Unfair bank charges - small businesses urged to claim refunds now

Earlier this year The Office of Fair Trading took the major banks to the High Court. Many regard the swingeing unauthorised overdraft charges and penalties made by banks as unfair and illegal, but the banks insist that their penalty fees are legal.

The purpose of the Court case against the banks is to establish whether the bank charges are legal or not, and Mr Justice Andrew Smith is due to give his decision on the case in the coming months.

Small business urged to claim refunds from banks now

While the case against the banks is being considered, there is a 'freeze' on refund claims for consumers. However, whilst consumers have to wait for Mr Justice Smith's decision before they can claim refunds of unfair bank charges, business customers do not.

Banks must deal with any complaints from business customers immediately. Businesses are, therefore, strongly advised to lodge their complaints regarding unfair charges with their bank, and claim refunds as soon as possible. If the High Court case rules against the banks, there is likely to be a significant delay in receiving refunds.

One business refunded £25,000 of overdraft charges by bank

In some instances, the amount that can be claimed back in unfair business banking charges can run to tens of thousands of pounds. Alan Abrahams and his partner Valerie Knight-Gibbons whose hotel business collapsed due to the foot and mouth outbreak six years ago recovered £25,000 in overdraft charges from NatWest. This is not an isolated case.

Research by Business Moneyfacts found that despite the 2002 Competition Commission investigation into unfair bank charges, there had been a steady increase in the costs imposed on small and medium-sized enterprises. The cost of going into unauthorised overdraft has risen on all business bank accounts offered by the major banks helping the banks record their highest every profits last year.

"There is a wide range of fees and charges associated with an unauthorised overdraft on a business current account. Charges can range from £4 to £30 per day or up to £30 per debit, a potentially costly mistake for any business to make," said Lee Tillcock from Business Moneyfacts.

The banks insist that their charges are fair and clear; but if that is the case, why did they pay out more than £550 million in refunds in 2007?

Refunds made by banks for unfair bank charges

The amount of money already refunded by the major banks in relation to unfair bank charges are as follows:

• The HBOS Group (includes Halifax) £122 million
• Royal Bank of Scotland Group (includes NatWest) £119 million
• Barclays £116 million
• HSBC £115 million
• Lloyds TSB £76 million
• Clydesdale and Yorkshire banks £11 million

You can claim back all unfair bank charges going back 6 full years. One or two unfair fees each month adds up to thousands of pounds. The banks usually pay up when challenged because business customers are the life blood of their business.

You can go through the process to reclaim bank charges yourself, or you can outsource the task to a specialist such as Claims Financial. They have expertise in recovering unfair bank charges for small businesses, and providing your annual turnover is less than £1 million, can represent you.

Is your business entitled to reclaim thousands of pounds in unlawful bank charges? Click here to find out.