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In this section

History of campaign


The Law

Media coverage


Cases summary

History of the consumer campaign

I first became aware of the potential illegality of banks’ penalty charges when I studied law at the University of Plymouth in 1993. But the only way to demonstrate that the charges were illegal was to have taken a bank to court to recover the charges made. At that time, I could not find a suitable case where an individual had suffered significantly from these charges and the individual would have been willing to engage in a court battle with their bank. At that time, I thought that the problem was predominantly confined to business account holders who suffered from having several cheques bounced in one day, incurring large charges thus putting them deeper into the red, and escalating from there. But most businesses in that position would not have felt that it would have been helpful to sue their bank when they were trying desperately to ingratiate themselves with the bank.

In October 2004, Richard Colbey, a barrister, wrote in the Money section of The Guardian an article highlighting the issue of default charges on credit cards. When an individual is just a day late with paying their monthly payment, the credit card company imposes a penalty charge typically of 25. Richard said that this charge was unlawful under common law principles and recommended that customers write to their card company to get the charge refunded. Because he had done this on a couple of occasions successfully, he suggested that others followed his tactic.

I wrote to Richard Colbey and pointed out the same situation pertained on current accounts particularly on small business accounts. He wrote a follow up article on that and he received comments from a few other readers. He put us in touch with each other by email and a group of 4 or 5 of us started to exchange messages.

Coincidentally, at the same time, I met a young lady who told me about the problems that she had had with her bank (Yorkshire Bank) where she had been charged hundreds of pounds in penalties over a period of months on an overdraft that at no time exceeded 450. In total she had been charged 800 in ten months. We agreed that I would try to recover the charges. We arranged to close her account and then promptly took out a County Court summons against Yorkshire Bank to reclaim the charges. Yorkshire acknowledged the claim but failed to file a defence. We obtained default judgment and after a further delay before instructing bailiffs, we received full repayment (by then it was 972 with interest and court fees). The case received a full page write up in The Guardian Money section. This led to more people joining our email group.

It became clear to me at that point that the problem with penalty charges on personal current accounts was far larger than I had ever imagined. I had not appreciated quite the scale of personal debt that had been tolerated and, in fact, encouraged, by banks. What I had viewed as a problem for small businesses was dwarfed by the scale of the problem for private individuals.

One of the group is a website designer and he constructed together with an email forum. This forum consistently primarily of people who had suffered penalty charges from their banks and they were encouraged to take court action to reclaim these charges. Since then, members of the group won actions against every high street bank recovering sums ranging from 100 to several thousands of pounds. In total, there have been thousands of successful actions. Banks frequently say that they will defend cases in court, but then pay up before the cases get to court.

At the same time, separate from our group, Stephen Hone a law student in Plymouth started his own action against Abbey for recovery of 840 in charges. After a long saga, in which Abbey made a total cock-up of their case, Abbey finally paid Stephen 5000 to prevent him going to court.

During 2005, I spent a great deal of time advising disgruntled bank customers how to make claims. At the start of 2006, I decided that I could obtain more publicity for the campaign if I personally issued the claims. Then I could inform the media of a number of successful cases with specific details. Throughout 2006, I did this on a part-time basis and won 28 cases, recovering over 40,000 for customers.

At the start of 2007, I decided to give up my "day job" and turn the campaign into more of a full-time activity. That way, I could help far more people. In the first six months of 2007, I have won another 70 cases recovering another 200,000 for clients.

By the middle of 2007, the total had risen to 123 cases won. Then, after claims were put on stay, the total crept up to 128 by end of 2007. For more information on successes, see Cases.

In 2008, progress has been slow as the test case goes through various hearings and decisions are drip fed out. See news for updates on what has been happening on this.

For other background reading, see background, the law, the media.

Published and promoted by Bob Egerton, TR2 4RS