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Consumer groups: intermediaries not needed to recover bank overcharges

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by Elaine Frei

Consumer groups: intermediaries not needed to recover bank overcharges

With complaints about penalty fees charged by banks and building societies for late payments soaring, many people have turned to companies that handle claims against businesses to help them get their money back. Consumer groups insist that these companies are not a necessary part of the claims process.

Some of the consumer groups offer sample letters and tips to help individuals who wish to go through the claims process on their own, noting that some of the firms charge up to 40 percent of the returned charge for their services. Additionally, the British Bankers Association has expressed skepticism about such firms, saying that the best thing for a customer with a claim to do is to contact the bank directly. Still, one such company has said it has been getting around 150 calls a week inquiring about their services.

Many of the intermediary companies promise that they will not charge a fee if no money is recovered but charge fee amounting to a percentage of the recovery if the claim is successful. These companies claim that they provide a needed service for individuals who are not comfortable acting for themselves. The managing director of one of these firms, Phoenix Financial Recovery, justifies the service it offers by noting that the recovery process involves writing a number of letters and filing documents in small claims court. He said that some people are not confident in handling the process successfully themselves.

A spokeswoman for Which?, a consumer group, counters that firms that offer these intermediary services have “no extra powers or persuasive abilities” to get the customer’s money back. She describes the process as one of just supplying details within template letters Which? has developed and then being patient while working through the recovery process.

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News posted: March 2, 2007

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