"The law says if someone breaches their contract, for example you go over your overdraft without permission, the bank's only entitled to recover its actual loss," Mike Dailly, Principal Solicitor at the Govan Law Centre told BBC Money Box, "If you get an automated letter from your bank for going over your limit, that costs about 50p. So why should someone get a £36 letter for that transaction?".
In a previous press release, the OFT stated that it, ?considers that, in a consumer contract, a default charge is likely to be disproportionately high if it is more than a genuine pre-estimate of the damages that the card issuer would win in court if it sued the cardholder for breach of contract.?
A representative of the British Banker's Association told the BBC that the banks were not charging customers more than the actual cost, citing that the charges were to cover additional costs incurred due to a need for human intervention, ?to extract the item from the day's work, to research the customer's recent credit profile, and then a managerial decision as to whether to return the unpaid item.?
The Glasgow based Law firm states that, ?The legality of bank charges has yet to be ruled on by a senior UK court but these will not be enforced if they are found to be 'penalty' or 'unfair' charges.? Until a final ruling is made by the courts, they have drawn up a letter citing both Scottish and English case law along with the regulations which apply throughout the UK to help customers get their charges refunded.
All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.
You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.
Credit card rate comparisons ( http://www.moneynet.co.uk/credit-card/index.shtml )
Current and savings account interest rate cuts further information ( http://news.ft.com/cms/s/faed1a82-8e9c-11da-b752-0000779e2340.html )
Michael is a keen writer, and internet marketer living in Scotland:
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