Monday 11 January 2010

Unfair bank charges: free help to amend existing complaint letters

What's this about?
Over the last two and half years complaints about unfair bank charges had been placed 'on hold' by UK banks and the Financial Ombudsman Service (FOS). This was because the UK's financial regulator - the Financial Services Authority (FSA) - had granted a waiver, which resulted in all complaints being frozen pending the outcome of the OFT's bank charges test case.

That waiver was lifted by the FSA after the OFT lost its test case before the UK Supreme Court. Most banks will now tell you that because they won they will not be refunding any bank charges, and that this issue is now closed. For example RBS is now writing to customers advising "we do not believe that there is any other legal basis on which the level of these charges can be challenged". It's untrue and incorrect to suggest that bank charges are 'fair' or cannot be challenged. The OFT lost on an extremely narrow technical point, and a consensus remains that bank charges are legally unfair and excessive.

Importantly, the UK Supreme Court was careful to explain that its judgment did “not resolve the myriad cases that are currently stayed in which customers have challenged Relevant Charges”. In particular, the court made it clear that “it remained open to question whether bank charges were fair” in relation to regulation 5(1) of the Unfair Terms in Consumer Contract Regulations.

What should I do now?
If you have an existing complaint with your bank or the FOS, it is likely this will be rejected unless you AMEND your grounds of complaint, to take on board the impact of recent developments, and explain why you are still entitled to a refund of unfair bank charges. There is no need to pay for anyone to help you do this - you can do this yourself, or with the free help or support of a community law centre solicitor, money advice agency or Citizens Advice Bureaux. Details of where to locate free help is set out below.

GLC has drafted the following downloadable example letters for use within the UK:

(1) Letter to bank with amended grounds of complaint:
| Word document link | htm link |

(2) Letter to the Financial Services Ombudsman with amended grounds of complaint:
| Word document link | htm link |

Use the following links to locate free help from a local advice agency in the following locations: glasgow; scotland; england & wales; northern ireland; ireland

It is understood (see the comment thread below) that the FOS has written to some people who have sought to amend their complaints, advising them that it is necessary to first put these 'new' grounds of complaints to the bank. This would effectively mean starting the complaint all over again. A suggested letter explaining why the 'amendments' are not 'new grounds' is here:

(3) Letter to FOS requesting a determination of the original complaint (as amended):
| Word document link | htm link |

There is no guarantee of success, however, we are encouraging UK consumers to insist upon their right to pursue a complaint with their bank and the FOS. If you are successful in obtaining a refund please let us know, by posting a comment will be producing free updated guidance on how to reclaim unfair bank charges in the next week or so, so please sign up to the free MSE e-mail alert, for further details.


  1. I question the wisdom of using the cross-subsidy argument as the basis for complaints in the template letters - points 1. (a) and (b).

    It has been suggested that UTCCR sec 5(1)can be applied to the cross-subsidy business model that the banks employ in respect of the relevant charges. But it is now well established beyond doubt that any question of imbalance can relate only to the individual parties within the contract and not to groups of consumers.

    This was confirmed in the transcripts of the House of Lords hearing, paragraph 16 of the first instance judgment and section 3.15 of the OFT Investigation Decision Explanation Document. Indeed it was the court's condonance and acceptance of the banks' cross-subsidy argument that was instrumental to their winning the appeal.

    Notwithstanding there is no legal (or otherwise) obligation on the part any business to disclose their business model or the cross-subsidised nature of it's charging structure,

    In my opinion there is no basis for complaints made on these grounds.

  2. The Supreme Court accepted the cross-subsidy argument insofar as this was necessary to provide 'free if in credit banking' to 42m customers. However, the President of the court, Lord Phillips, made it clear that it remained open to argue whether this cross-subsidising charging structure was 'fair' to those individual consumers who had to pay charges under reg 5, UTCCR.

    I accept any question of an imbalance in the rights of the customer as against the rights of the contracting bank needs to be considered in relation to the contracting parties alone: yet the issue of a cross-subsidising charging structure is relevant to each individual customer who pays overdraft charges. For example, he or she may argue, that it was unfair for the bank to require me to disproportionately subsidise 'free if in credit banking' each time I was in financial difficulty; the bank never explained this to me; the banks distorted competition so I could not escape this charging structure; and this has caused me the following serious detriment ...

    Of course that would be but one strand to a reg 5 case; GLC believes it is always best to present a number of reasoned arguments, as ultimately the objective is to have at least one accepted by your opponent or the court, in order to succeed.

  3. My complaint is on hold with the Sheriff Court - how do I proceed? Do I need to apply for an amendment to the legal challenge?

  4. Anonymous - if your case is based on the 'excessive cost' of bank charges in terms of the UTCCR and the common law then, yes, unless you amend, this will likely be an irrelevant case standing the Supreme Court's decision. If you are in Glasgow, please e-mail or telephone us to see whether we might be able to help; in any event feel free to e-mail us and we will endeavour to do what we can.

