For many years, banks have been issuing punitive charges that are not reflective of their costs. In certain instances, this is unlawful, and you are able to challenge the charges, demanding not only a full refund, but also interest.
It is nothing new for banks to charge for bounced checks and overdrawn accounts. But it is not fair for banks to fine customers in an excessive fashion. Anytime a bank charges you, the amount charged should be reflective of their own costs – and nothing more.
The problem is, the legality of such charges has not yet been proven in high court. But this can work in the interest of consumers. This is because the last thing banks want is to have to go to court, risk the possibility of a ruling being found against the bank, and then owing billions of pounds to consumers and having to spend years investigating their banking practices.
This issue was raised in the year 2006 by the Office of Fair Trading. The Office stated that credit card companies should apply charges of no more than twelve pounds per violation, instead of the thirty pounds that was becoming the norm. Credit card companies have now had to comply with this new regulation.
If you feel that you have become subject to excessive bank charges, then you have every right to complain and ask for a refund – in addition to interest. By law, this is limited to the last six years. Keep in mind that you can only appeal against excessive punitive fines – not the standard charges for operating your bank account. Your credit score should not at all be effected by this process. Banks and other lending organizations only advise credit reference agencies of non payment of credit repayments and of loan or credit applications.
Challenging Bank Charges
Below is a set of tips you may wish to follow in the event that you find yourself having to reclaim excessive bank charges.
Open a new bank account.
It is possible that your bank will close your account after taking exception to your claim – no matter whether the pay out ultimately claims or not. That is why it is vital to have a bank account sorted out in advance, just in case. That way, you can readily re-arrange your direct debits, standing orders, and the place where your wages are to be paid – and rest assured that you are not leaving yourself vulnerable to financial problems.
Add up all the bank charges that have been made against you.
You should make a list of all the bank fines that have been levied against you in the past six years. This should be for closed accounts, as well as active ones. If you have not been able to keep all your bank statements for the last six years, then you are entitled to write to your bank and ask for details on all the charges that have been levied against you during that period. Here is a sample letter requesting your bank to send you this info:
A.N. Other
Your Address
Data Protection Officer
Your Bank
Your Bank's Address
Today's Date
Dear Sir/Madam Re. Account number: [Your account number]
Please consider this letter to be a formal request for a complete list of all the default charges for direct debits, unauthorized overdrafts, bounced checks and standing orders paid from the above account over the last six years.
Should you be unable to provide this information, I will accept a copy of my statements for this period.
I am aware that statements on their own are not covered by the Data Protection Act 1998, however, I’m not requesting the statements, but the charge details, which I am entitled to do so by law.
As you are obliged to reply under the Data Protection Act, I anticipate a response within 40 days.
I have enclosed a check for the maximum statutory charge of £10.
Yours faithfully
A.N. Other
After you have all of this info at your disposal, you should write to your bank and demand a full refund – in addition to interest. If this were a court ruling, you would be entitled to eight percent interest per annum from the date you were deprived of that money. You should ask for this – you never know, you very well may get it. Such a request may also encourage the bank to offer the payment without interest to thus bring your appeal to a quick conclusion. You should keep in mind that the bank is not, in fact, obligated to pay you interest, since this is not a court order. Below, you will find a sample letter requesting a refund of bank charges without interest.
A.N. Other
Your Address
Customer Care
Your Bank
Your Bank's Address
Today's Date
Dear Sir/Madam Re. Account number: [Your account number]
Please consider this letter to be a formal request that you repay all default charges that have been applied to my account. I do not believe these charges reflect the true cost to yourselves of the account entering an unauthorized overdraft.
The charges total are £[xxx].
I believe I have been unlawfully deprived of the money and therefore ask that you repay me the full amount. Please find a below a full list schedule of the charges. [List details of charges here]
I look forward for a full response to this letter within 14 days.
Yours faithfully
A.N. Other
If worse comes to worse, you can always threaten court action. Below you will find a sample letter for those worst case scenarios:
A.N. Other
Your Address
Customer Care
Your Bank
Your Bank's Address
Today's Date
Dear Sir/Madam Re. Account number: [Your account number]
I refer to default charges applied to my account amounting to £ [xxx], which I requested a refund.
I wrote to you on [date], requesting payment in settlement of my claim.
As I have not heard from you (or have not received a satisfactory response) I am writing to inform you I intend to claim the above amount and court fees through the county court.
This is based on the Unfair Terms in Consumer Contracts Regulations, as I believe these default charges are unfair and not reflective of your costs.
Please find a below a full list schedule of the charges. [List details of charges here]
I look forward for a full response to this letter within 7 days, otherwise I will commence court proceedings to reclaim my money.
Yours faithfully
A.N. Other
Bank won't refund charges, What Next?
Finally, if you still have problems getting the bank to pay you a refund, you should complain to the Financial Ombudsman Service or consider taking the bank to small claims court.
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