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If you have a current bank account, you may have an agreed overdraft on it, which you can use without having to pay any fees. But there may also be times when you exceed this overdraft limit and the bank charges you for it.
There have been times when these overdraft fees have been excessively high. So, in 2020, the Financial Conduct Authority (FCA) reviewed overdraft charges and ruled that banks would no longer be able to make increased charges if a customer exceeds their arranged overdraft limit on their current accounts. Instead, there is now a single overdraft interest rate.
However, bank charges can still mount up. As well as overdraft fees, there are other things you could be charged for. For example, if a direct debit or other payment is refused because there isn’t enough money to cover it, you may be charged for the processing fees.
But did you know that if bank charges – particularly in the past – have contributed to financial hardship you may be able to reclaim them?
Let’s take a look.
The main circumstance that could make you eligible to reclaim bank charges is financial hardship. So, if you were already in financial hardship and the bank charges made things worse – or if the bank charges themselves actually caused the financial hardship – you may well have a case.
Some examples of financial hardship include:
If bank charges have been applied to you while you have been in financial hardship – and you have evidence of this – it is worth considering trying to reclaim those charges.
You can reclaim bank charges for the last 6 years, and possibly even further back. You can reclaim charges for:
You can reclaim charges even if the bank account is now closed, and can make several parallel claims from various accounts and banks. You can also reclaim charges even if you have had a previous payout for other charges.
There are two steps to the claims process:
You need to find out exactly how much you have been charged. So start by gathering information on all the fees and charges applied to your account. If you use online banking and your account is still open, see what information you can find from there first.
If there are gaps in the information the next step is to contact your bank. Be careful to ask them for a list of charges rather than a list of all transactions: if you ask for transactions, they may send you bank statements and try to charge you for these.
Once you have all the information you need, the next step is to write to the bank explaining how the bank charges impacted your financial situation at the time, and either caused your financial hardship or made it significantly worse.
You also need to say that if you are not happy with the outcome of your complaint, you will take the matter to the Financial Ombudsman Service (see below).
Once the bank receives your complaint, they should contact you to confirm receipt of it, and they then have up to eight weeks to deal with it.
When the bank has reviewed your complaint, there are several possible outcomes:
A full refund
In a small number of cases, the bank will give you a full refund. There is more chance of this happening for small claims, particularly if you have provided plenty of evidence of the financial hardship the charges have caused.
A partial refund
A more common scenario is that you’re offered a partial refund as a goodwill gesture. If you are happy with this outcome, then accept it. But if you feel it is not reasonable enough, contact the bank again to ask for a higher amount that you feel is fairer for your situation.
A conditional refund
What sometimes happens is that a bank may offer you a full or partial refund on condition that it is put towards paying off any debts you currently have at the bank – for example overdrafts, loans or credit cards. This can be a good compromise in that your overall finances will be in a better position than at present. But if it still leaves you in hardship – for example unable to pay other bills – you need to contact the bank again.
A request for further information
Another possible outcome is that the bank requests further information in order to process your claim. For example, it may ask you to fill out a financial statement outlining all your income and expenditure to check whether you fulfil its hardship criteria. If this happens, complete and return the form as soon as possible, along with a copy of your original letter, to reinforce exactly what you are asking for.
A rejection
The final outcome could be that the bank rejects your claim completely. If this is the case, all is not lost. Read on for what to do next . . .
If your claim is rejected, the first thing to do is to contact your bank again to explain you will be taking the matter further. This in itself may lead to a more positive outcome but if not, your next step is to contact the FOS – Financial Ombudsman Service.
The role of the FOS is to settle complaints between consumers and businesses that provide financial services. The ombudsman aims to resolve disputes fairly and impartially, and also has the power to put things right.
The FOS is free and easy-to-use. If you are not happy with the outcome of your claim, or the way your complaint has been dealt with, you can contact the FOS either by calling 0800 023 4567 or by using one of the complaint forms on the FOS website.
You need to explain to the FOS what has happened to you, and the impact the bank charges have had on you. Be as honest and detailed as you can, so that the FOS can make an accurate judgement as to whether or not you have been treated fairly by your bank.
There is no guarantee that the FOS will resolve the complaint in your favour, but it is definitely worth a try, particularly if you are still in financial hardship. The process may take a while: around half of bank charges cases are resolved within three months, whereas the rest take between six to nine months. But it could be worth the wait.
If the complaint is resolved in your favour, the FOS will aim to restore you to the financial position you would have been in if your bank had not treated you unfairly.
We hope that this article has given you some useful information about whether you are eligible to claim back bank charges and, if so, that it helps you to save money that would otherwise have been lost.
Check back here with us soon for more financial tips from Loans 2 Go.
Loans 2 Go is a trading name of Loans 2 Go Limited, registered in England and Wales. Company number 4519020. ICO registration number Z720743X. Registered address: Bridge Studios, 34a Deodar Road, London SW15 2NN. Authorised and regulated by the Financial Conduct Authority (FRN 679836). *Payment by bank transfer once application approved, subject to our working hours of Monday to Friday: 8am to 8pm and Saturday 8am to 5pm. All loans are subject to eligibility & affordability criteria.
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