If you feel you have been charged excessively by your bank, either in the form of overdraft charges or other default fees, you can ask to have them returned to you. A simple Google search will provide a plethora of claims management companies willing to apply on your behalf, for a hefty fee or percentage of any win.
However, following a Supreme Court ruling in 2009 brought by the Office of Fair Trading (OFT), which found in favour of the banks, it is much more difficult to reclaim bank charges than simply writing a letter and expecting a cheque. The Financial Ombudsman states that since the ruling they will not involve themselves with ‘template’ or ‘standard letter’ formats, but will continue to consider any extraordinary cases on their own merits, in terms of fairness.
One of the only avenues to be successful in reclaiming bank charges, then, is to prove that you suffered (or are suffering) from financial hardship as a result of the charges, and/or that you were treated unfairly by your bank.
Who can reclaim bank charges?
Any banking customer can ask their bank directly if they can have a refund of their charges. You do not need to use a claims management company – in fact, your claim may be weakened if you do. Your plea is more likely to fall on sympathetic ears if you have been a loyal customer for a number of years, you have suffered financial hardship because of the charges, or if you can show that the charges were disproportionate to your actions (for example, you only went £1 overdrawn and were charged £12).
It is always best to write to your bank, rather than to phone – that way you have some evidence of the correspondence. If you are lucky, you may get a refund of your fees in the form of a goodwill gesture, but the banks are not obliged to do so.
There are other resolutions your bank may offer you, apart from a full refund. These can include:
- A partial refund. You may be able to speak to your bank to increase this amount if you are not happy, but again they are not obliged to do so (unless you have a valid case).
- A full refund, but the bank insists that you use the money to pay off any debt (overdraft) you have with them. This would be considered fair by the Financial Ombudsman, as the bank is effectively putting you back to where you were before the charges were levied.
- Financial help other than a refund, which can include barring any further charges for a period of time, or placing you on a payment plan to give you the opportunity to pay off your debt.
If your bank rejects your decision outright, but you feel you really have a valid case, there’s a chance that you received the bank’s standard template letter for such requests. If so, a second letter outlining your case more firmly, and stating that you plan to go to the Financial Ombudsman if it cannot be resolved at this stage, may be the impetus needed for you to be successful.
What if I am not happy with my bank’s decision?
If you feel you have a valid case and your bank has refused to refund your charges, offered you something else which you do not consider sufficient, or they have not responded to you within eight weeks, you can send your case to the Financial Ombudsman for them to consider. However, it is worth noting that you are unlikely to be successful if you are simply stating that you went overdrawn and were charged, or that the overdraft interest was too high.
The Financial Ombudsman will assess your case if you suffered, or are suffering from financial hardship because of the charges. If you informed your bank of this at the time, this will go some way to strengthen your case. In this context, financial hardship includes the following:
- You have recently lost your job
- You have recently become disabled and your finances have suffered as a result
- You are finding it difficult to pay for basics, such as food and household bills
- You are unable to pay back money that you owe
- You are constantly living off credit and need to apply for more
- You regularly need to make credit card cash withdrawals
- You regularly go over your overdraft limit
- You have gone into bankrupt or debt management
- Bank charges have made your financial situation worse
The Financial Ombudsman will investigate how the bank helped you in your financial predicament, and they will assess whether this was sufficient in the particular circumstances of the case. They will also assist in cases where the bank charges were applied in error, or were not applied in line with the terms and conditions of the bank account.
You can send your case to the Financial Ombudsman in a variety of ways, including over the phone, via an online form, or typing it all up in a Word document and emailing it to them. It is important that you include as much detail as you can – and include some documented evidence, ideally – outlining your financial situation at the time and all the charges that were levied upon you.
What if I am not successful with the Financial Ombudsman?
The Supreme Court found in 2009 that bank charges can’t be considered ‘high’, and that the Financial Ombudsman should assess your case based on fairness. If they find there was no case for the banks to answer, you are highly unlikely to be successful with your claim. If you vehemently feel that you have a strong case, then you could take your case to court. Be warned though, if you lose, you could find yourself liable to pay court costs, which may further exacerbate any financial difficulty that the charges caused in the first place.
Reclaiming mis-sold packaged account fees
This is different from claiming generic bank charges, which cover overdraft and other default fees. Packaged accounts are current accounts which offer you certain benefits or extras for a monthly fee. These extras can include things like breakdown cover, travel insurance, phone or gadget insurance, or preferential rates on loans or overdrafts. They can be very useful accounts, as they provide a ‘package’ of goodies for a single convenient, and usually reasonably priced, monthly fee. The advice when looking for such an account is always to assess whether you need the cover (or have it elsewhere), that you are eligible to claim on it, and whether it is value for money when you work out all the benefits separately.
You cannot claim the packaged fees back simply because you did not claim on the insurance it offered – after all, that is true of most of the insurances we take out. In order to be in any way successful with a claim for claiming fees back on a packaged account, you will have to be able to prove that you were mis-sold the policy in some way, and that one of the following applies (or a similarly weighty argument):
- You were not told about the account at all. You were not informed by the bank staff that your current account had been upgraded to a packaged account (or about any of the benefits it offered), and you only realised when the money was taken out of your account every month.
- You were sold the account under pressure, without receiving any information about it.
- You were not given a choice about opening the account. Bank staff told you that you had to take it out, in order to be eligible for another product (such as a mortgage, loan, overdraft or savings account), or you were told that you would suffer some hardship if you didn’t take it out (it would have a detrimental effect on your credit rating, for example).
- You were not eligible for one or many of the benefits on offer. If the packaged account was recommended by the bank, did they assess whether you would be able to claim on any of the policies? For example, this would be relevant if you were over the age of 70 when you opened the account, and the travel insurance only covered those under the age of 70.
- You were not told that you had to register or activate certain features – for example, providing details of your mobile phone or car registration for insurance and breakdown cover respectively.
- The price of the packaged account increased and you were not informed beforehand.
- You were told you had to keep the account open when you asked to cancel it.
How much can I claim?
If you have been mis-sold your packaged account, you can claim for a return of all the fees you have paid for it. You can include interest payments (at 8% per annum, which is akin to what you would be able to claim if were a court matter).
Who should you complain to?
Your first port of call should be your bank. Write a letter outlining your situation and why you are claiming back the fees. Include as much information about the sale of the account as you can, as this can add credence to your claim. Like with the generic bank charges, it may be the case that the bank refunds you in full at this point.
What if I am not happy with my bank’s decision?
If you believe you have a valid case, but the bank has rejected your claim or offered you an alternative that you don’t think is sufficient, you can escalate your case to the Financial Ombudsman, who will assess your case on its merits. They will need to know what you were told about the account when you opened it, and they will assess whether the bank did enough to assess your need/desire for the benefits and whether you were eligible for any or all of the cover.