Getting your money’s worth

If things began to totter in 2008, it appears that 2009 will be the year that they will eventually plunge. The evidence is all around us: banks, victims of their own hubris and greed are on life-support, requiring fresh injections of capital in the form of massive government bail outs just to stay afloat. As the British taxpayer prepares to foot the bill for years to come, the banks’ drawn purse strings will continue to stifle borrowing for the foreseeable future, offering scant repayment to the hand that currently feeds them. As the City reels from its excesses of the last two decades it now has no option but to tighten its belt lest the whole system collapses beneath it. Certainly it looks as though the next few years will be lean ones for the banks – but, while the City ‘Fat Cats’ temporarily exchange their cream for milk, at what expense to the rest of us? Already struggling for breath, can we tighten our belts any further?

{{ quote Already struggling for breath, can we tighten our belts any further? }}

If recent news be our measure then it appears not, for the forebodings of an increasingly difficult future may mean that we have already run out of notches.

#### Deep Recession

The harbingers of financial doom began mid February with Mervyn King, governor of the Bank of England, confirming that we are ‘in a deep recession’ that will continue throughout the year. Central forecasts of a tentative recovery starting in 2010 were then quickly scotched by David Kern, chief economist at the British Chamber of Commerce as ‘unduly optimistic’. More bad news followed in the form of an admission by a senior government minister who remarked that the current crisis may be ‘more extreme’ than the 1930s and perhaps ‘the worst […] for […] more than a hundred years.’

#### Unemployment

These statements were subsequently vindicated by data from the Office for National Statistics which revealed that current unemployment levels are in excess of 1.97 million, the highest they have been in over a decade. Furthermore, figures showed that among the hardest hit are young people between the ages of 18 to 24, approximately 12% of which are now jobless. Worryingly, the situation is expected to get worse before it improves with senior economist Tony Dolphin predicting that ‘unemployment will exceed 3 million during 2009.’

#### Graduate Job Cuts

Perhaps more perturbing still, this year has been described as ‘one of the worst [in which] to graduate for nearly two decades’ by Martin Birchall, managing director of market research company, High Fliers Research. According to a survey by the company, nearly half of graduate recruiters have been forced to cut jobs this year, while recruitment targets among one hundred of the top U.K. firms have been slashed by 17%. Meanwhile, a report by the Association of Graduate Recruiters has found that those successful in gaining employment in ‘09 will have their starting salaries frozen at last year’s average, the first time that this has happened in living memory.

#### Student Debt

While graduate recruitment is on the slide, student debt is firmly on the increase. Indeed, this year’s set of graduates will be the first to have accumulated all the extra debt associated with three years worth of tuition top-up fees. As a result, the debt burden for the class of 2009 is estimated to be between £18,000 and £20,000 per student. This figure is set to increase, with first years typically totting up more than £7,000 debt per annum – second year undergrad, Sophie Richardson, expects this academic year to cost her ‘approximately £9,000’.

#### National Debt

As student debt rises inexorably, so the national debt has swollen to a ‘quite staggering’ £1.5 trillion (following the government bail-outs of Northern Rock, Bradford & Bingley, R.B.S. and Lloyds Banking Group). Disconcertingly, shadow business secretary Kenneth Clarke has forewarned that it is ‘the voters [who] are going to have to pay the interest’ upon this debt…

#### Bankers’ ‘Apology’

Spiralling student debt and high taxation will be the millstones around our collective neck(s) for at least a generation. In response to the latter, the former bosses of R.B.S. and HBOS have, of late, made ‘profound and unreserved’ apologies. However, the veracity of their atonements has since been questioned in light of the subsequent announcement by the now government owned R.B.S. group who declared that it still intends to pay its staff over £775 million in current and deferred bonuses…

#### Bonus Culture

As the dust slowly settles and the bankers retire from the public spotlight, they do so safe in the knowledge of their long term financial security, gained, in no small part, from the spoils of the City’s lucrative, performance-related bonus culture. Ironically, it is this very ‘performance’, so handsomely rewarded, that has brought a nation’s economy to its knees…

#### Unfair

To get it back on its feet will require the taxpayer’s support (for many years/over decades). Inevitably, a large part of this support will come from current and future generations of students, a cruel injustice given their tenuous connection to the country’s financial crisis. That the same group continues to be penalised by excessive top-up fees means that much of the burden will be suffered by those perhaps least well-equipped to bear it.

#### Reclaim Bank Charges

To assist in lightening this burden, read on for a guide to help you reclaim your unfair bank charges.

Last Thursday, the Court of Appeal upheld an earlier High Court ruling that bank overdraft charges have to be fair. In doing so, the Court dismissed the banks’ appeal, leaving the way open for the Office of Fair Trading (OFT) to judge on the issue of fairness. That the OFT will conclude that bank overdraft charges are unfair is highly likely – if it does, millions of current account holders could be in line for refunds totalling billions…

However, to prevent this, the banks have since announced that they plan to contest the decision in the House of Lords. Remarkably, they are doing so even though the judges have refused them leave to appeal.

In the meantime, the reclaim process remains on hold. The hold officially expires on the 26th July 2009 but is expected to last beyond this date as the legal battle continues…

For claimants this is undoubtedly bad news as (it means) many will (now) have to prolong their wait, perhaps until next year, to find out if they can successfully recover their unauthorised overdraft charges. Conversely, the banks continue to levy their charges, some of which are as high as £38…

However, new guidelines have made it possible for financially hard-up students to reclaim their money now. This is because the Financial Services Authority (FSA) has told the banks that they must deal with cases where the claimant is in financial difficulty, during the hold period. Specifically, the guidelines cite that the banks must ‘in making an assessment of financial difficulty […] take into account […] evidence of changes in lifestyle, including […] starting full-time education.’ Among other forms of evidence that they ought to consider are:

– Items repeatedly being returned unpaid due to lack of available funds;

– Making frequent cash withdrawals on a credit card at a non-promotional rate of interest;

– Repeatedly exceeding a credit card or overdraft limit without agreement.

Furthermore, if necessary financial commitments such as utilities and rent cannot be afforded or if certain debts (e.g. credit card debt) cannot be repaid then there is a good chance that the lender will consider an early settlement.

To pursue an early settlement, follow the steps below:

1. Write to your bank and request a list of charges or statements going back 6 years (5 years if you live in Scotland). Banks are allowed to charge up to £10 for each request so ask that it debits your account (ensuring you have sufficient funds for them to do so). Alternatively, if you have insufficient funds or if your account is closed, enclose a cheque for the same amount with the original letter.

2. Visit www.moneyadvicetrust.org and print off a ‘Common Financial Statement’ (CFS). Fill in the CFS to the best of your ability. Banks require this in order to assess you for financial hardship.

3. Once you have received the data from the bank, add up all the unauthorised overdraft charges and detail them in a list. To increase your claim, calculate statutory interest upon each charge at the rate of 8%. Enclose the list and write to your bank demanding a full refund of all unauthorised overdraft charges on the basis that they are unfair. Make reference to your perceived financial hardship and enclose a copy of your completed Common Financial Statement.

4. Await the decision of the bank.

5. The bank will reply by offering settlement in full, partially or not all.

6. In the event that it offers a partial settlement or no settlement at all, refer the complaint to the Consumer Credit Counselling Service or the Financial Ombudsman Service. Both services are independent, impartial and free to use.

7. Alternatively, as your claim is now logged, simply await the conclusion of the test case.

If you have incurred unauthorised overdraft charges yet do not consider yourself to be experiencing hardship, it is advisable to log your claim as soon as possible for these reasons:

– There are currently over 750,000 claims on hold. As each is lodged on a first come, first served basis, the sooner one is received, the sooner it will be dealt with once the test case is over.

– The law can change. Act now while it is in favour of the consumer – a future appeal may well favour the banks.

– Claimants in England, Wales and Northern Ireland are only permitted to make a claim for six years worth of charges, five in they live in Scotland. To make certain that older charges are not precluded by the unresolved test case, it is essential that prospective claims are lodged immediately.

Simon Turner is a part-time undergraduate reading English Literature & Philosophy. In his spare time he operates a small claims management business that provides services to people in need of claiming back their unfair bank charges. In addition, he offers services to reclaim credit card charges and premiums paid on mis-sold insurance. He has offered to discount his services to other students by 20% if any would like him to work on their behalf.

Simon’s website is [www.studentbankcharges.co.uk](http://www.studentbankcharges.co.uk) or [www.bankchargesolutions.co.uk](http://www.bankchargesolutions.co.uk).