Legal Bank Charges Information

On 5 April 2006 the Office of Fair Trading(OFT) concluded that under the Unfair Terms in Consumer Contract Regulations default charges over £12 are automatically presumed to be unfair.

Unfair terms are legally unenforceable. Although all charges have been incurred correctly as per the terms and conditions of your bank account the maximum a bank can charge for a minor breach of contract is £12.

Anything over this amount is unfair and therefore that term of the contract is unenforceable. The charges also represent a penalty and under contract law a party cannot charge another party a penalty.

A contractual party can only recover real or 'liquidated' losses at common law. So how do the banks calculate their charges? Parliament decided that it was about time the banks explained the level of their charges and the House of Commons Treasury Select Committee asked them to do just that.

The banks say that the charges 'cover our costs’ and are designed to off-set all of their debt recovery costs i.e. the costs of writing to you to inform you what you are being charged and why.

However they also want to recover from you, the money that they do not recover from people who default on loans as well as money they write off from bad debts, bankruptcy and liquidation.

A clear case of the many paying for the few. If you wish to read more about this visit: www.parliament.the-stationery-office.co.uk.

It is estimated that the banks make approximately 4.6 billion pounds a year from charges and this is not an amount of money that the banks wish to lose, much less pay back! That's where DJF Charges Consultants come in.