Step By Step Guide

From Consumer Wiki

Example Step-By-Step Instructions

Please note that this advice is given informally and without liability and without prejudice.

Seek the advice of an insured qualified professional if you have any doubts.

This information is a guide only - your case may not unfold in this way - but the majority have.


Small Claims Procedure: A Practical Guide

If you want to understand litigation in the County Court small claims track works, then we now recommend Patricia Pearl's book: Small Claims Procedure: A Practical Guide. This book is excellently laid out and is a thorough but readable guide for the ordinary person who wants to bring any kind of claim in the County Court.

See a full review here.


Introduction

Bank charges are not legally enforceable if they are penalties. Penalty clauses in contracts in English (and Scottish) law for breach of contract are not legal if the penalty exceeds the actual cost of the breach of either party.

Nobody believes that it costs a bank £25 to £39 to return a DD, SO or cheque. It is purely a money making scheme, and a lucrative one at that - last year Which! estimated that the top 4 UK high street banks made £3 Billion from these charges alone. One in five bank customers incur these types of charge, and because its a bank imposing them, most assume that the bank must be legally entitled to do so.

An interview by Radio 4 with Peter McNamara in 2004 has been transcribed and is in the library. Peter McNamara had previously been the Head of Personal Banking at Lloyds. In his interview, he makes it clear that charges are used to fund free banking for the whole population.

We believe this is also a breach of the 1999 Consumer Credit Act (Unfair Terms in Consumer Contracts) - the OFT is already investigating the charges levied by Credit Card Companies - and possibly the Supply of Goods and Services Act.

The following information is based on experiences of people posting in the forum and has been collated here in a readable form. This should not be considered legal advice.

REMEMBER - using the courts is a last resort. You should be absolutely, 100% sure of your case and 100% sure that you have exhausted every avenue to settle before considering legal action.

How to reclaim your charges.

Thousands of people have now reclaimed their charges from their bank - some by just asking, some by sending threatening letters and some by starting legal action. ALL got their money back before a court hearing has been heard.

It is our opinion that the banks do NOT want to go to court. In all of the letters received from banks giving the money back, they claim that it is for 'financial' reasons - i.e. the cost of defending a claim would outweigh that of just paying up.

In the case of one of our forum users, the bank paid 600% of what was being claimed in order to avoid court action. The bank in question has repaid over £100,000 so far. Surely if they were legally entitled to this money, they would have defended an action by now to prove the point and stop the 'snowball' effect? How many more cases do they have to pay back before it becomes financially viable? I think we all know the real answer.

Anyway, to the point; A step-by-step indication of how to reclaim punitive charges from your bank:


Data Protection Act - Subject Access Request

(1) If you do not know the amount the bank has taken from you, then send the Data Protection Act request letter in the library Subject Access Request (The bank can charge a maximum £10 fee for this by law - send it to stop any delaying tactics from the banks - if they don't use it then great - if they do, then fair enough - at least you'll be getting the rest of your money back).

Under the Data Protection Act - the Data Controller has only 40 days to provide this information. If they refuse, or do not furnish you with the full information within 40 days, report them to the Information Commissioner for a breach of the Data Protection Act. We also have templated letters to force compliance through the courts - see here: Data Protection Act: Non-Compliance

Having received either a summary of charges, or copy statements, and calculated your charges (plus any overdraft interest which you can show was caused solely by those charges - not general overdraft interest), enter them into one of our spreadsheets in the Library. This will also calculate a further kind of interest (at 8%) but this is not reclaimable at this early stage and is for future reference only.


Preliminary Letter

(2) If you know how much you are claiming (i.e. because you already have all your statements), then send the preliminary approach letter: Preliminary Approach For Repayment

Edit the letter according to your circumstances, removing any details not applicable etc..

Enclose a schedule detailing the charges you are claiming, but do NOT include the 8% interest on the schedule yet.


Bank's Response to Preliminary Letter

(3) One of the following will now happen:

A) The bank or Credit Card company will ignore your request and you will not receive a reply. If this is the case, allow for the 14 day deadline and proceed to the next stage of the claim.

B) You will receive a fairly standard letter saying "sorry you are not happy, we'll get back to you sometime in the next decade..." Again, if this is the case, allow for the 14 day deadline and proceed to the next stage of the claim.

C) You will be offered a partial refund but it will be offered as a "Full and Final" settlement of your claim. We would advise you to accept this - but only on the condition that it is a partial settlement and that you will continue with your claim to recover full funds. Letters for this can be found here... Rejecting Offers

D) You will be offered a full settlement of your claim. Experience shows this to be very unlikely at this early stage, but it just might happen.

Letter Before Action

(4) If you are not offered a FULL refund then proceed to the Letter Before Action

However ,do make sure that you understand that there is a possibility that the Bank may decide to defend and that you may have to present your case to a Judge in a Small Claims Court. This is very rare, but you should be aware of the possibility.

If you have to issue a court claim, the spreadsheet mentioned earlier will also calculate interest at 8% as allowed by s.69 the County Courts Act (1984) and which you will add to your claim at that point. NOTE: you do not claim the 8% unless you put in a court claim.

Bank's Response to Letter Before Action

(5) Once again, one of the following will now happen:

A) The bank or credit card company will ignore your request and you will not receive a reply. If this is the case, allow for the 14 day deadline and proceed to the next stage of the claim - COURT ACTION

B) You will receive a fairly standard letter saying "sorry you are not happy, we'll get back to you sometime in the next decade..." Again, if this is the case, allow for the 14 day deadline and proceed to the next stage of the claim.

