Request for repayment of charges: £XXX.XX
I am writing to ask you to refund the charges which you have levied from my account in respect of late payment fees to the sum of £XXX.XX, plus the interest charged on said charges up until the point of the house being sold.
Please find enclosed schedule of charges detailing dates and amounts. I now understand that such fees are unfair in line with recent Consumer Regulations.
In the case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. (1904) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract as oppose to a charge which represents a penalty.
This law was confirmed and upheld in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd  AC 79. A charge will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved to have followed from the breach. A penalty clause is void in its entirety and unenforceable.
Your charges appear to represent an unfair term of contract which is contrary to the Unfair terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). My account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations (1999) as I am a consumer.
Your charges constitute an unfair penalty under Schedule 2 of the said Regulations which provide an indicative and non-exhaustive list of terms which may be regarded as unfair. Under paragraph 1(e) of schedule2 this specifically includes terms which have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation. I would vigorously contend that this is the position regarding the fees of £XXX.XX which you deemed fit to apply to my account.
I would futher like to bring your attention to the following statement by the former Office of Fair Trading:
A term in a mortgage agreement which requires the borrower to pay more for breaching the contract terms than actual costs and losses caused to the lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations.
The Financial Conduct Authority updates it at follows:
A firm must ensure that any regulated mortgage contract that it enters into does not impose, and cannot be used to impose, a charge or charges for a payment shortfall on a customer unless the firm is able objectively to justify that the charge is equal to or lower than a reasonable calculation of the cost of the additional administration required as a result of the customer having a payment shortfall.
I believe that the charges you have levied of £XXX.XX far exceed any true cost to yourself as a result of my breaches and any genuine pre-estimate you could conceivably reach. If you disagree, then will you please demonstrate this by letting me have a full breakdown of the costs to which you have been put to as a result of my breaches, in order to reassure me that your charges really do reflect your costs.
I really hope that this matter can be resolved amicably and without the need for redress to the Small claims courts. Thus I am asking that you refund the charges which have unfairly been levied on my account.
If this went to court there would be an extremely good prospect of success, this is backed by case law. However, I am mindful of additional costs that such action could incur both on my part and on yours, so I trust you will give consideration to my request.