It is very difficult to read any personal finance related news without coming across something relating to unfair bank charges. But how do you know when a charge is unfair?
Over recent years highstreet banks and building societies have been exposed for imposing high charges on their customers which are deemed unfair.
Penalties have come in all forms and have been recorded as being as much as £39 for going just £1 over and authorised overdraft.
These unfair charges, according to the banks, are there to cover the cost of processing the interaction with the customer. This however, isn't really true as all the banks does is send out a franked letter informing said customer that they have been charged for exceeding their overdraft limit, an action that only costs around £3.50.
The good news is that many people have been successful in reclaiming these charges.
For many, many years, banks have got away with charging customers for overspending, either through exceeding an overdraft, bouncing a cheque or a reversed direct debit.
But, the law associates these charges with a breach of contract. It simply states that the charges must reflect the true costs incurred by the bank, or if they are a fee they must be reasonable for what the customer is offered in return.
As a result of the mounting cases banks have had to deal with, the Office of Fair Trading has stepped in and is currently hearing a test case that will ultimately decide whether these charges are, or are not, fair.
Although, until this hearing, the Financial Services Authority has given banks permission to hold off completing any more reclaim cases.
What you can claim:
Account misuse fee
Cheque return fee
Card misuse fee
Unarranged borrowing fee
Unauthorised overdraft fee
Unpaid direct debit fee
Unpaid cheque fee
Unpaid standing order fee
Exceeding Authorised Overdraft Limit
Exceeding Unauthorised Overdraft Limit
Direct Debit/Standing Order/Cheque returned fee
Paid referral fee
And what you can't claim
Cash Machine Withdrawal Fees (ATMs)
Account Service Charges
Service Fee/Annual Fee
Charges related to foreign currency transactions and conversions.
Monthly account fees on certain type of accounts (such as RBS Royalties)
Normal overdraft interest charges
How to reclaim
Because the process of reclaiming unfair bank charges has temporarily come to a holt, you can only submit your case to the bank involved and wait for the test case decision.
However, there are some steps you can take to prepare.
First of all you need to gather together bank statements. Now, because you can reclaim bank charges for the past six years you can write to your bank and ask them for this information, which they are legally bound to give you under the Data Protection Act. However, they can charge a fee for this - usually around £10 - a fee which is classed as fair.
If you have access to online banking, however, you can obviously get all of the information you need from there.
Once you have collected all of your information, you need to calculate how much you are owed. Many website now have a tool that does this for you.
Armed with all of this information, all that's left to do is write a letter to your bank outlining that you have been unfairly charged and wish to claim back the disclosed amount.
You should get a reply from your bank to acknowledge that they have received your complaint, however they will no doubt also say that they don't have to act on any case at the moment following the waiver from the Financial Services Authority (FSA).
I've been with NatWest since I was 16-17 and ever since I got contactless it's been putting me into and an un arranged overdraft. When I spoke to the woman years ago it was re-embursed to me. Now the same thing is happening because their system don't process my payments that if make on a Friday untill the Monday. Not only that but the bank has been showing I've got a few pounds left. Also the banks payment system for arranged over drafts and unarranged is taking money from my account that it's clear I DO NOT HAVE and for lack of a better phrase forcing me into an unarranged overdraft. What do I do, because is effecting my credit history a serious amount. Please advise
TT - 21-May-19 @ 7:08 PM
Hi, I have been charged by FirstDirect £80 for unarranged overdraft payment. I have gone over £74 in the minus but they have charged me £80 for this.
Can this be reclaim?
Dan - 28-Nov-18 @ 11:14 PM
To add further detail to my first comment, my business banking is with Santander. In my early days of running a creative micro business (a startup recording studio without any startup business load), a monthly outgoing for around £33 was paid even though there wasn't enough money in the account. Santander would honour the DD, despite a shortfall of between between less than £1 up to £15 at most. I would be charged £30 for honouring the DD and then a further £15 plus interest for going into an unarranged overdraft limit, so total charges would be around £45. The shortfall would usually be cleared by me within a matter of days. Sometimes the charges would themselves put me into an unarranged overdraft. Again by small amounts which were cleared within days wherever possible, but would lead to further charges the following month. Clearly, this snowballed as it was then twice as difficult in the early days of my business to make the same payment the following month plus covering the charges. Santander also refused to grant me a minimum overdraft to help cash flow would have clearly resolved this situation.
CW - 14-Nov-18 @ 12:56 PM
Would this apply to business banking? As a sole trader in my early days, I was often charged £30 for going over, sometimes less than £1. It was always paid back within a couple of days and due to oversight rather than misuse. Hard to keep your eye on everything daily as a startup, as much as I tried and some outgoings are on variable dates.
