Just because the High Courts ruled that the Financial Ombudsman couldn’t assess bank charges for fairness it doesn’t mean you can’t get some money back
Did the banks kill your piggy?
So far, over a billions pounds have been paid back to bank customers who were unfairly charged for ‘misdemeanours’ such as being overdrawn. The OFT put up a good fight in the name of banking customers but, ultimately, the high courts decided to rule in favour of the banks. So where does that leave you?
You’ll probably be quite surprised to learn that it is still possible to claim some money back from
champagne charlies banks. A word of caution: don’t EXPECT to get any money back. The banks are under no obligation to give you anything but it’s worth a try.
Unfair Bank Charges: The Background
Over the years, many Britons have been subjected to some incredibly unjust bank charges. Going overdrawn, having a failed direct debit or watching a cheque bounce down the street like a lunatic on a space hopper have resulted in charges of up to £40. Now, if that’s not a rip off then I don’t know what is.
Sadly, many bank customers started to see the fines as almost a part of everyday life. But not everyone was happy to simply bend over and take what the banks had to offer. Complaints to the Banking Code Standards Board rocketed. The main causes of ire were the spiralling interest rates and exorbitant charges.
The hardest hit were low income earners with relatively small amounts of savings. Banks charged £20 for sending a letter to tell you that your account was in arrears (Duh! Thanks but you probably knew that already). On top of this you were then slapped with an additional charge for being overdrawn.
At this point, I’d like to add that most of the banks have been bailed out by the tax payers of this country. Talk about having a monopoly!
Let’s Take A Look At How To Claim Back Bank Charges
If you’re facing financial hardship or you can prove that the charges levied against you are excessive then you have a chance of getting the Financial Ombudsman involved. If this happens, or it looks likely to happen, you’ll have a better chance kicking some arse and getting some money back.
Are You Eligible To Claim?
The Ombudsman has made a statement concerning your eligibility to make a claim. Basically, if you’ve been treated either unfairly or harshly then you are more likely to have your claim looked at. The Ombudsman will look at your case even if you’re no longer in debt but were struggling at the time the charges were imposed.
Do you fit into any of the following categories?:
Being broke is no fun whatsoever. What’s worse is when, in effect, you’re being fined for being broke! Fortunately, most of the banks shot themselves in the foot by signing up for the Lending Code.
This code states that all customers must be treated fairly and with consideration for their personal circumstances.
If you meet one or more of the statements below then you have a good chance to making a successful claim:
You can’t pay for the basics e.g. food, gas bills, electricity bills, mortgage, etc
You can no longer service your existing debts such as outstanding credit card payments and loans.
You bank balance is severely impacted by the charges you’ve been hit with.
Income drop – this has to be quite significant.
The Charges Are Unfair
If you’ve gone into the red by a few pounds and then been hit by a whopping £35 charge then you may have a case. Disproportionate charges are unfair at the best but if you’re also having financial troubles then could well get the backing of the Ombudsman.
Are You Stuck In Cycle of Debt and Charges?
This is the reverse of a debt snowball. Instead of slowing paying off your outstanding loans and credit you’re finances are feeding ever higher interest payments and penalty charges. If you’re in this situation you stand a higher chance of getting the Ombudsman to back your case.
How To Claim Back The Charges
Getting your money back from the banks is not quite as straightforward as issuing them with a strongly worded letter (you only have to see how many times the United Nations tried this trick to know this won’t work).So, before rush out to your bank and start demanding money back from them there are a few things you need to do.
Look For Excessive Charges
By excessive I mean disproportionate charges you’ve been hit with. Take my earlier example of being overdrawn by a few pounds. Did you get hit with a fee for going overdrawn? Did a letter arrive the next telling you that your account was overdrawn AND that you’re were being charged an extra £20 for the ‘pleasure’ of receiving the letter? Now that’s disproportionate!
Going a step further, look for large, daily fines you might have been hit with. Again, if they massively at odds with the level of your ‘crime’ then make a note of it.
Write Down What You Think You Are Owed
Time to get your calculator out and start sifting through all your old banks statements. Look for anything that you consider excessive.
Now, if you’re like me, then you probably don’t keep your bank statements for more than a few months. This shouldn’t be a problem. If you have internet banking you can easily download and print off all your statements. Alternatively, you can import them into one of these free budgeting applications and search for the charges your bank has applied.
If you don’t have internet banking you’ll need to ask your bank for a list of the charges they’ve applied to your account. Make sure you ask for details of:
- The amount
- The date your account was charged
- The reason for the penalty
Send the request for information in a letter (ideally, send it guaranteed delivery and email your bank a copy as well). The bank then has 40 days in which to reply. If you haven’t heard anything in a couple of weeks give them a call. Whatever you do, don’t let them try to give you the brush off.
By law, the bank is obliged to supply you with this information but they can charge you a nominal fee of £10.
Note: if you need to request printed copies of your charges make sure you quote the Data Protection Act in your letter. If you don’t the bank may try to charge you a higher fee for the paperwork.
