumours of the death of

bank charge reclaiming

are greatly exaggerated.

People still regularly get

some of their excess

charges back – adding up

to £100s, joining the £1bn

already repaid.

Mortgages and loans

This covers a vast range of issues not just with lenders but also mortgage brokers, including the way lenders have handled Arrears Problems or the affordability of the mortgage/loan when it was first taken out. There is also the once huge issue of endowment miss-selling although time is now running out for this.

Savings & deposit accounts

A less obvious area of complaint but ISA applications that were not processed correctly or on time, what happens to "roll-over" savings bonds when they end or account interest rates not changing in line with base rate changes are examples of savings complaint that are covered.

Investments

Although the Ombudsman does not deal with complaints that are solely about the way an investment has performed it can help with many areas to do with with-profits or whole-of-life policies, unit-linked bonds, savings endowments and stockbrokers. Plus it also has jurisdiction on where people have asked or been told they were getting low risk products but were actually sold risky deals. Pensions & Annuities

Complaints can include being wrongly advised to transfer out of SERPS, the suitability of a pension or administra-tive matters such as delay. However, ongoing administrative pension problems (involving an employer or trus-tees, for example) should be referred to the Pensions Advisory Service in the first instance.

What does it take into account?

Companies must treat customers fairly and reasonably, yet of course that definition is open to question. Unlike a

court, the Ombudsman can rule against companies even if they‟re acting within the law, as this is not the only

source it takes into consideration. Its three sources are:

The law of the land Of course the primary source is the law, if companies actions are breaking the law

then it‟s quite clear cut.

Regulators rules and guidance The Financial Services Authority‟s (or other relevant regulator) rules also play a key

part, so if the FSA has indicated how it wants companies to behave and a company

breaks that, it can be deemed unfair.

Good Industry Practice This is the most interesting one, as it allows the FOS to define good practice. In most cases it means that the FOS

will look at any trade body standards (such as the Lending Code), but it can also look at what is seen as common

good practice, and if a particular company goes against that, it can deem its actions unfair.

How do I complain to the Financial Ombudsman?

There is a protocol set out here that needs to be followed, yet it's very simple:

Complain direct to the company, but expect it to say no

You can't just go to the ombudsman, it will always want to have seen proof that you tried to settle it with the

company first.

Yet the most important thing to understand is that in most cases a

company‟s first reaction is to reject your complaint yet this doesn‟t

mean you‟ve no case either, it‟s just a tactic. This isn‟t about rights

and wrongs, it's about commerce. It's far cheaper to say no, pro-

duce a legalese argument to befuddle you and hope you‟ll cower in

a corner.

So expect a reject and don‟t be phased by it one jot.

Complain to the Financial Ombudsman

If your bank won't help, or you wait eight weeks, you can then go to the Ombudsman, unless your bank has sent

you a rejection letter suggesting you use the Ombudsman, when it can help sooner

To start your complaint you just need to contact the Ombudsman and ask it to take on your case. Either do this

via the FOS website or call 0300 123 9 123. If you're not good at form filling or English isn't your first language,

the Ombudsman can take you through the process and/or find an interpreter.

After contacting it, you'll need to fill in and post back a copy of its complaint form to explain your case (attach evi-

dence if you have it) and so that it has a copy of your signature. You then leave the matter to it to resolve and it'll

contact you if it needs more information or with any possible resolutions. Remember though…

Like all good writing, the essence of the complaint & what remedy you want should be in the first

line

How Far Back Can I Complain? The good news is you‟ve a right to go back a number of years, so if you think you‟ve been

hard done in the past, dig out your paperwork and put a complaint in.

Yet the Ombudsman can only help with complaints about companies regulated by the FSA.

While this doesn't affect most banks and building societies, some insurance providers, for ex-

ample, were not regulated until 2005 or 2008. If in doubt check with the Ombudsman.

If covered, the key rule is you‟ve EITHER three years from when you knew you could make a complaint OR six

years from the event you're complaining about taking place. If you are given the correct details you need to contact

the Ombudsman within six months. Outside of this timeframe you will need to start your complaint from scratch,

and there is a chance the Ombudsman may not be able to help if you need to refer your case to it down the line, so

do try not to miss the deadline.

In some cases it’s clear cut

For instance, with Mortgage Endowments, you get a dated red letter when your insurance company knows there

will be a shortfall, meaning your mortgage might not be covered by the investment. If you took out the mortgage

endowment over six years ago, the 'red letter' will start the three year rule (although for endowments your lender

should also have written to tell you about the time limit at least six months before it expired).

If not, use the best option for you

In other cases, this can be a grey area. Let's say you want to complain about your APR getting raised by your cred-

it company. Does the clock start ticking when the rate was altered, when you got your statement or when you

knew you could complain about it, which may be months or years later?

