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Reclaim bank charges - Ask our expert

On the subject of reclaiming bank charges, our expert says...

Hi Liz,

Thanks for getting in touch. Yes, you’re right - you can put in a claim for up to six years worth of bank charges if you believe them to be unfair.

The reason these charges may be considered unfair is that under the “Unfair Terms in Consumer Contract Regulations,” charges should not exceed the cost to the provider. While the cost to a bank of rejecting a direct debit and informing you is a few pounds, banks have charged consumers up to £38 for doing this.

However, the banks are arguing in court with the Office of Fair Trading (OFT) (www.oft.gov.uk) to decide whether or not bank charges are legally “unfair.”

The case has been going on for over two years, but the results are expected within the next few months. Until then, the Financial Services Authority (FSA) (www.fsa.gov.uk) has issued a waiver on all bank charges claims, which means banks do not have to process them until a court decision is made.

However, you can still register your claim now and it would be a good idea to do so. Over a million people have written to their bank or building society requesting their money back, and if the court decides in favour of the consumer, you’ll want to have secured your place in the queue for cash.

Here’s how to register your claim:

1. Find out what you’ve been charged

If you are going to ask for your money back, you need to know how much you might be entitled to.

You can claim for charges from the past six years. However, as the claims process has been on hold since July 2007, you can argue that you should be entitled to charges from up to six years before this date – so dating back to July 2001.

If you have online banking, it’s worth seeing how far back your online statements go back. Otherwise, you can send a letter to your bank asking for a list of all past overdraft charges that have been applied to your account. You have a legal right to this information under the Data Protection Act, although banks are allowed to charge up to £10 for it.

Once you have this information, you need to list all the charges you believe to be unfair. Note that this can only include charges for bouncing cheques or direct debits and for going over your overdraft limit (i.e. not interest charges or account fees).

2. Ask for your money back

Once you know how much money you have been charged, you can write to your bank to ask for it back.

When you write to your bank you need to list all the past charges that you believe to be unfair. You also need to tell the bank that you believe these charges were disproportionate, and so you want your money back.

What next?

Most banks will write back to acknowledge your complaint, but tell you that the FSA has given it permission to suspend all bank charges complaints until the verdict of the court case. Then it’s just a waiting game.

However, if you’re in financial difficulty…

If you are in financial difficulty, you are exempt from the FSA’s waiver and can ask for your case to be dealt with now. You are considered (by the FSA) to be in financial difficulty, if your income is “insufficient to cover reasonable living expenses and meet financial commitments as they become due.”

If you are unsure whether you fit the FSA’s criteria, you can contact the Consumer Credit Counselling Service (www.cccs.co.uk) who can look at your circumstances and make an independent decision.

If you believe you are in financial difficulty, as the FSA defines it, write to your bank detailing your circumstances and request that it addresses your claim now. This doesn’t mean it has to give your money back, but it does have to consider your claim.

Prevention is better than cure

While most people expect the court to rule that bank charges are unfair, there is no guarantee that this will happen and no guarantee that all charges will be refunded in full.

So it is better to avoid being charged in the first place. Keeping a close eye on your finances may help you avoid exceeding your overdraft limit, but if your bank applies particularly high bank charges, you should also consider switching current accounts.

See our guide to current account charges for tips on how to find an account with low charges.

Good luck Liz

Ask Chris a question

If you have an money query please email OurExpert@CreditChoices.co.uk

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