How do you tell if your bank owes you money?
The banking crisis that led to a global financial meltdown left many people questioning the role banking institutions play in their day to day lives
12:51 08 September 2015
With governments forced to hand over billions in order to bailout failing banks, the traditional image of bankers as a 'safe pair of hands' was damaged seemingly beyond repair.
The PPI scandal and other headline stories about mismanagement of customers' funds have led to more people than ever wondering if their own finances have been affected by the sometimes reckless behaviour of financial institutions.
So how do you actually tell if your bank owes you money?
UK banking
For many years, the UK banking sector had a reputation for looking after customers and having a personal relationship that could be beneficial. Whether than meant talking to a local branch about a short term loan or overdraft extension, through to a friendly manager offering mortgage advice, generations of Brits came to think of their bank as a trusted place to keep their money.
However, the increasing globalisation of financial sectors led to many British banks being swallowed up into larger international companies. One result was a feeling that the local aspect was being lost, especially with many branch closures. There was also a sense that other 'financial products' were being sold aggressively.
Perhaps most importantly, the whole relationship between customer and bank seemed to undergo changes, with some high profile individual cases highlighting this.
Oliver Foster Burnell plunged into debt when charges from his bank mounted up, but he went on to win a landmark case against Lloyds Bank over unfair charges. After having to pay £750 after only going over his £500 overdraft limit by £2.67, Mr Burnell eventually defaulted on credit cards because of the costs.
He had been charged £20 by the bank every day while he was overdrawn, and the fees spiralled to £750 before he was able to pay them.
After settling his debts, Burnell took the bank to court and a Judge ordered Lloyds to repay the money with interest.
Different products
It isn't only the issue of fees and charges attached to bank accounts that can lead to you being owed money. The sale of so-called 'financial products' by banks has increased in recent years, and the mis-selling of PPI products is perhaps the most important example of how things can go wrong.
UK lenders have already paid back £30 billion in compensation over PPI mis-selling. The payment protection insurance packages were often added to loan and credit applications without being fully explained or understood by customers.
A second wave of pay outs by further breaches of the 1974 Consumer Credit Act regarding broker commissions on PPI sales could see billions more added to the total.
The scandal, which shook the UK banking sector, led to thousands of people winning money back after they were mis-sold products.
As the issue could potentially affect anyone who had a loan, credit or store card, catalogue or car finance on policies as far back as the 1990s, the numbers involved are huge. The company who sold the PPI deal, usually the bank or lender itself, had a duty to ensure the PPI was appropriate in each case. Some examples saw actual lying by claiming the add-on was compulsory, whilst others had it added without being asked or giving explicit permission.
The financial regulator started fining PPI companies in 2006, and 2011 saw a massive jump in pay outs. The major banks were some of the worst offenders, so anyone who thinks they might have a Lloyds PPI Claim should seek professional advice on how to get the compensation they might be due.
Of course, although the PPI scandal has gathered many headlines, there are many other ways that you might find your bank owes you money.
Dormant or unclaimed bank accounts are thought to hold between £250 and £350 million, although most only have small sums in them of around £50 or less. Some of this money has been deposited for the past 100 or more.
How to reclaim unfair charges
If you think the charges or fees you have received are unfair or excessive, you might be able to claim them back, especially if you are currently in financial hardship.
The first step is to start by talking directly to your bank and take it from there.
Overdraft charges can be reclaimed, although since a Supreme Court ruling in 2009, it’s much harder than it used to be. Of course, any customer can contact his or her bank and ask for a refund, and the Financial Ombudsman Service can investigate if you are unhappy with the response.
The main grounds for mounting a successful claim are if you suffer from real financial hardship, such as struggling to buy necessities and pay bills or if you have recently become unemployed. Also, unfair charges can be challenged, or if a spiral of charges and fees are mounting up far beyond the original amount involved.
Although it's fairly straightforward to make a claim yourself, using a specialised experience claims firm can make thing much easier. These companies help thousands of people in exactly the same circumstances, so know how best to proceed and who to talk to. Thousands of customers who lost out by being mis-sold PPI products have successfully got money back by using a claims company.
Your money
If you think that you have a case to claim money back from your bank, it's worthwhile thinking about how the image of the whole sector has changed in recent years.
Whereas once your local bank manager was a friendly face well known in the community, today a 'computer says no' mentality often prevails, with the result that customers feel far less loyalty than they did before.
Most claims against your bank won't cost you a penny to make, so there's nothing to lose by finding out if yours might owe you money.