If the rate was raised in the last six years you're covered, otherwise you need to be able to reasonably show that

you didn't realise there was a problem until three or less years ago, otherwise you‟ll be out of time. So as long as

it's honest, work this through to your advantage and pick the time when you first realised you could complain

about your treatment and you'll be fine. Ultimately the ombudsman will decide if it's in time or not

Can I Re-Open My Complaint? Each time you complain, a financial company needs to give you a final response,

which must mention the Ombudsman's free service, and it can get in trouble if it

doesn't eg in Jan 2011 the FSA fined RBS and Natwest for not telling some of its cus-

tomers about this.

If you are not given a final response, or it doesn't mention your right to use the Om-

budsman within six months of their letter, your timeframes are extended.

In this case you‟ve three years from when you knew you could make a complaint OR

six years from the event you're complaining about taking place.

If you are still within these timeframes and would like to pick up a complaint where

you left off simply contact the Ombudsman and ask it to take on your case. The

Complain to the Financial Ombudsman section above includes links to the forms and

a free guide, which takes you through filling in the form step by step.

If you're re-opening your complaint we suggest you include any original letters you

still have and mention the fact in the „any other details‟ section on page 3 of the form.

Here‟s some suggested text to help:

"I am reopening this complaint due to not receiving full and correct details of my

right to use the Ombudsman service following my original complaint in ENTER DATE".

Can I Charge For The Hassle It's Caused?

The Ombudsman awards compensation for material distress and inconvenience in

around 25% of the cases it looks at. Hidden in its compensation guidelines, it states it

can make an allowance of around £50 to £100 a day, and not more than £10 per hour,

for the time the consumer needed to spend to put things right, so you can charge for

your time.

This is great news for anyone who's experienced unfair problems (from inconvenience

to issues that cause distress) due to their bank or finance company, as it officially recognises that time spent to

rectify the situation is worth something.

Therefore when you do complain to the Ombudsman, if you have spent significant time and hassle going through

the process, be sure to include an estimate (or proof if you've got) of the hours spent and ask for compensation ac-

cording to its guidelines.

You could go one step further though, and use this as a stick to hit an unco-operative company straight away.

While it officially only applies for complaints resolved by the ombudsman, when complaining in the first place,

do note it with the company and indicate that you will be asking the Ombudsman for compensation, it may help

make it settle.

DEBTS? All options

Page 12

No matter how small or large your debt is, realise there is a debt solution for you that can help you to pay off your loans.

Pay Day Loans An Overview

Payday loans seem to be everywhere at the moment, if you’re a little short of cash one month and need a small cash injection then you would be made to believe that a payday loan is ideal for you.

The advantages of payday loans are applicable to most kinds of finance. They simply give a cash boost. So what are the disadvantages of payday loans?

Payday loans are expensive

Payday loans have very very high APR most of them in the 1000%+ bracket. The providers of the loans will tell you the APR is high because the loans are high risk. However that doesn’t stop them being really expensive so you want to avoid this at all costs if you can. Payday loans can be addictive

People taking out short term small loans to fix finance problems at the drop of a hat can get addicted because it’s all too easy to get into the habit of relying on them. It may start out well, you get a small loan to fix your car and pay it off on time, then it’s your mum’s birthday so you get another one and pay that back on time. Then you real-ly need a holiday so you get a loan to cover a week in Spain, but when you get back you can’t afford to pay it back on time, now the problems can really start.

They have to be paid back within 1 month (typically)

If you can’t afford something today, chances are you won’t be able to afford it in a months’ time when the loan is due to be re-paid. Try to find longer term finance, so that you can spread the cost making it more affordable.

Missing a payment has severe consequences

As with all finance, if you miss a repayment then the company will pursue you for the money and will probably charge you fees for missing payments. This can very quickly get out of control; you should also bear in mind that the big banks tend to be much more lenient on late payments than smaller payday loan companies. Payday loans don’t fix the problem.

Despite what you think the short injection of cash won’t fix the problem, what you need to do is address the problem of not having enough money to start with.

An independent investigation, which lasted months

on payday loan companies, found worrying trends within the industry. Upon reading the report I ex-pected it to focus on the eye-wateringly high APRs, which can reach thousands of percents. But what I found was much more worrying. Payday loan companies defend their high charges by claiming that they’re only designed for short-term borrowing. And yet, the way some companies work could be encouraging customers to borrow more and more over a longer period.

Several companies in the investigation encouraged borrowers to extend (or ‘roll over’) their loan, sometimes for several months. You have to pay off the previous month’s interest first, but you’ll still incur an extra monthly inter-est charge of around £25 per £100 borrowed for each month you roll over the loan. Borrow £100 for four months and it’ll cost you £100 in interest.

