HAPPY RICKY

Every penny counts in a recession, and here is where our readers won and lost

Consumers have had a mixed year in 2009, with disappointment on bank charges offset by good news for people shopping round for personal loans, credit cards and energy deals.

More than a million people who hoped to reclaim excessive overdraft charges were disappointed last week when the Office of Fair Trading (OFT) said it would drop its case against the banks, after its defeat in the Supreme Court last month. Any further action would have “limited scope and low prospects of success”, it said.

Though there will be no mass refunds from the banks, some customers may be able to reclaim on an individual basis.

There was good news for other consumers when the Treasury select committee called on the OFT to hold an inquiry into credit reference agencies.

Here, we list the top five consumer battles of the year and show how you can get back your money.

1 BANK CHARGES Banks earn about a third of personal current account revenues from charges on unarranged overdrafts, amounting to a hefty £2.6 billion each year. The fees can be as high as £35 for a single missed payment.

The OFT announced in 2007 that it would launch a test case to clarify the law on current account charges in respect of seven banks and one building society — Abbey, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland (RBS) and Nationwide.

Following the OFT’s decision last week to end its action, about £800m of refund claims, which had been on hold since then, are now expected to be turned down by the banks. However, consumers can still attempt to reclaim money by applying individually through the Financial Ombudsman Service (FOS).

The OFT said: “We believe that an individual action against a bank could succeed, but a collective action would be too hard to bring.”

The advice is therefore to avoid downloading template letters and instead write to your bank on the basis of your own circumstances. It has eight weeks to respond, after which you can take your claim to the FOS.

Consumers are being urged to avoid using claims management firms, which offer to handle cases in return for a share of any money recovered.

Kevin Mountford at Moneysupermarket.com, the comparison site, said that although the negative publicity had spurred banks to cut charges, consumers unhappy with their existing providers should look elsewhere.

For customers who stay in credit, the Alliance & Leicester Premier Direct account pays 6% for 12 months on balances up to £2,500. You must deposit at least £500 a month.

For those who need an authorised overdraft facility, the lowest rate comes from Cahoot, which charges no interest up to £100 and then 11.8% up to £1,000.

For those who rarely use their unauthorised overdraft, HSBC charges the least — 0.01% interest if you haven’t gone overdrawn without authorisation in the past six months.

Nationwide does not impose a charge for unauthorised overdraft transactions of less than £30, provided you clear the borrowing on day one.

2 CREDIT REFERENCE AGENCIES The Treasury select committee last week called for the OFT to investigate credit searches by the three main agencies: Experian, Equifax and Callcredit.

In particular, the committee questioned whether customers were being penalised for shopping around for loans and credit cards by having a build-up of multiple searches on their files, making it harder to obtain credit in future.

John McFall, chairman of the committee, said: “While it is right to protect consumers from potentially reckless lending, equally, they shouldn’t be penalised for shopping around for loans.”

He also emphasised the importance of agencies keeping consumers’ reports accurate and up to date. The Sunday Times Money section has received scores of letters from readers complaining that agencies took months to correct inaccuracies on their files.

The report also asked the OFT to consider the fairness of imposing a £2 fee for each statutory credit report, and suggested that they be free.

Consumer groups said that until the OFT takes action, consumers should avoid making multiple applications close together.

If there is a mistake on your file, you should write to each of the agencies individually. They have 28 days in which to respond and if you are dissatisfied with the result you can go to the ombudsman.

Cathy Neal at Which?, the consumer group, said: “People should request a statutory report from each of the three agencies once a year. This may cost you £6, but is sufficient for most people. It is probably not worth signing up to some of the expensive monthly deals offered by agencies.”

3 STRUCTURED PRODUCTS Some 1,700 investors who were mis-sold structured products backed by Lehman Brothers will soon be compensated, the Financial Services Authority (FSA) said earlier this month.

The Financial Services Compensation Scheme (FSCS) is sending out application forms to investors in “capital secure products” sold by NDF Administration, Defined Returns and Arc Capital & Income. It aims to pay most eligible claims within six months of receiving the completed forms.

The products offered returns linked to the stock market while promising to return investors’ capital in full at the end of the term — but this promise was backed by Lehman Brothers, which collapsed in September 2008.

