A guide to claiming back bank charges

Most of us have been hit by a bank charge once in our lives and most of the time, we just suck it up and move on. But sometimes those charges can escalate and before you know it, you could be caught in a cycle of constantly owing money – which quite honestly, is stressful and you could probably do without the hassle. So if you’re stuck in a rut or you genuinely think what you’ve been charged is unfair then here’s what you can do about it.

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Common types of bank charges

Banks charge us for all sorts of services – whether that’s using our cards abroad or charging us for a packaged bank account such as one that includes insurance policies. But the charges that tend to sneak up on you are the ones that you might feel are unfair – like being charged for being overdrawn (even by a few quid) or being fined for ‘returned items’ which is a polite way of saying your payment’s bounced.

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What charges can I dispute?

There’s no set list of things you can dispute and those you can’t. It comes down to whether you genuinely think you’ve been unfairly charged. The emphasis should definitely be on ‘genuine’; you can’t complain if you’ve made a mistake (our guide to budgeting could help with this).

If you decide you want to make a complaint and reclaim unfair bank charges, then you should put together your case and present it to your bank first through their official complaints process. They have up to eight weeks to come back to you with a final decision on your complaint If your bank doesn’t respond within that time or give you the answer you’re hoping for (or you think it’s not fair) then you can take your case to the Financial Ombudsman Service and they’ll look into your case for free. You won’t be able to go straight to the Ombudsman; you need to have approached your bank first to give them a chance to resolve your issue.

Of course, if the Ombudsman doesn’t support your complaint, then you can take it to the courts – this is the last resort and once you’ve been to court you won’t be able to go back to the Ombudsman.

Can I make a case to reclaim bank charges?

If you fit into one of these scenarios then it could be worth your while, just bear in mind that you’ll need to show evidence for anything you say (such as if you lost your job which made things difficult financially):

  • Are you in financial hardship? This applies if you’re struggling with all of life’s essentials – your rent, mortgage, food, utility bills and council tax; it also includes problems covering debt repayments such as loans or credit cards.

You might have recently lost your job or had to take a pay cut or perhaps your partner’s become ill and now there’s only one wage coming in. Financial hardship can creep up on us at any time, whether it’s dealing with a disability, illness or being forced to permanently live on credit – if this is the case, don’t be afraid to ask for help.

  • Are the charges disproportionate? If you were £10 overdrawn, then you might be disgruntled to get a fine for £50 and feel that the small amount you were overdrawn by doesn’t warrant such a hefty charge. This situation doesn’t automatically give you a reason to make a complaint – it really depends on the circumstances. So if you’re a good customer with a previously unblemished record of money management then it would be reasonable for you to be more than mildly irritated. But, if you’ve got a history of slipping into your overdraft and generally being all over the place with your cash then it might be hard for your bank to feel sorry for you.
  • Charges are reinforcing a vicious cycle – this can happen if you’re continually being slapped down back into your overdraft and into debt because of charges. These sorts of cycles usually go alongside being in financial hardship.

I think I have a genuine case, what next?

If you think right is on your side and you want to do something about it, then the next thing to do is to work out how much you’re owed. You should do this by gathering information on all the fees and charges applied to your account. You may need to ask your bank for this information – but make it clear that you just want a list of charges and not a list of transactions, otherwise they’ll just send you a bank statement (which you might have to pay for).

If they aren’t being helpful you do have a legal right for this information under the Freedom of Information Act – there’s a fee for making a request under the act (currently £10) but it might speed things up if you feel ignored. The next steps are:

  • Make a case directly to your bank. Set out what your complaint is and why you think it’s unfair. If you’re claiming financial hardship, tell your story honestly and if you have evidence – then all the better.
  • Follow it up to make sure your correspondence has been received – your bank has eight weeks to look into it.
  • Your bank will come back to you with a solution. The best case scenario is that they refund you all the charges. Alternatively, they may come up with a compromise such as partial refund or write off the debt you owe (taking you back to zero). They might ask you for more evidence and ask you to fill in some forms – this is usually if you’re in financial hardship because they’ll need to clearly understand your income and expenses.
  • If you’re not happy with the solution, then take your case to the Financial Ombudsman and they will help you for free.
  • Take your case to court, if the Ombudsman doesn’t support your case, you can take it to court, this is likely to be expensive and risky so think very carefully before going down this route (you have been warned).

Finding a current account

Of course the best way to avoid charges in the first place is to find a current account that meets your needs which may include an interest free overdraft. Make sure you understand all the terms, conditions and charges - that does mean reading the small print. So start searching current accounts at comparethemarket.com

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