Some of the lenders told the mystery shoppers in the investigation that the amount they could borrow next month would be guaranteed to increase, provid-ed they pay this loan back on time. In one case, the initial loan of £100 was followed by a loan offer of £1,200. I think this is irresponsible lending.

The effect of roll over

Payday loan companies claim that APRs are irrelevant as their loans are only designed for short-term borrowing – not the full year that the APR implies. However, I be-lieve this picture misses a crucial fact. Here’s what I could do if I were a hard-up consumer, unable to

cope with my finances:

Take out a payday loan with company A. Before loan A is due to be repaid, apply for a second loan with company B. Loan B will need to be a bit

higher than loan A to cover the interest. Use that loan to repay loan A.

Watch out, loan B is due to be repaid! What can I do? Luckily, company A is offering me a guaranteed loan of double the amount it lent me a couple of months ago. I’ll take out that new, increased loan to repay loan B. Double hurrah. Lender B also guarantees to lend me more the second time round, so I’ll use that to pay

off the second loan from company A.

I can keep doing this until either A or B pulls the plug. At that point I can’t afford to repay the final loan and I go into default, leaving me in real financial trouble.

Payday loans can, in theory, offer a short-term solution to an immediate cash flow problem. However, the struc-ture that many providers have built into

their lending systems, whereby loans can be auto-matically rolled over and/or increased, could encour-age cash-strapped consumers to enter a cycle of un-manageable debt that will probably only end in far greater money problems. Not all payday loan companies work this way. And yet, I find some companies’ apparent disregard for the long-term finances of their clients astounding.

I have seen posts on forums of people who have tak-en out payday loans and been unable to pay the loan back, so they decided that the best course of action is to shut down their bank account, and ignore all letters from the company requesting payment and threatening court action. This is not smart or clever and help should be seeked. But I really need some cash now!! Have a read of our debt solutions article.

Designed To Trap You In A Cycle Of Debt!

Debt Solutions

No matter how small or large your debt is, realise there is a debt solution for you that can help you to pay off your loans. A debt solution could reduce your monthly repayments to an affordable level by reducing or freez-ing interest, other charges and extending the repayment period. Debt solutions range from informal Debt Management Plans (DMP) and IVA (Individual Voluntary Agreements) to Debt Consolidation and Bankruptcy. The best debt solution for you depends on your individual financial cir-cumstances, your creditors, the amount of debt and your ability to pay it off on a monthly basis. If you are in debt, you can speak to our debt advisors for free initial debt advice. Our professional debt special-ists will advise you on the various debt solutions available.

Types of Debt Solutions IVA: An IVA is a better alternative for people with larger amounts of debt who may be eligible to write off a portion of it. As part of the arrangement, you agree to pay an affordable monthly instalment of your debt over a period of time which is normally five years. An IVA ensures that all further charges and interest are frozen so that the debt is brought down to an affordable level. Debt Management Plans: Debt Management Plans are infor-mal arrangements reached between you are your creditors to pay off your debt over an agreed period of time. Most DMPs are set up by debt management companies who negotiate with your creditors on your behalf to re-duce or freeze all further interest and charges and extend the time period for repayment. Debt Consolidation: You can take one large loan to pay off your multiple unsecured loans. The advantage of debt consolidation is that multiple loans are consolidated in one manageable loan and so you just have a single credi-tor and make one manageable monthly payment. A debt consolidation loan is usually a secured loan, or in other words a loan that is backed by a valuable asset such as your home/property. Bankruptcy: This should be considered as the last resort because it has long lasting consequences and you may also lose your property and other valuable assets. In case of bankruptcy, a trustee or Official Receiver will take over the management of your financial affairs for a limited period of time.

IVA - Individual Voluntary Arrangement

An Individual Voluntary Arrangement (IVA) is a formal and legally binding contract between you and your creditors that sets out how you are going to repay them over a five year period. Given the fact that it is a formal arrangement, an IVA is set up by a licensed Insolvency Practitioner (IP). At the end of the IVA period, all remaining debt is written off and you are declared debt free. Advantages of an IVA

Unlike bankruptcy, an IVA is not made public so there is no social stig-ma associated with it.

At the end of the IVA period, all remaining unsecured debt is written off and you are free to make a fresh start.

With an IVA, you can continue to have a current account though you will not be allowed an overdraft facility.

An IVA allows you to pay what you can reasonably afford. Once in place, your creditors cannot contact you for repayment or initi-ate legal proceedings against you.

An IVA can help you improve your credit ratings.

The costs of an IVA are less than bankruptcy.

