Suing my bank

This morning in the post I received the letter I had been waiting for for over a month.
A while ago, Someone called Jambon Spandau (allegedly) posted a message up on choke about penalties from their bank and how very unfair they are.
I had a look into this, and apparently many banks charges may be deemed unreasonable as they do not adequately reflect the true costs of the administration necessary when somebody goes over their overdraft limit or fails to pay back their credit card or has an unauthorised payment or whatver it may be.

On 5 April 2006, the Office of Fair Trading (OFT) concluded that default charges over £12 are automatically presumed to be unfair in terms of the Unfair Terms in Consumer Contract Regulations. Unfair terms are legally unenforceable.

(http://www.bankcharges.info/)

The point is, that if you breach a contract and somebody charges you more than you would be expected to pay back, then this stops being known in legal terms as a charge, and instead turns into a penalty. (Dunlop Pneumatic Tyre Co. - vs. - New Garage and Motor Co. Ltd, 1915).

People have been suing banks left, right and centre as far as I can tell. It has been on This Morning and discussed on Money Box on radio 4, I think. Due to the nature of English law, the banks appear to be unwilling to fight it in court as they may then have to change their charges to a reasonable amount. in other words the equation is:

if ((unreasonable bank charges - reasonable bank charges)>legal costs, then continue to settle out of court).

I could be wrong. I'm no legal or financial expert.

First I got a letter from HSBC saying that they did not accept the charges as illegal but to save them from paying all the legal costs, would I accept a token amount (about half) in settlement of this matter.

Next I received a letter from their solicitors not accepting that there was anything wrong with their charges, but offering to pay the full amount + my legal costs as an out of court settlement. the only thing was that I would have to sign and return the letter and agree to treat this matter confidentially.

I had to think long and hard about this, as it wasn't pocketmoney. It was almost a month's wages they were offering to pay me back, and all I had to do was agree. I very nearly did, but then I got courage from the testimonies on penaltycharges.co.uk and wrote back saying that I couldn't do that. I waited. I checked the mail every morning, and finally I got a letter agreeing to accept. I signed it and returned it Recorded Delivery the next day, and a few days ago, the payment came! Yeah!

So anyone who thinks they have been charged too much in the last six years - I recommend fine-tooth combing your bank statements and check the fees and charges they have slapped you with, count them as an investment, add 8% interest and then write to your bank and see what they say!