Banks treating people unfairly? Surely not

October 23rd, 2009

BLOG There has been disturbing news from the ongoing saga of Bank charges. Banks have been told by the Financial Ombudsman Service (FOS) that they must deal fairly with people who ask for the return of overdraft charges because of hardship.

Banks are supposed to consider such cases, even though all other refund claims are on hold pending the outcome of a long running legal test case. Under Financial Services Authority (FSA) rules, banks are supposed to treat hardship claims sympathetically.

However, the FOS says it has received many complaints that this is not happening.

The Ombudsman’s letter to the banks spelt out its concerns: “We see cases where it appears to us that the bank has not engaged properly with the consumer [or their representative] to gain a clear understanding of the consumer’s financial position. Where banks follow iterative or circular processes, consumers can be left feeling powerless to progress their complaints.

“This difficult situation is made worse by standard or generic statements [by any of the parties] which do not address the consumer’s individual circumstances and may even be inaccurate.”

In July, the campaign group Legal Beagles obtained figures from the FSA, using the Freedom of Information Act, showing that while 178,000 people had made hardship claims, since July 2007, only 53,000 had been accepted.

About 32,000 had been rejected and put on hold because the bank said there was not sufficient evidence of hardship, and 93,000 cases were still being assessed.

The FOS has also written to claims management companies, who submit many claims on behalf of their clients, asking them to co-operate by ensuring they give banks the necessary information to judge if their clients are in genuine financial hardship or not.

The banks said that many claims for hardship, channelled through these claims-handling firms, were turning out to be “spurious”.

Under the rules, financial hardship is defined as not having enough money to pay for reasonable day-to-day expenses and other usual outgoings.

If someone claims they are in financial difficulty this does not mean they can automatically expect their claim for the refund of past overdraft charges to be accepted.
But the claim must be dealt with using a “sympathetic and positive approach”, said the FOS.

In July, about 1,126,000 ordinary refund claims were on hold, either with the banks or the FOS itself.

This entry was posted on Friday, October 23rd, 2009 at 7:36 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Banks treating people unfairly? Surely not

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