The term bank charges which is also inaccurately known as "unfair charges" covers all bank charges made by banks to their customers. The term bank charges often relates to the bank charge in respect of personal current accounts.
In the UK, this was not common practice until the 1990s when banks began to introduce this type of charges as a means of product differentiation - often offering additional services bundled with the bank account itself.
Such services include travel insurance, mobile phone insurance, preferential rates on other products. It is estimated that UK banks make an estimated £4.7 billion profit a year from unfair bank charges to their client's accounts.
The law in Britain does not permit a penalty clause. Inspite of this, when you may have been overdrawn in the bank, even by a penny, banks have automatically sent you a letter telling you that you are overdrawn and charged you anything from £20 to £40 just for sending this letter. This is in addition to any interest charge for being overdrawn or having an unauthorised overdraft.
Other unfair bank charges include returned cheques fees, excessive fees for overdrafts, excessive fees for unpaid standing orders, excessive fees for unpaid direct debits, card misuse fee, unpaid cheque fee, unarranged borrowing fee, late payment fee for credit cards, account misuse fee, late payment fee for store cards, late payment fee for catalogue purchases, fee for exceeding authorised overdraft limit, and other irregular fees.
However, people of UK got some relief when during a ruling that credit cards should only charges no more then a £12 annual fee in 2006, the Office of Fair Trading declared that some bank charges was unlawful as well as being unfair.
This opened up opportunities for people to reclaim unlawful bank charges. To date the banks in the UK have not challenged this decision and have refunded the unlawful bank charges to their customers.
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