Note: Make sure you ask for a list of charges NOT statements otherwise the bank will charge for every statement they send. Here’s a quick sum: £10 per statement, 12 statements per year = £120!
Claiming Back Your Bank Charges
Once you have all the information, simply write a letter and ask for the money back. If you need any help trying to work out what needs to go into your letter there are two claims templates a here (first letter) and here (second letter). Fill in all the relevant sections of the template then post it.
Make sure you give details of how the charges have hurt your finances.
After a few days, give your bank a call and make sure the letter arrived.
Keep a record of all conversations and letters. Note the date, time and name of the person that dealt with your enquiries.
Wait For The Banks Reply
The bank should respond within two weeks. There are a number of options on the table:
If you’re lucky or you have a truly compelling case the bank will offer you a full refund of all charges. If your claim is relatively small and you have a good case for making the refund request you have a good chance of getting all your money back.
In most cases, claimants have been offered partial refunds (the average being 6 months worth of charges). This is the offer you’re most likely to receive. It’s up to you to decide wether to accept, decline or start haggling like a seasoned market trader.
If you accept then take your money and run. If you’re not sure you can start haggling e.g. you thinkg you’re owed £1,000. The bank offers you £200. If that’s not enough make them an offer that’s will keep both camps happy. Offering to settle for £500 might be enough to get them to agree.
Your Claim Is Rejected
The banks have a nasty habit of automatically rejecting claims no matter how reasonable they may be.
DO NOT GIVE UP! They may have said no but when has that ever stopped you? Write a new letter telling the bank that you’re are going direct to the Ombudsman but offer them the chance to settle without going down this route.
If you think your case is strong and the bank still refuses to play ball it’s time to…
Write To The Ombudsman
If it comes to this then you have to emphasise the point that you’re contesting the fairness of the charges. The Ombudsman’s office will reject ‘templated’ claims so write a letter of complaint by filling in this form on FOS site.
To avoid have your claim rejected o. As with any attempt to reclaim bank charges, you will have a far better chance of getting money back if you’ve suffered from financial hardship as a result.
What Information Should You Put In The Complaint Form?
Everything that’s relevant to your case but make it personal – not Rambo vs bad cop personal – and highlight any hardship you may have suffered as a result of the charges. Be honest and include all the facts but don’t go over the top as the Ombudsman isn’t interested in your great love affair that went sour – they want the facts.
The Financial Ombudsman Service will then send you a letter confirming that they are looking into your case. If they need more information they will contact you.
What If The Ombudsman Says No?
Unless you have balls of steel then it really is the final curtain for your claim. There is no appealing the Ombudsman’s decision – ‘the man from FOS, he say no’. If you’re adamant that the bank have shafted you (and who isn’t?) then your next stop will be the courts.
If you go down the path of court action then, in the words of the great Baden Powell, ‘be prepared’. You may have to pay money to take this course of action and you’ll need to be prepared to do a lot of research and argue you case.
One final point about the British legal system: it’s slower than a tortoise going for an amble through the park. In some instances, cases have taken a couple of years just to get through the system and in front of a judge!
Reclaiming Bank Charges Q&A
I’ve listed some more information on what, exactly, you can claim back below:
What charges can be reclaimed?
Before you start down the claims path you need to make sure that you’re asking to have only certain charges reimbursed. Only fees that are excessive and go above and beyond your agreed charges should be claimed i.e. unfair overdraft fees, charges for cheques that bounce or being penalised for going over your overdraft limit.
You can’t claim back fees that are an agreed part of you account.
Can You Claim Back Charges On A Closed Account?
Yes, you can. Even if your account has been closed for a number of years, you can attempt to reclaim any excessive charges on that account. By law, the financial organisations are required to retain your personal account details for years so you should have no trouble getting a list of charges from them.
Can I Make More Than One Claim?
Yes but, in every case, you will need to go through the same process as I’ve detailed above.
How Far Back Can I Claim?
You can request a repayment of charges that go back years. Be prepared to show, across all the years you claim for, that your finances were in poor shape. We all go through highs and lows but it’s the low’s you need to concentrate on as you’re most likely to get a refund on the times when your finances were at a low ebb.
To be honest, it would seem that most claimants have found that they receive some not all of their claims.
Once you realise there’s a problem you
Technically the Ombudsman can only help with claims within three years of when you realised there was a problem, so if you’ve been waiting, claim now.
Can You Charge Interest On Claim?
If your case goes to court and you win, yes you can. In the current legal climate, you are entitled to add 8% interest (flat rate). Adding a request for this additional interest when you first make your claim is the wisest course of action (even though you’re not actually entitled to it unless you win a court case against your bank).
It’s easy to say but your best bet for avoiding charges is to keep your finances in tip-top condition. The less you rely on the banks to finance your lifestyles through their overdrafts the less likely you are to be hit with punitive charges.
As Dame Shirley Bassey once sang, “It’s all just a little bit of history repeating…”.