What can you do?
Recovering bank charges from closed or current accounts from the time your cheques or direct debits bounced, was once plain sailing. By simply threatening to take the bank to court or complaining to the Financial Ombudsman Service (FOS) the public would receive a goodwill cheque to cover the costs plus interest; this is no longer the case.
In November 2009 the Supreme Court ruled it to be more difficult to claim these charges back. However, over the last 3 years pay-outs have still been possible for those in financial hardship. Charges may have dropped slightly over the last couple of year to around £15 for going overdrawn; however it is still possible to be charged up to £35. Don’t give up; similar to people reclaiming the PPI scandal, you may be entitled to this money back.
For those of you who feel you have been unfairly charged by you bank, or received a charge that has been applied in error, don’t let it go, you may be entitled to the money back. By simply calling the bank to check the charge and if it is your first time of going over-drawn or if you feel it is an unfair charge, then explain your case to the bank, they may be able to clear the charge this time. The biggest problem with bank charges is when you receive one, if you don’t pay it in time; the number of charges rack up and begin to snowball out of control. The best thing to do in this case is, don’t bury your head in the sand, when you notice a charge, call your bank and try to come to some sort of agreement. Leaving the situation to escalate will only cause bigger problems in the long run. If you find yourself with many bank charges, fear not, you can still call the bank and you may be entitled to a pay out from the bank.
Are you eligible?
The best way to claim your money back is through the Financial Ombudsman Service. The Ombudsman is an independent service created by parliament to help settle disputes between financial companies and their customers. The worst thing that can happen is you wait a couple of months and get rejected.
You will need to have several of the following criteria to be successful with a claim. You will be required to give the bank full details regarding how you’ve been affected.
- Can't pay for necessities.
- Can't pay debts.
- Income eaten by charges.
- Payments regularly returned.
- Substantial drop in income.
- Disability or illness.
- Going bankrupt or into debt management.
- Continually living off credit.
- Regular credit card cash withdrawals.
- Frequently over overdraft limit.
There are other ways in which you can be eligible to claim back bank charges: if you have gone over agreed overdraught limits by a couple of pounds and the charge is a lot higher than ‘the offence’, then this is a good platform to make a claim. An example of this is by going over your agreed limit by £1 and the charges are £35.
The snowball effect, as described earlier in this article; is where you are trapped in the cycle of charges upon charges and have no way of getting back into credit as the money going in the bank, is eaten up by the bank charges. People can be stuck in a trap of not being able to clear charges before the new daily or monthly charges are added on top. People who are paid back £1000’s in bank charges and interest commonly stem from this “snowball effect”; although in many of these cases, you must meet some of the criteria of hardship, described in the above bullet points.
Write a letter
Now is the time to contact the banks asking for your money back. Be sure to plan your letter out, a well written and thought out letter will certainly get the attention it deserves. Explain to the bank why you believe you should be entitled to claim back or have your bank charges wiped. If you fit the Ombudsman criteria, set out in the above bullet points, this is not the law, this is where you have your time to explain to the bank how these bank charges have impacted you and worsened your financial state.
Explain to the bank in the letter, that if you are not considered or your claim is rejected then you will take your case to the FOS or court. The next step all depends on the strength of your letter and your case, if the bank reject your case, don’t worry; this is just another step in the “dance”. We know from previous FOS reports that the banks use rejection as a tactic.
The next step to the getting your money back is, you will receive a reply from the bank showing acknowledgement of your complaint. The bank now has eight weeks to deal with the complaint, there are a number of different ways in which they will deal with it, and the outcomes are as followed:
- You're offered a full refund
- You're offered a partial refund
- It offers a refund but says it should be used to pay off your debt
- It'll ask you to fill in a financial statement form (easy to fill out)
- It offers to help, but not to refund any charges
- The bank rejects your claim
If your first letter is rejected then try giving the bank another call, explain to them that you think your case is strong and if no action is taken then you are contacting the FOS, try to include that you want the case resolved as quickly as possible. If there is no outcome then proceed to the FOS. For more information contact:
By phone - Call 0800 023 4567 (from a landline) and 0300 1239123 (from a mobile) for free
Online -Go to the FOS website http://www.financial-ombudsman.org.uk/consumer/complaints.htm
If all options have failed then many of us would be obliged to give up as you think the banks word is final; you don’t have to succumb to their tactics of rejecting you to scare you off, you can still contact the FOS or Citizen’s advice for more information. Failing this, the option of court is still there, but you need to be sure you have a case; it is advisable to seek legal advice before lodging a court case.