Bankruptcy Bankruptcy is an option you can consider if you are completely unable to pay back your debts. As part of the bankruptcy process, the court appoints a trustee or Official Receiver to take over the management of your financial affairs for a limited period of time. You can declare bankruptcy on your own. Alternative-ly, your creditors can initiate bankruptcy proceedings against you. Once you are declared bankrupt, your debts will be written off. Normally, the bankruptcy pe-riod lasts till one year, or less, after which you are free to make a fresh start. Can bankruptcy be avoided?

Bankruptcy can seriously affect your future your ca-reer, home, earnings and credit rating and so it is best

to consider all other options such as an IVA (Individual Voluntary Arrangement) in order to avoid it. If you owe £15,000 or more of debt and have a regular disposable income of £200 per month, you can seek the help of a debt management company to set up an IVA with your creditors. Alternatively, if you are a resi-dent of Scotland, a Protected Trust Deed can be an option.

Debt Management Plan

A Debt Management Plan (DMP) in an informal arrangement reached between you and your creditors to repay your debt in more affordable amounts.

Debt Management Plan may or may not involve the reduction in the amount of debt. However, the company offering the debt management plan will negotiate with your creditors to reduce or freeze all further interest and charges, allowing you to make reduced payments over a period of time. Unlike other debt solutions like an IVA (Individual Voluntary Arrangement), the Debt Management Plans are not legally binding, which means your creditors can revert back to the original terms of the loan. However, the in-volvement of a debt management company greatly ensures that the terms are honoured by both parties. You simply need to make the monthly payment to the debt management plan company who will then distribute the amount to your creditors so you don't have to deal with them directly. Eligibility Criteria for Debt Management Plans

Only unsecured debts can be included in your debt management plan, for example, personal loans, credit cards and store cards. You must be able to demonstrate that you are facing genuine difficulties in repaying the loans as and when they are due. Your level of unsecured debt typically has to be above £1000. Your disposable income every month needs to be at least £100 to make your monthly instalments to your credi-tors.

Bank Charges

Reclaiming Rumours of the death of bank charge reclaiming are greatly exag-

gerated. People still regularly get some of their excess charges back

– adding up to £100s, joining the £1bn already repaid.

Reclaiming bank charges from current or closed accounts specifically for busting your overdraft limit, bounced

cheques and direct debits was once an open door. You simply threatened to take a bank to court or the Ombuds-

man and it sent you back a goodwill cheque for six years' worth of charges plus interest.

While charges have dropped slightly to an average of around £15 in the past few years, it's still possible to be

charged up to £35 a pop for going overdrawn. Yet it may be possible to get this back.

Since the result of the Nov 2009 Supreme Court ruling it has been more difficult, but two years later some pay-out

are still possible for those in financial hardship.

If you're reading this after a one-off recent bank charge or a charge has been applied in error just call up the bank

and see if it'll wipe it. This guide is aimed at those who've had a number of charges that have snowballed over a

longer period. For many people, especially those who've had charges on charges, pay outs could still be possible,

and done right it's free and risk-free.

How easy will claiming be?

There's no guarantee of winning, yet for some, primarily those in hardship, there's still a risk-free, cost-free pro-

cess which could see money coming back.

The independent Financial Ombudsman Service will still look at certain cases (see the step by step process be-

low), and there's no risk in doing so. Yet even so…

"The safest thing to do is plan your finances on the fact you WON'T get a payout, but cross

your fingers in the hope you will"

Some do find battling their bank stressful though, so go in with a positive mind, and even if you don't get a re-

fund don't feel let down. And do remember the best way to avoid bank charges is not to have them in the first

place.

Reclaiming bank charges has always been an art not a science. In many ways this guide is about negotiation. It's

designed to try and get back the money we believe has been unfairly taken off you as quickly and swiftly as pos-

sible. It's important to remember the basics though:

You want your money back, the bank isn't keen to give it. Yet it's obliged to treat customers

fairly and stay within the law.

Step 1: Are you eligible?

Before you even start to reclaim, we need assume that your complaint to the bank could be rejected so you may

need to take it further. Most will do this via the free Financial Ombudsman Service. Some may decide to go to

court, which is explained later.

It's free and virtually risk free, so if you have a chance of complaining there rather than court it's much safer and

more desirable. You don't need to go in person, it's just a matter of filling in forms.

The Ombudsman has said it is willing to look at specific types of bank charge reclaims (see below) primarily in-

volving severe hardship and if you can go this way, it's a far safer option. It doesn't mean you'll win, but the risk

of losing is less.

Who can go to the Ombudsman? The Ombudsman has said it doesn't want legalese challenges; it will only look at cases based on the „fairness' cri-

teria – in other words if you have been harshly or unfairly treated. It's specifically noted three different reasons

which it would be likely to look at on this basis.

