How to claim back bank charges

Emma Bandey, personal finance campaigner for Which? explains how to reclaim unfair bank charges.

Managing your finances can be a real headache, which is only made worse when you find that your bank has hit you with an unfair penalty charge for slipping into an unauthorised overdraft, even if it’s just by a few pence.

Which? estimates that one in four people have been charged in this way and that, as a result, the banks have been raking in the cash – to the tune of an astonishing £4.7billion in the last year alone.

We believe that current overdraft charges are unfair as they do not reflect the amount it costs the banks to deal with accounts that slip into the red. If you have been charged for going into an unauthorised overdraft, you can join the tens of thousands of consumers around the country who are claiming back these unfair charges by visiting www.which.co.uk/bankcharges. 

Step One
The easiest way to avoid being charged for slipping into unauthorised overdraft is to contact your bank immediately if you think you may become overdrawn or exceed your arranged overdraft. Contact your bank and explain your situation. They could agree to offer you a larger overdraft facility.

Step Two
By law you can make a claim for charges paid on unauthorised overdrafts in the last six years. Unless you have kept all your bank statements for this time, you will need to write to your bank and ask them to provide this information.

Under the Data Protection Act 1998 the company must provide this information within 40 days and they cannot charge more than £10. The company may try to charge you more for providing copy statements (this charge is usually explained on the back of statements), but if you request a computer printout of charges, which are acceptable evidence in the small claims court, they cannot charge more than £10.

Do not be put off by any attempt to prevent you getting access to information. If you experience problems, contact the Information Commissioner (http://www.ico.gov.uk/ 08456 30 60 60). 

Step Three
Write to your bank, telling them that you are a loyal customer and that you are unhappy with the charges you have paid. Under the banking code, your account provider has five days to make an initial response to your complaint and eight weeks to have dealt with it. If you are not satisfied with your bank’s response at the end of this period, go to the Financial Ombudsman Service (FOS).

Step Four
If your first letter doesn't work, a stronger letter might do the trick. Write to your bank and tell them that if they do not pay back your money you will either take legal action against them, or refer them to the FOS.

So far the banks have chosen to settle all cases that have been referred to FOS rather than letting them get as far as the small claims court. In some cases, they are only offering to refund part of the money. While some money is better than none, there is no reason why you should not receive the full amount. Persist and your bank should settle in full.

Some third-party claims handlers offer to take care of the whole process for you but be warned - they will take up to 40% of your money as their fee. There is no need to go to a claims handler when you can do it yourself and keep all of the money. It’s a simple process that won’t take up hours of your time. All of the information you need plus template letters for every stage of the reclaim process are available at www.which.co.uk/bankcharges.