A further 4,000 people who were sold products with some capital risk will find out next month whether they can claim compensation.

The FSA, the City watchdog, has also reviewed the marketing literature of 19 firms that sold structured products in general, concluding that the risk of capital loss was not made clear in about a third of cases.

If you invested in a non–Lehman-backed product, but feel the risks were not fully explained, complain first to the product provider or your adviser and then to the FOS.

4 PAYMENT PROTECTION INSURANCE More than a million homeowners with mortgage payment protection insurance (MPPI) are in line for refunds totalling £60m after the FSA ruled that lenders and insurers were wrong to raise premiums and reduce payouts earlier this year, just as unemployment was rising. The insurance is designed to cover mortgage repayments in the event of illness, accident or redundancy.

The FSA has given firms until June to reimburse consumers and reverse any reductions in cover. The Post Office was one of the worst offenders — in April it raised monthly premiums by an average of 40% and cut the maximum monthly benefit from £2,500 to £1,500.

If you feel you were mis-sold MPPI, complain first to the firm and then to the FOS.

5 ENERGY Householders should see lower gas and electricity bills in 2010 after Ofgem, the energy watchdog, told the UK’s six main energy suppliers that they must cut prices early in the year.

The companies — British Gas, EON, Scottish Power, Scottish & Southern, Npower and EDF — have lowered their prices only slightly this year, despite a near-halving of wholesale energy prices.

This has left them with a net profit margin of 7% after about four years of losses, according to Ofgem.

The industry has defended its pricing levels, arguing that it has been asked to pour £200 billion into developing sustainable energy.

Alistair Buchanan, chief executive of Ofgem, said: “Our role is to ensure that companies can invest but do not use investment as a shameful excuse to overcharge consumers.”

The average dual-fuel gas and electricity bill is £1,239 a year, according to Uswitch.com, the comparison site, but consumers can cut costs if they shop round (see below).

Penalty is worth paying to get ahead on cut-price energy

Thousands of people who took out fixed-energy tariffs at the top of the market in 2008 are being told it is worth paying the exit penalty to get out now and move to a cheaper deal — potentially saving hundreds of pounds

Wholesale energy prices rose steeply in 2008, meaning higher bills for consumers. British Gas was the worst offender — in July last year, it put up gas prices by a record 35% and electricity prices by 9%.

Consumers who signed up to British Gas’s fixed-price tariff in September 2008, which runs until January 31, 2012, are paying an average £1,428 a year for their gas and electricity.

The deal has a £70 exit penalty. Joe Malinowski, founder of Theenergyshop. com, the comparison site, is advising consumers to take the hit and move to the cheapest deal on the market — Npower’s Sign Online 17, which costs £907 a year if paid by monthly direct debit. Even after paying the penalty, customers would be £451 better off.

If they wanted a fix, they could go for Ovo Energy’s rolling 12-month fix, at an average of £920 a year — a saving of £438.

Malinowski said: “It is not just customers on standard or expensive fixed deals that have been stranded paying over the odds. If you’re on a historic tariff then it is likely that your bills haven’t fallen very far at all.”

Someone who signed up to the Southern Electric fix in 2008 will be paying an average of £1,301 until August 31 next year. Even with the £50 exit penalty, they would save £344 if they switched to Npower and £331 if they switched to Ovo.

Similarly, those forking out £1,291 on the EDF Price Protection fix, which runs until September 30, would pay an exit penalty of £50 but save £334 if they changed to Npower and £321 if they went with Ovo.

Even though energy bills have fallen slightly this year, experts say the cuts have not gone far enough.

“The 5% cut in standard energy bills that we saw this year was a lot less than we had expected and nowhere near reflects the 60% fall in wholesale energy markets,” Malinowski said. “The stage should therefore be set for further cuts in energy bills in the spring of 2010, but there is no guarantee that we will get them.

“The one place where prices have fallen is for discounted online tariffs and it seems likely that competition for new customers will remain intense.

“However, to get these deals you need to be prepared to go online and shop around.”

Note: This article is extracted from http://www.timesonline.co.uk/tol/money/consumer_affairs/article6968244.ece