The reasons can either apply to your situation now, or at some point in the past. Yet importantly, if you're no long-

er in hardship the Ombudsman will look at how your bank treated you at the time and whether you are still strug-

gling. To help your case you should have contacted your bank for help when you had the difficulties.

So check whether you fit in one or more…

You’re in financial hardship

Under both standard banking regulations and the Lend-

ing Code (an agreement that all major banks have

signed up to) banks must treat you fairly and be consid-

erate if you are in financial difficulty.

We have therefore used these criteria as well as guid-

ance from the Ombudsman to try and give some ideas

as to what would count as hardship.

You're likely to need several of these criteria to be suc-

cessful, not just one, and you'll need to give the bank

full details on how you've been affected. Check the fol-

lowing guidelines:

Can't pay for necessities. You're struggling to meet

basic necessities eg mortgage, council tax, food, utility

bills

Can't pay debts. You're struggling to make loan and

credit card repayments

Income eaten by charges. Your income's being eaten

up by repaying charges (eg you're being asked to pay

£50 of charges from a £100 weekly benefit income)

Note: this doesn't specifically cover the deduction of

bank charges from your benefits under the Social Secu-

rity Administration Act 1992, this is an urban myth

Payments regularly returned. Your payments regular-

ly get returned unpaid as you don't ha've enough money

in your account

Substantial drop in income. For example, you've lost

your job, started a lower paid job, needed to take paren-

tal or carers leave, your partner has died, you've separat-

ed from your partner, you've started full time education

or you/your partner has been in or gone to prison

Disability or illness. You've needed to increase

spending on something due to a disability or serious

illness

Going bankrupt or into debt management. You're

going bankrupt, getting an IVA or Debt Relief Order

or are in a debt management plan

Continually living off credit. You're living off

credit and regularly need to increase your credit

limit

Regular credit card cash withdrawals. You are

using regular cash withdrawals from credit cards to

make ends meet

Frequently over overdraft limit. You frequently

go over your overdraft limit. In earlier incarnations

of hardship rules this was explained as having more

than £500 of charges a year – so that seems a good

benchmark

Bank charges have hurt your situation. The

charges have contributed to making your financial

hardship situation materially worse

The charges are disproportionate

If you unintentionally slipped over your limit by a few pounds and the charge is a lot higher than the „offence' eg,

you go £1 over but are charged £35.

You are / were stuck in a cycle of charges you cannot break out of

This is known as snowballing and effectively means you've had charges on charges, so you've been stuck in a

trap of not being able to clear charges before new daily or monthly fees are added on top.

This is very common for those with larger reclaims, and is often the reason why some people are being paid back

many £1,000s. Of course it tends to go hand in hand with being in hardship.

Which category do you fit?

After reading the list above, here's how to decide what's next:

You're pretty sure you fit into these guidelines. If so follow the Ombudsman route laid out below.

You think you could fit into these guidelines. If it's touch and go, then it's worth trying this route as it's safest

and you've nothing to lose. You are still allowed to go to court if you lose at the Ombudsman – though you can't

go to the Ombudsman once you lose in court.

You don’t fit into these guidelines. In this case the only chance is to go to court, and that means the landscape is

radically different. We need to be honest – we've not heard of anyone actually winning.

Step 2: How much can you reclaim?

If you're making a new claim, the first step is to

find out how many charges you've had and there-

What charges can I try to reclaim?

We're talking specifically charges and related costs for

going beyond your overdraft limit, or bounced

cheques and direct debit. Traditionally these were

about £35 per transaction but can now range from

around £5 up to £35.

Can I try to reclaim if the account's now closed?

There is nothing barring you from trying to reclaim

charges if you've now closed the account, even if it was

a few years ago.

Can I reclaim from more than one bank?

Yes there's nothing barring you trying that, this applies

to any current account you've had.

Can I try to reclaim new charges if I've been paid

out before?

Yes, there's no bar on reclaiming again. However the

fact you've already been through this is a worrying sign

of either severe financial problems or money misman-

agement.

How far back can I reclaim?

We're certainly talking years not months, though there

are varying views on how many, and you'll probably be

asked to prove your financial situation for the full time

you're claiming for. Don't worry if you haven't kept

historic statements though, you've a legal right to ac-

cess them.

The Ombudsman suggests claiming as far back as you

like, and it will decide whether or not all or part of your

claim can be considered. We believe it's more popular

than not to only be paid part of your claim though.

Technically the Ombudsman can only help with claims

within three years of when you realised there was a

problem, so if you've been waiting, claim now, yet if

you end up in court, normally the Statute of Limitations

Act says you can only claim for something within six

years of the event in England, Wales and Northern Ire-

land, and five years in Scotland.

In many ways this six years is probably a good rule of

thumb for putting in front of the Ombudsman, though if

you had substantial charges before that there's no harm

including them.

