Banks use delaying tactics in repaying charges

by Gill Montia

Story link: Banks use delaying tactics in repaying charges

High Street banks stand accused of continuing to delay payments to thousands of customers who believe they have been successful in reclaiming penalty charges.

According to This is Money, the financial website, the banking sector has paid out approximately £1 billion in reclaimed charges so far this year.

However, there is evidence to suggest that banks are using delaying tactics to avoid making repayments, even when ordered to do so by the courts.

In some cases a bank will lose a court case because it has not presented a defence.

It will then appeal the judgement in favour of the customer, whilst providing an excuse for not attending the hearing.

This method can delay the payment of compensation for weeks, or sometimes months.

According to the Consumer Action Group, some banks are asking district judges to suspend a court order in favour of a customer, until the result of a High Court case due to be heard next year is known.

The High Court case is being brought against eight High Street banks by the Office of Fair Trading, to establish the legality of penalty charges.

The Financial Services Authority has allowed banks to withhold payments to customers that have requested compensation directly from their bank, until the results of the case is known.

The waiver does not, however, extend to repayments ordered by County Courts, where cases are assessed on an individual basis.