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Home > Debt Management > Debt management guides > Reclaiming unfair bank charges

Reclaiming unfair bank charges

At one time, reclaiming bank charges for overdrafts, direct debits, and bounced cheques was an open door. To do so, you simply needed to threaten that you would take the bank to court or take the matter to the Ombudsman. After which, the bank would send you a cheque for years of charges plus additional interest.

Although the Supreme Court ruling in November of 2009 has made it more difficult to reclaim bank charges, receiving a payout is still possible. When done right, reclaiming unfair bank charges is a risk-free process.

Determining your eligibility

It is more difficult to reclaim excess or unfair bank charges today than it was prior to November of 2009, but it is still very achievable. Anyone can visit or write their bank and politely ask for a refund for unfair bank charges. If they refuse, the Financial Ombudsman Service will investigate the matter for free. The FOS can help you if you are able to prove the following:

  • You are suffering from real financial hardship, such as being unemployed or behind on your mortgage.
  • You were hit with unfair charges. For instance, you were charged £35 for being overdrawn by £1.
  • You are in a cycle of excessive charges that keep putting you further and further in the red.

The charges you can attempt to reclaim

You are able to reclaim overdraft fees, direct debits, and bounced cheque fees, which traditionally range from £5 to £35 per transaction. Monthly bank fees for account services typically cannot be reclaimed, and the rules governing reclaiming credit card fees are quite different than the standard bank fees.

Reclaiming bank charges from multiple banks or closed accounts

Contrary to popular belief, you are able to reclaim bank fees from a closed account, even if the account was closed three or four years ago. You may also be able to reclaim bank charges from more than one bank.

Reclaiming new charges after a previous payout

You are also able to reclaim charges more than once. However, the banks and perhaps the Ombudsman will view this as a sign of poor money management, possibly making it more difficult to reclaim bank charges multiple times.

How far back you can reclaim

The Ombudsman can only technically investigate claims that occurred within three years from the time you first realised a problem was present. So, if you have delayed reclaiming bank charges, you should act as soon as possible. If the Ombudsman refuses to investigate your claim and you take it to court, according to the Statute of Limitations Act, you will only be able to reclaim charges within six years of recognising a problem if you reside in Wales or England, and five years if you live in Scotland.

Contacting the bank

Many people make the mistake of going through a claims management company, which charge people for tasks that they can easily do themselves. The first task when attempting to reclaim unfair bank charges is to contact the bank, because the Ombudsman will not investigate you claim unless you have gone to the bank first.

When contacting the bank, you should use the fairness argument and state that the charges have negatively impacted your life and worsened your financial situation. Additionally, you should firmly state that you will contact the Ombudsman or take the matter to court if they reject your claim or refuse to hear your case.

At the same time, you should keep in mind that even when banks were paying out money left and right to those who reclaimed unfair bank charges, nearly every claimant had their claim rejected the first time. This is merely part of the process.

After contacting the bank, it has up to eight weeks to respond to your complaint, in which case the bank will likely respond one of the following ways:

  1. The bank will offer you a full refund.
  2. The bank will offer you a partial refund.
  3. The bank will offer you a refund, but it will tell you that it must go towards paying off a debt you owe the bank.
  4. The bank will ask you to complete a financial statement form.
  5. The bank will reject your claim.

If the bank rejects your claim, do not give up. Often, writing them another letter will persuade the bank to settle your claim.

Complain to the ombudsman

If the bank refuses to offer you a satisfactory settlement, then it is time to contact the Ombudsman and let them investigate the matter. Once again, you should use the fairness argument and explain the problems that the unfair bank charges have caused you. Other than having to supply the Ombudsman with some documents and wait for a few months, the process is free and all you stand to lose is a few stamps.

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