Can I charge interest on my bank charges?

If you got to court and won there, you'd be entitled to

add 8% flat interest (not compounded) on top of com-

pensation from the date of each charge. Therefore, you

may want to ask for the interest as part of the initial

claim.

Do understand you are NOT legally entitled to interest

unless you win in court, yet if you do decide to push

hard, consider it part of the negotiation process. It may

mean you could offer to settle “without interest”. Plus

the Ombudsman's view is it'll consider interest if it's

asked for – and may even plump for the interest you

were charged by your bank eg, around 20% - so don't

ask don't get.

What should I do if I don't have old statements?

Now, let's be honest, how many people have years' worth of statements? If you don't have them, don't worry,

you've a legal right to force the bank to give you them, but before that there are a couple of things you can try…

Do it online. If you use online banking check out what's available there first.

Call or write to the bank. Some banks will send you the info if you phone to ask (we've had feedback in the

past that sometimes Barclays, Halifax and HBSC have done this) so try this first.

You can also send a letter to your bank requesting a comprehensive list of all past transactions, including

charges (and at this point you may as well try going back for the longest period possible).

Demand your past charges under the Data Protection Act

If the above doesn't give you what you want, you've a legal right to demand the information under the Data Pro-

tection Act, though banks are legally allowed to charge up to £10 for it (and banks being banks, they usually

charge the full amount).

To speed the process up you could insert a cheque for £10 as part of your initial request as banks may stall the

process by later writing to ask for the money. Of course the counter is that it may send you the information

without charge if you don't include the tenner.

Yet there's one crucial fact here…

Never ask for statements, specifically request a list of transactions

If you do ask for statements you may be charged £10 a time, and over six years that's £720, yet asking for a list

of charges should be fine.

Banks have 40 days to respond to this request. If you have to wait longer, follow up with a phone call and then

report it to the Information Commissioner for a breach.

When you receive your transaction list go through with a highlighter and find all the relevant charges. You

should also be able to note what the charge was for and decide why you think it was unfair.

Step 3: Write asking for your money back

It's now time to contact the bank and ask for your money back.

If you fit in the Ombudsman criteria from Step 1 this is where you use the fairness argument. This is not based on

any law, but is about simply telling your story about how the charges have impacted you and caused or worsened

your financial situation and firmly stating you'll take the matter to the Ombudsman or court if it refuses to hear

your case or if it rejects it. The aim here is to make it take you seriously, yet equally you need to go into this with

your eyes open!

The bank may respond noting the Supreme Court decision means you can't reclaim. If you feel you've a case don't

let it put you off.

Remember even in the days when banks were paying back millions to re-claimers, almost everyone who wrote got

a rejection letter first time. Don't let it phase you, it's a step in the dance, we know from Ombudsman reports some

banks use rejection purely as a tactic regardless of merit.

What happens next? You should get a letter back from the bank acknowledg-

ing your complaint and it then has up to eight weeks to

deal with it. When your case is dealt with there are a

number of possible outcomes:

You're offered a full refund

There is a small chance your bank will offer you a full

refund as a „goodwill payment'. It's more likely to hap-

pen if you have a small claim or have provided very de-

tailed evidence on how you've been in hardship for the

full timeframe you are trying to reclaim for. If it does…

hoorah!

You're offered a partial refund

If you're offered anything at all, it's more likely to be a

partial refund as a goodwill gesture. Recent successes

suggest many are being offered around six months of

charges but it should depend on your circumstances and

the amount should result in you being treated

'sympathetically' plus be a 'reasonable' amount for your

situation.

If you don't think it's enough, call up and ask for what

you feel is appropriate – remember this is a negotiation.

A quick call saying, “I've had £1,300 of charges, you're

offering me £400 – I'll take £800 as it's a fair reflection

of my situation”. Remember banks have to balance the

administration cost of continuing versus clearing this off

their books. And you need to factor in your hassle and

risk of continuing against getting some cash now.

It offers a refund but says it should pay off your debt

You may be offered a refund but told it must be used to

pay off the debts you currently have at the bank

(whether overdrafts or cards). The Ombudsman has said

this is generally acceptable as it is returning you to the

position you would be in without charges (and is still a

win after all).

However if by the bank doing this you are still left in

hardship eg, you have mortgage or utility arrears, tell it.

If it doesn't budge read Step 4.

It'll ask you to fill in a financial statement form

If you've told the bank you're experiencing financial dif-

ficulties and it's unsure you fulfil the hardship criteria it

may send you an income and expenditure form, or

something similar, to complete.

Fill this in and send back as soon as possible. Do re-

include your original letter, adding a line that you've

enclosed the info as requested – this em-

phasises that you're serious and confirms

exactly what you're asking for.