CW - 14-Nov-18 @ 11:05 AM
My partner had a letter saying he owes just over £500 form a bank he was with over 8 years ago, never had an overdraft or direct debits but paid on card at a shop, thought he had money in the account but didn't (didn't realise untill a few days later) the transactions went through, now they have sent a letter years later saying he owes £500, what can I do please
Sjwilson - 17-Aug-18 @ 2:25 PM
I have a Metro card. For almost a year there have been an authorised direct debit from a fake American account. I spoke to my bank and I was told they can not refund me the money as i was 6 months late to ask for help. Am I being treated unfairly?
Hannan - 26-Feb-18 @ 8:23 PM
I have a Lloyd’s bank account a - Basic one -
It states that the account doesn’t have any fees but I have been charged numerous amount of
“Unpaid DD or SO” & O/D usage fees as well.
Also if I have been overdraw in my current account they have transferred money from my savings account without my knowledge
I would like to know if I have a claim worthy case as my account does state “no fees/charges”
Thank in advance..
Hannah - 30-Jan-18 @ 8:06 PM
Nationwide basic account was defaulted in July 2014 for failing to keep up repayments on bank charges they issued when I went in the red by £43 back in 2012. I was in an IVA at the time so was struggling as you imagine. I reached a settlement to pay £43 last year and they agreed to mark account satisfied. However they refuse to remove the default so my argument now is were these charges justified and I thought you can only be defaulted on credit agreements. This was a basic bank account which are designed to stop customers going overdrawn. I needed advice to see if I have any form of redress on this. I am trying to improve my credit score.
Markss - 31-Dec-17 @ 6:30 AM
Lloyd’s Bank has just introduced a daily overdraft fee which must be paid daily when overdrawn.
What do you advice?
Cf - 4-Nov-17 @ 4:39 PM
First it I important to state that these charges are always the individuals fault, however, Santander has continously put me in a cycle of charges.
As a 16 year old care leaver I have experienced over 10 Years (yes) of constant charges usually from 50-150 pounds. My account has no overdraft and a majprty of charges are for -1 to-10 pounds or from the charges themselves.
Considering this has put my in dire fincial stress, impacted my studies, creates further debt and contributed to my depression I hope one day a ruling will force repayment.
Once again, it is the individuals poor managment that enables this - does this make it ethical?
Lukily, I now freelance for my daily bread and get a majority of my imcpme paid into a PayPal account -- slowly turning my back on the banking system.
Hope the best for all.
JMS - 25-Sep-17 @ 11:34 PM
When banks were bailed out by the government ....if over 51% did they not by default be also become subject to the Human Rights Act ....and its effects on unfair .unjust actions of a goverment body ????? It is also apparant .i was charged 15 £ per month for ....emergency call out etc. However when i failed to pay in 500 they stll charged 500 BUT i did not have access to emergency call outs ????
Jimbo - 23-Aug-17 @ 12:33 AM
When banks were bailed out by the government ....if over 51% did they not by default be also become subject to the Human Rights Act ....and its effects on unfair .unjust actions of a goverment body ?????
Jimbo - 23-Aug-17 @ 12:18 AM
I was with lloyds tsb around 4 years ago, i had a £1000 overdraught which i had used exept 2p left on my account. I owed £600 on a payday loan and as i only had 2p in my account could't pay that week but my bank just let them take £600 from my account in one go which caused my account to be £600 minus lloyds then froze my account and passed my debt to a debt collecting company which the debt has risen to nearly £4000 now after court cases, i an fuming that lloyds should not have given money that was not in my account in the first place.
Mangan - 22-Aug-17 @ 10:02 PM
I am currently battling santander as they have hit me with near £500 in charges this year, when they charge me this puts me overdrawn and i am then charged again and this is just a vicious circle, i have contacted them and they are refusing to do anythin about these charges
Manz1983 - 17-Jul-17 @ 3:50 PM
the core thing I go for is usuary
of, two months ago, the bank charged you ten pounds. and today you go two pounds over your overdraft limit, then the issue is that they have forced you into overdraft fees with their own fees. this has been completely illegal since the dark ages.
I had every charge ever made in my account bar two refunded without even referring to the unfair charges act
jay - 23-Jun-17 @ 9:39 AM
@Rose - they may have refunded only the charges that were not applicable. If you racked up an overdraft charges that were applicable perhaps they have charged you rightly for these.
ASde - 13-Jun-17 @ 11:26 AM
Hi I've recently put in a claim to get my bank charges backthey sent me a letter saying that they would refund 900 pound and 300 compensation over the last six years I have had refund but messaged to say they only refunded a third ofbank charges as they totalled3 thousand and I said I wasn't happy still they did send a letter stating that we were given wrong information and sold bank account wrongly .they have said now that they have paid out all they are going too.is it worth me writing to ombudsmon to see if they can get me the full amount especially as I have the letter from them stating blame on there part
Rose - 12-Jun-17 @ 1:52 PM
Just been charges £48 unauthorised overdraft fee plus 3 x £10 authorised card payments fees for card transactions of £1, £4 and £2.29 by Santander. This amounts to 428% interest on the payments made. It's daylight robbery. How can I go about claiming these back if they refuse? Feel like going to the media about this.
