Thu 29th Mar, 2007
Overdrawn Consumers are Going to Court
Hundreds of consumers who went into the red on their overdraft accounts are fighting the unfair charges in court. Dozens of consumers claim they are hit not with £40 overdraft fees, but with fees in excess of £200. Many consumers claim that the fees are making it impossible for them to get out of their overdrawn state and want to stop the unfair charges from piling up.
One small business claims they have been hit with £3500 in charges in the last five year. Whilst we cannot disclose names of those currently pursuing their claims through court, these incidents of banks taking advantage of consumers are widespread and cases are likely to be hitting the news soon.
One woman who responded to our query was told by her bank to take out a credit card from them to clear her overdraft and pay off the unfair charges.
It is paramount to an illegal act to force consumers to take out a high-interest unsecured loan to cover unfair charges on a low interest loan like an overdraft.
Complaints against banks have soared in recent months, according to the Banking Code Standards Board Banks. The banks have been accused of ripping off customers with the high charges, imposed for minor account problems, with most about complaints covering interest rates and unfair charges.
As more claimants seek advice from charities and the Financial Ombudsman Service, the numbers of claims and the value of those claims will increase. This is good news for many consumers who are facing high interest rates on these loans.
However, experts warn that banks are out to make money and will grab it where they can from their customers. If overdraft penalties are deemed unfair, banks will simply create charges in other areas and these could easily hit all customers, not just those in the red!