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More complaining about bank penalty charges

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by Elaine Frei

More complaining about bank penalty charges

More people are complaining about penalties levied by banks and building societies, according the Financial Ombudsman. New figures show that approximately 1,000 people per day are calling the Ombudsman with complaints, compared to the 100 calls per week it was getting last year at this time. Previously, most of the calls that the Ombudsman received were in relation to endowments, but at present it is getting at least three complaints about penalty charges to every one it receives regarding endowments.

Part of the reason for the increased numbers of calls is the greater media coverage of penalties charges in the wake of Office of Fair Trading investigations into the issue. In May of last year, the OFT ruled that charges on credit card defaults should be limited to company costs in dealing with the defaults. The OFT extended the principle of limiting default charges to overdrafts as well. This has led to a greater number of individuals taking banks to small claims court in an effort to get refunds on what they believe to be excessive charges.

The Ombudsman does not investigate every claim of penalty overcharge it receives, but the office says that it opens about 150 investigations per week. So far, the Ombudsman says, all of the cases it has investigated have been settled between the bank and the customer before any judgment could be made.

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News posted: February 22, 2007

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