ASHERS - 18-May-17 @ 1:14 AM
I've just been charged £50 for a direct debit overdraft of £8. Money that I needed for bills and they took it without any notice or reasons why. The charge went through and put my account into overdraft. They took 3p of unaranged overdraft interest along with the £50 saying "fees according to advice". I've messaged the bank telling them it's unfair as everything I do is done with online banking so the cost to the bank would be nothing... I'm with Danske Bank. What steps can I take to get the money back as quickly as possible?
J - 28-Apr-17 @ 1:10 PM
I am trying to reclaim bank charges from an account older than 6 years. Lloyds have said that they dont have to refund anything passed the last 6 years? Is this true because they was taking around £180 in charges in some transactions back in 2007. Thanks
kk - 20-Apr-17 @ 3:25 PM
Hi ..I have recently asked my bank for the last 6 years statements so I can calculate the charges I've incurred and start the process of reclaiming.im with Santander and they charge £25 for a non payment of direct debit or standing order even if you 10 P shirt they will bounce it ....i have written to them bfre and they just say I accepted those charges when I opened up the account with them ...This does not deter from the fact that they are abusing their position and overcharging IE I'm sure a reasonable amount has been indicated at £3.50 ...So what is the status of this decision now march 2017 ? They've taken thousands from my account over the years ..Single working mum ..Thanks
Cally - 20-Mar-17 @ 1:34 PM
budulis11 - Your Question:
Im with Barclays for years.Very often I have missed payments (direct debit,outstanding orders).Over them years I paid many charges which most of the time were 8£ per missed payment.Can I claim it back?Thanks
If you think the charges have been unfair, then you would have to speak to Barclay's customer service dept directly regarding this matter.
BankAccountAdvice - 13-Mar-17 @ 2:16 PM
Im with Barclays for years.Very often i have missed payments (direct debit,outstanding orders).Over them years i paid many charges which most of the time were 8£ per missed payment.Can i claim it back?
budulis11 - 12-Mar-17 @ 8:25 PM
Charges for sending first copies of printed statements when you are paperless should be deemed unfair.
Mistry Tor - 20-Feb-17 @ 7:46 PM
Could we stop these
This is getting
Helena Troy - 20-Feb-17 @ 7:42 PM
Halifax have charged me 10 pounds for unpaid direct debits. I've seen that they have taken over 2000 pounds over the year. I 2as looking at my online banking and sometimes taking 40 pounds in one month. Can I reclaim this?
Missp - 13-Feb-17 @ 4:58 PM
I am in the same position as Smaz. I have just been charged £30 for one month because of Talk talk. Now my car insurance has been returned so I will now be due £10 bank charge CV on/ around 1st of next month. Single mum on benefits who can't get out of the unfair system. Halifax account too.
Ang - 4-Jan-17 @ 11:35 PM
Over the past few months my bank have been charging me an average of £105 for "unplanned overdraft charges" even when i am not using my overdraft they had charged me. Now i have lost my job and i have no money to make any payments but they kept the huge charges coming and now im in over 300 pound in debt for there charges and now they are harrasing me with phone calls and letters stating if they dont get the money they will close my account down can i take legal action on this? because it is getting rediculous now
Matt - 28-Dec-16 @ 12:29 PM
Every month I go over my overdraft because of my unauthorised overdraft usage charges coming out.
In the letter they send me every month it says:
"We do charge a fee of £6 per day for our unarranged overdraft service...The maximum amount you can be charged in daily unarranged overdraft usage fees is £90 per monthly charging period..."
I end up having to pay £90 EVERY MONTH because I pay all my normal bills then do the monthly grocery shopping and after I've done all of that I'm not exceeding my overdraft but then it takes out the unarranged overdraft fee and I end up going over my overdraft, I don't get any more money coming in till the next month and by that time I'm at the maximum fee again. It's rediculous surely that's way too much, I just can't afford it.
bm - 25-Nov-16 @ 1:34 PM
Clibb68 - Your Question:
I went 49p over my over draft I wasnt aware of this until I received a letter from my bank to tell me that they would charge me £5.00 a day for being over my overdraft. I received the letter after I had already racked up bank charges of £65.00, they have taken there charges I am now £65.00 over my over draft because they took the charges and they are now charging again for being over my overdraft.
Some banks will let you overdraft your account by a small amount without a fee, so you would have to check with your bank to determine its policy.