  5. It may be of interest to business customers of RBoS, that having discussed the subject of bank charges in my own case, that I was informed that RBos had a 'fixed fee' basis that they could apply. In my case this represented a discount of over £40 per month and in several colleagues' case (I told them about this), they received discounts of over £80-£100 per month each.Considerable savings for all concerned.

    Also, in fairness to RBoS, I got all of my charges back on requesting them to be refunded (Verbally), I now though bank elsewhere!

  6. Please could you tell me if your letter template to the banks is valid for English law?

  7. Durrson: the points concerning Reg 5, UTCCR and section 140A of the CCA apply across the UK generally. So yes. The information provided is not specific to Scotland.

  8. I used your template for the FOS to amend my complaint and received the following response:

    "Thank you for letting me know that you wish to proceed with your complaint, albeit, on amended grounds.

    I would like to explain that this service is unable to investigate the 'new' grounds of your complaint until the bank has been given the opportunity to carry out its own investigation. Therefore, I would suggest that you contact the bank. You will of course be given referral rights to this service once the bank's complaints procedure has been exhausted.

    I trust this clarifies matters for you."

    Any thoughts on how I should proceed, i sent the Bank template top my bank at the same time as the FOS on.

  9. pb - Clearly, one could either resubmit an amended complaint afresh to the bank, but this will mean the whole process starts from the start with possible timebar issues; alternative one could argue that the FOS has misunderstood the position here - in other words, the amendments are not 'new' grounds but rather an updating or amending to take on board a change in the law from the Supreme Court's decision. An example of the type of letter we might send is set out below (provided subject to the *Disclaimer below).


    The Financial Ombudsman Service
    South Quay Plaza
    183 Marsh Wall
    E14 9SR

    Dear Sirs


    I write in response to your letter advising that I must contact my bank with respect to the ‘new’ grounds of my complaint, so that it may ‘investigate’ these.

    Please note these are not ‘new’ grounds, rather I have been required to amend or update my existing complaint to take on board a change in the law from the case of OFT v. Abbey National plc and others [2009] UKSC 6.

    In light of the Supreme Court’s decision, I have simply alerted you to what I now understand to be the relevant law which applies to my complaint, and which provides authority for the proposition that these charges were unfair.

    In determining a complaint , I understand that the Ombudsman will have reference to what is ‘in his opinion, fair and reasonable in all the circumstances of the case’. DISP 3.6.4 of the FSA’s Handbook provides that in considering what is fair and reasonable, ‘the Ombudsman will take into account: (1) relevant law and regulations’.

    Accordingly, I would be grateful if you could now proceed to determine my complaint, having regard to what I now understand to be the applicable law which supports my view that these charges were unfair.

    If any further information is required please let me know. I look forward to your written reply.

    Yours faithfully



    This letter is provided for illustrative and information purposes only. In using any part of this letter the user agrees that he or she shall obtain their own independent legal advice, and accepts that they shall not treat or use this letter as legal advice. The user accepts that any use of any part of this document is done at their own risk and subject to the terms of this disclaimer. © Dailly & Co., Solicitors at Govan Law Centre, Glasgow, 2010].

  10. Thanks for your advice, I have sent a letter following your recomendations and will let you know the outcome.

  11. Dear GLC

    I recently received my letter from Clydesdale informing me that they will not be upholding my complaint and refunding charges as a result of the outcome of recent legal proceedings etc.

    I now plan to respond as you have advised and will keep you updated.

    However I would also like to bring to your attention that no more than six days after receiving this letter I received another letter from a different department placing pressure upon me to clear an overdraft that I have with them, even though I had recently entered into an arrangement with the bank to address my OD and have being doing so without default.

    I certainly don't believe that this is any small coincidence.

    Keep up the good work your guidance has been invaluable.

  12. I also have a case sisted against Clydesdale Bank. However when I first made my particulars of claim I didn't use Reg 6 of UTCCR, I used Reg 5. I also used the various common law cases as support. I wrote to CB as per Steven above, after receiving there very dismissive letter. I pointed out that my case was always under Reg. 5. and I've now received a letter from S&W, their solicitors, stating that I cannot claim under Reg. 5(1) either? Is this correct? Can they state this when L.Phillips has specifically mentioned Reg.5 as a possible route to an unfairness test?

  13. I sent the letter suggested by yourselves on the 26th of January to the FOS and have received a reply to which I would like some advice, Is there an email address I scan their reply to in order for someone to review it?

  14. I too sent your letter to my bank and was told I cannot claim under Reg. 5 (1). I accompanied my argument with a good number of personal examples of how I had been treated unfairly but they dismissed the entire argument.

    I haven't finished with them though and I am about to go back to them. In the past I have found that if you persist they will comply.

  15. When the Supreme Court amde its judement this year, I knew that organisations such as yours and others were looking for alternative ways to claim. however, I hadn't realsied you had produced a new template letter. When the bank wrote to me after the court case they gave me 8 weeks to repsond. I didn't see any point until I came across the template today.

    I've amended it and said that as far as I'm concerned there's no time limit. Is that the case ?