Consumers are cashing in by battling back against overcharging
DAILY RECORD - 8TH MARCH 2007
If you were overcharged in a shop or restaurant, you would want the bill reduced. And if the goods were sub-standard, you would demand a refund.
There's no reason to expect less of banks and other financial services providers.
If you think you've been unfairly charged, or a product isn't as it was described, don't suffer in silence.
More and more people are realising the same principles of value and service apply to financial services as to any other purchase - and they are taking action.
Consumers who feel they've had a raw deal on bank charges, mortgage endowments and exit fees, payment protection insurance or council tax are claiming refunds - and even compensation.
The Financial Ombudsman Service currently receives around 25,000 calls and letters a week about excessive bank penalty fees - that's 50times the number it was getting a year ago.
Last year, the Office of Fair Trading told credit card providers to cap their charges for missed payments and broken spending limits at £12. This has led many people to question the legality of the fees banks and building societies apply for unauthorized borrowing and bounced payments, which consumers' association Which? says earn them £4.7billion a year.
A survey by the Consumer Action Group, which advises unhappy bank customers on how to reclaim charges, found almost 6000 successful claimants had received a total of just over £8million in refunds - that's an average of around £1300 each. The Financial Ombudsman Service also gets more than 1000 complaints a week from homeowners who believe their endowment policies were mis-sold.
Thousands have already received compensation because the risks of these stock market policies were not properly explained or didn't suit their needs.
But Simon Burgess, managing director of cover provider British Insurance, believes compensation claims due to mis-selling of overpriced, useless payment protection policies will eventually eclipse those for endowments.
The Competition Commission is currently investigating the whole payment protection insurance industry.
Simon says: "I predict that around half of the 28 million payment protection insurance policies in the UK have been mis-sold. If claims are upheld, it could cost the sector in excess of £10 billion."
Unfair mortgage exit fees are also in the spotlight. These have increased dramatically in recent years and the Financial Services Authority is now taking an interest. As a result, anyone charged more than the figure stated in their original contract could be able to reclaim the difference.
And an increasing number of householders are questioning council tax bills too, as these have nearly doubled in the past ten years.
In many cases, all it takes to recoup your cash is a polite letter outlining your complaint.
Case Study
Ian Reid has already made one successful claim for payment protection insurance mis-selling and is waiting to hear the outcome of a second. The 48-year-old service engineer, from Dundee, was sold payment protection insurance alongside a loan he took from a high street bank.
Ian says: “They more or less implied if I didn’t take the payment protection insurance, I might not get the loan.”
When he discovered payment protection insurance is always optional, he asked for a premiums refund of £400. He added: “They made me an offer of about £150. I said I would accept it as part settlement and take them to court for the rest. An hour later they settled in full.”