Once you've sent that you could then get

the same list of results as happens here:

It offers to help but not to refund any

charges

Even if the bank has accepted your word

that you're in financial difficulties or does after you've

sent in the financial statement, this doesn't mean it has

to give you your money back, just that it has to treat you

sympathetically.

It could try and help in other ways, such as not imposing

any further charges, rescheduling payments or charges

to minimise the impact, stopping any debt enforcement

action against you or putting you into a payment plan to

manage any debts you have with it. If you're not happy

with the offer carry on to Step 4.

The bank rejects your claim

By auto-rejecting even people with reasonable claims,

the banks succeed in stopping some people ei-

ther going on to the Ombudsman or taking their

claim to court as people give up, and that's the

whole point.

If your first letter doesn't work, before going

further you may want to give the bank a call, or

write another letter saying you're going to the

Ombudsman and you think your case is strong,

but would prefer to sort it out quickly. See how

that works and carry on if it doesn't.

Don't give up. Call

up or write another

letter to show you're

not going to give up

easily. This could

persuade it to settle.

Step 4: Complain to the Ombudsman

If you haven't been able to negotiate a satisfactory settlement with your bank at this point, then it's time to take it

to the Ombudsman.

Here you need to rely on the „fairness argument', ie, the problems charges have caused you, as the Ombudsman

has said it is unlikely to consider „template arguments'.

As it's free and there's no negatives apart from a few months wait, even if it rejects your complaint, it's worth do-

ing. It's not guaranteed to get you a pay out but the chances are greatly increased if you are in financial hardship.

The worst that can happen is you lose the cost of a few stamps.

The Financial Ombudsman Service is the

official independent financial disputes

body, and it's completely free to use. It's

nothing like going to court and can all be

done simply from the comfort of your home – either via the internet or post.

The Ombudsman's job is to settle disputes and see if your bank has looked at your situation properly. If it

accepts your complaint, it first goes to the bank and asks it about the situation. If the bank doesn't agree to

pay you, the Ombudsman may carry out a formal investigation. It's far more common that a settlement is

reached without a formal investigation and adjudication though.

You can't simply go direct to the Ombudsman, you must always complain directly to the bank first. Then

you need wait eight weeks from the date you sent your initial letter to the bank – however if you've received

a rejection or final response from it, you can go sooner. Don't expect an instant decision though – it can take

weeks or months.

It's is a deliberately simple process and there is a designed complaint form that you need to fill in, which can

be obtained two ways…

By phone: Just call 0800 023 4567 (from a landline) and 0300 1239123 (from a mobile).

Online: Just go to the FOS website, where there is a Microsoft Word version or PDF version

You'll need to fill in and post back a copy of the form to explain your case and so it has a copy of your sig-

nature. You should also send copies of any previous correspondence you've had with your bank.

What to write on the complaint form

Honestly state what's happened to you; the Ombudsman has specifically said it's not interested in template

letter type applications. It wants to hear the affect of bank charges on you from a human perspective – so

make it as personal and specific as you can (though it needn't be over emotional – stick to the facts and the

impact).

You can also ask for interest to be added to your claim (eg, the 8% you'd get if you were going to court or

the actual interest you were charged by your bank of around 20%). After all, if you don't ask, you don't get.

To help we've written a guide in Word so you can easily cut and paste sections of it and/or print it out and

have it next to you as you're filling in the FOS form:

The FOS will then send you a confirmation letter that it will look into your case and get back to you if it

needs any more information, but otherwise you can then leave the matter to it to resolve and it'll contact you

with any offers from your bank.

If it decides in your favour its aim will be to put you back in the position you would have been in had you

not been treated unfairly. This does not necessarily mean a refund of charges, it may think an alternative so-

lution is more suitable.

How to complain to the Ombudsman

Step 5: If you lose at the Ombudsman

For many people that's it, you've lost and there are no further routes although you can still go to court using the

arguments charges are „legally unfair' (you can't go to the Ombudsman if you've already failed in court though) so

this may be an option for some.

This is something that should not be undertaken lightly, you will need to do work and research and be prepared to

turn up in court to argue this. The arguments are complex and untested and it won't be easy to do. It will almost

certainly involve paying a fee and also has a small risk of having costs awarded against you.

The Legal Argument In the Supreme Court decision in 2009 the chief judge thought it important enough to say this ruling didn't stop

people challenging fairness under 'Regulation 5' of the Unfair Terms in Consumer Contracts Regulations

(UTCCR) which the Supreme Court case did not cover.

We hired a top banking QC to suggest possible new grounds for reclaiming to us but they were just thought pa-

pers, and two years later are still to make their full way through court. The first argument uses a different part of

the UTCCR, the second a new argument based on the Consumer Credit Act.