C) You will be offered a partial refund but it will be offered as a "Full and Final" settlement of your claim. Again, we would advise you to accept this - but only on the condition that it is a partial settlement and that you will continue with your claim to recover full funds. This is now the most likely outcome. Again, see here Rejecting Offers if this happens.

D) You will be offered a full settlement of your claim. This is still unlikely at this stage, but it is becoming a little more common lately.

Issuing Your Claim

(6) If you still don't get a full refund then you must now issue a court claim.There are 2 options - firstly online at Moneyclaim - fill in the form. A rough pro forma text can be copied from Particulars Of Claim(Money Claim) (also, part of the text you need is also on the moneyclaim website) - you will have to register there for free, but you will have to pay the fees associated with the case, with a credit or debit card. These are minimal and you will get them back from the bank when they refund your money should you win your case.

There is a guide to registering and filing at Money Claim On-Line

If you are in receipt of certain benefits, you may be exempt from the fees but will not be able to use the online version.

See here - Court Fees

If you don't have a credit or debit card, or would prefer not to use the online version, then you can complete an N1 Form. These are available from your local court buildings, but we also have a PDF version in the Library - the Particulars Of Claim text can be copy & pasted into this form and printed off. If you are starting your claim in this way, be sure to make 3 identical copies of the form - 1 for you and 2 for the court.

Attach a schedule of your claim with the form which will now include the 8% interest.

N.B. The court fees range from £30 - £120 depending upon the total value of the claim. You DO get this back as well if you win your case.

Acknowledgement & Defence

(7) The bank will now either....

A) Ignore the claim completely - they can claim incompetence as the reason for not Acknowledging or defending and you win by 'default' after 14 or 28 days respectively. You will need to apply for a "Judgment in default" which you should do as soon as the time limit has expired.

If they get a defence in before you apply for the judgment, then they gain the right to proceed into court if they want. It is also true that they may be awarded a 'second chance' (called a Stay) which might delay things a little, but in the long run will have no impact.

B) Acknowledge the claim - this buys them a further 14 days to enter a defence. Some banks will acknowledge the claim and then pay up. They know you MEAN it now! For every threat that gets this far, there are many more that give up long before this point and they know it.

Some will acknowledge the claim, but 'forget' to enter a defence - after 28 days from the date the papers are served on them you will have won by default and you will get all your money back. Once again, you will need to apply for a judgment. If they do not pay you in full, you have every right to send the bailiffs in - this can also be done from the moneyclaim.gov.uk site or by applying in person at your local court (if you started your claim this way). This however is rare.

C) Settle the claim in full, including interest and court fees (if they offer to settle for anything less, then refuse - YOU WILL GET THE FULL AMOUNT)

D) Submit a defence. If they do this, the court will send you an Allocation Questionnaire form to complete. This is quite straight forward and, once again, there is help for completing one. See here

Please note that because of the weight of claims and because the courts have now realised that the banks are not serious defendants and are wasting court time, the Allocation Questionnaire is now frequently dispensed with. If this is the case, you will be told about it by the court and you will not have to pay an allocation fee.

However, we do suggest that write to the court and ask them to adopt out draft directions for dislcosure


Allocation

(8 ) If (a) or (c) - then job done, take the money, go to the pub and pat yourself on the back. Then tell everyone else, of course!!

If (b), then just sit back and wait. They have 28 days from the date of service in which to submit their defence. It is fairly likely that a full settlement will be made at this stage or shortly after.

If (d) - complete the Allocation Questionnaire mentioned above, making sure you return it within the timescale shown on the form. Don't leave things to the last minute either - take action promptly. Pay any additional fees at this point if applicable. Keep a photocopy of the questionnaire for future reference.

We have a guide to completing these forms here


The court will now set a date for a hearing (if the bank hasn't already given your money back by this point - and most will have done)

Directions From the Court

(9) Once the Judge allocates a hearing date he will send you and the defendants a letter with directions on. You need to comply with these directions in good time, its unlikely the bank will, if you get yours right it puts you in a stronger position.

The Hearing

(10) Extremely unlikely, but the bank may choose to attend court. If this looks likely to happen, come to the forums and post details of events. We will help to guide you through the proceedings. There are some good guides of how to behave in court and prepare for a hearing to in Templates Library.

There is a guide to the different types of hearing here


OTHER NOTES

It pays to open another account somewhere else in case they turn nasty and close your accounts and/or demand overdrafts be paid pack immediately - some have been known to do this on occasion - although most don't. If you have the choice, stay with the same bank - next time they charge you for going 8 pence over your limit, they KNOW that your threat is real.

Finally, if you have been defaulted for a debt which has been caused by unlawful charges, you must make it clear to the bank that any settlement must include FULL REMOVAL of the default entry - not merely a correction or amendment. Please spend lots of time reading threads on this subject as it can be much more complex.

Above all, stand your ground. Good luck.

In the Consumer Action Group library there are now Case Guidance notes on going to / appearing in Court and putting your case across. However, it is YOUR case. You are responsible for its preparation and presentation. You would also be advised to buy a small book on Small Claims Procedure - here.

Please note that this advice is given informally, without liability and without prejudice. Seek the advice of an insured qualified professional if you have any doubts.

Related Pages

Guide to reclaiming bank charges

Frequently Asked Questions

Things you really need to know


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