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The legal argument on unfair charges is based on your terms of agreement with a bank or credit card company. Breaching your credit card contract by exceeding your limit or having a direct debit return unpaid, for example, can incur a charge enforceable by the courts.
Critically, however, the sum must only reflect the cost incurred by the finance company. If they sent you a letter informing you of a breach, you are liable for the cost of stationery, postage and labour.
Until recently, credit card companies, banks, mortgage lenders and insurance firms have been charging fees far in excess of actual costs incurred, without opposition. Last year, however, the Office of Fair Trading ruled that credit card companies should not charge more than £12 for default charges. The announcement not only put pressure on companies to justify higher charges, but also underlined consumers’ rights.
Since the OFTs ruling, current account holders and credit card customers have been successfully reclaiming unfair charges from their providers. Section 15 in the Supply of Goods and Services Act 1982, states all fees for any ‘service’ must be ‘reasonable’. Therefore it does not only apply to credit cards and current accounts.
You are entitled to reclaim unfair charges on any of the following:
