Bank charges leave 8,000 families in serious financial hardship

Number of families in trouble due to charges quadruples over year

By Elliot Wright, 19th January 2010

The number of families struggling as a result of excessive bank charges has quadrupled from 2,000 to 8,000 in just a year, according to the latest figures.

A report by the Financial Ombudsman Service (FOS) indicates that bank charges are leaving more low-income households than ever unable to pay their rent or mortgages, along with other household expenses such as energy bills and council tax.

The FOS said the situation has been made worse by last year's Supreme Court decision in which it was ruled that bank charges could remain unregulated - dashing the hopes of millions of customers who had hoped to reclaim their bank charges.

Consumer champion Which? said: "The issue of financial hardship has not changed - the regulatory authorities must take action against any bank ignoring the financial plight of customers."

But the British Bankers Association said banks always treated customers experiencing financial difficulty "sympathetically".

The issue of financial hardship has not changed - the regulatory authorities must take action against any bank ignoring the financial plight of customers

Lloyds banking group which includes Halifax bank stated that they will look into cases where customers are in financial hardship, but bank charge refunds are unlikely as banks look to help customers in other ways such as by restructuring their finances or providing them with loans.

The report follows the FOS's announcement last week that it is preparing for a 27% increase in the number of disputes between consumers and financial firms over the next tax year.

It predicts that they could receive a record 210,000 complaints from consumers -about a range of issues including bank charges, mis sold PPI and mis sold endowments - up from 165,000 it received in the last year. 

Claims Financial