While we think the arguments certainly make sense, when the Office of Fair Trading looked at them in 2009 it

didn't believe they had a realistic chance of success so wasn't willing to take on another case.

Taking this route is likely to be difficult and there are risks involved.

Consumer Watch Overcharging gadgets?

£134 million a year is wasted by overcharging our gadgets, according to a

study by energy firm Eon. Do you leave your mobile phone or laptop plugged in

well after it‟s fully charged?

Eon‟s study found that one in five of us leaves our devices plugged in even after

the battery is full because we‟re scared of running out of power when we leave the

house. Another one in ten of us are simply too lazy to pull the plug.

I‟m guilty of overcharging, especially when it comes to my beloved netbook. I

have a one-and-a-half hour commute from home to work (each way) and pass the

time by trying to write the book I‟ve been working on. So I always make sure it‟s

plugged in as soon as I get home and just unplug it when I leave.

On occasions the plug‟s come loose from the wall at home and I‟ve run out of charge on my way in. It‟s not criti-

cal, but without this distraction the journey does seem to take twice as long. To me a charged netbook is essential,

and if that means leaving it plugged in, so be it.

Overcharging won’t give you more power

In reality there‟s no need for me to overcharge my netbook at all. On a full charge it‟ll last for two full days‟

worth of journeys – around six hours – a massive leap from the 1.5 hours of my first portable device (a Toshiba

Libretto).

So why is it that, like me, 41% of those surveyed by Eon are overcharging their laptops? I suspect that part of the

answer lies in the fact that a laptop‟s battery barely lasts as long as we expect it to, or as long as manufacturers

claim it will.

Still, overcharging isn‟t going to buy you any more time – if anything it‟ll degrade the performance of your lap-

top‟s battery faster, not to mention the estimated £60 per year Eon says you‟re racking up on your energy bill.

Alternatives to overcharging

Eon‟s survey reveals that 46% of us would stop overcharging our gadgets if we were aware of the savings we

could make. But for me it‟s as much about ensuring I have enough travelling time with my netbook as it is about

saving money. Call it paranoia if you will!

There are, however, other strategies you can use to save battery life on your laptop. Such as lowering your

screen‟s brightness and switching off Wi-Fi.

As for me, I‟m going to stop overcharging my netbook – though I‟ll be keeping a spare charger in the office as

well as at home… just in case.

The Rise of Short Date Shopping

Would you shop for food that‟s just passed its best before date? A flurry of new websites specialising in older

goods are springing up – but is „short date shopping‟ going to make you serious savings?

I get all manner of press releases every week with companies trying to convince me they have the next money-

saving tip for hard-pressed consumers.

The latest one initially had me reaching for a sick bag. „The rise of the short date shopper – the new trend saving

families £3,500 a year.‟

Ah, „short date shopping‟ – the concept of buying food that‟s close to the end of its shelf life, or even out of date,

at a major discount. Buy now before it rots, or pay even less while it‟s putrefying.

Approvedfood.co.uk, which sent round the release, says that it can cut grocery bills by up to 80%, and that its

website includes over 1,000 different products to choose from.

Want some tinned celery hearts with a best before date of October 2011? Yours for 49p. Grab some of Ainslie

Harriott‟s Spice Sensation Couscous (past its best before date in December last year) for a quid.

Challenging ‘best before’ date preconceptions

While on the face of it this sounds disgusting, and really not worth the savings you‟re going to make, the NHS

provides some interesting information about best before labelling on food. Its website states:

„Except in the case of eggs, “best before” dates are about quality, not safety. When the date is passed, it doesn‟t

mean that the food will be harmful, but it might begin to lose its flavour and texture.

Every year in the UK we throw away 8.3 million tonnes of food and drink, most of which could have been eaten.

So think carefully before throwing away food past its “best before” date.‟

Creative ways to cut food bills?

Misshapen vegetables have challenged the preconceptions people have about what they can and can‟t eat. So, if

you‟re really finding it a struggle with your grocery bills, and you want to reduce food waste, this could be an al-

ternative means of shopping, albeit perhaps a skimp on quality?

I‟ve even dabbled in this in the past. A couple of years ago, my flatmate was writing an article about „freeganism‟

– rifling through the bins of supermarkets for food that had been thrown away – and I decided to participate for a

week. Although the freeganism movement has lots of anti-establishment motives, we just wanted to see if we

could live off what we found in the bin.

While we managed to survive (thanks to a lot of roasting and sauces), it didn‟t feel particularly nourishing, nor

something that‟d make a habit of. So perhaps being a short-date shopper would be a decent compromise?

Would you buy food that‟s gone past its best before date and do you think it could make you some serious sav-

ings?

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