Home > Financial > Your Rights On Bank Overdraft Charges

Your Rights On Bank Overdraft Charges

By: Chris Nickson - Updated: 28 Feb 2012 | comments*Discuss
 
Overdraft Charges Banks Fsa Court Case

Overdrafts are nasty things we all know that. If you dip into the red in your current account on occasion without having agreed an overdraft with your bank, it can be a costly business. If it happens often, it can prove extremely pricey.

The banks charge what can often seem exorbitant amounts in administration fees to cover the payments – in fact, what they’re charging for is notifying you that you’ve gone overdrawn. Lately, though, there’s been a revolt against that, and often the banks have refunded charges they’ve made customers pay – often a few thousand to each customer. So what exactly are your rights regarding overdraft charges?

What the Bank Can Do

If you become overdrawn in your account, your bank is legally allowed to charge you the administrative costs of letting you know about the situation. It’s not uncommon for banks to charge up to £30 for the service. Unfortunately, no legal limit has been set on what the banks can charge. But even at £12, if the bank is making a profit on its actions, it’s actually in contravention of the law.

It can charge for every overdrawn transaction, Charges also apply if you exceed your authorised overdraft limit, or if your building society or bank won’t honour a payment you’ve made because there are insufficient funds in your account. In some cases where people have a number of direct debits due and there’s not the money in the account, those charges can run into hundreds of pounds over the course of a month.

What You Can Do

You can claim for what you feel are excess charges by your bank over the last six years. If you’ve kept your bank statements (and you always should), then what you need to do is go through them, highlight all the bank charges for exceeding your overdraft, and total up the amount.

However, it’s a simple fact that many people don’t keep their statements. You can obtain them from your bank, although they will charge you for them – which they have every right to do.Once you’ve established the final figure, you should write to you bank or building society, claiming back the excess charges. Plenty of people have done this, and have reclaimed a lot in charges – several companies have been set up to help, and a number of newspaper campaigns have made people aware of the situation. So many people have claimed back charges, in fact, that it’s cost the banks a great deal of money.

However, because of a court test case on the legality of these charges that’s due to begin in January 2008, no banks will resolve any new matters before that case has finished; the most they will do is acknowledge receipt of your complaint. This has been done with the agreement of the Financial Services Authority.

For the future, a lot will depend on the outcome of this court case.If you’ve made a claim with your bank and they’ve offered to settle, that offer will stand, and you have two months in which to accept or reject it. If you’ve already accepted what’s called a “full and final settlement” offer, you will receive that, and you will have to right to claim for any other charges, depending on the court’s decision.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • Norman kaid
    Re: Dealing With Cowboy Builders
    Please please avoid andrew oates liverpool of landscape industries he took £3000 from us left our garden a right mess and fled…
    25 October 2020
  • RealInvestor
    Re: Dealing With Cowboy Builders
    Cris Webber, from Aberdare/Mountain Ash, trades as 'CSW Construction' is a liar, thief and fakes certificates and work done. He is…
    19 October 2020
  • Manda
    Re: Faulty Goods
    I purchased 2 leather sofas in October 2019 to find 6mnths down the line it was peeling and the arms wer cracking they came out to view it they new…
    16 October 2020
  • Paul b
    Re: Dealing With Cowboy Builders
    The unfortunate victims of James mcginity please take him to court he’s done this over and over again I worked for him and his…
    13 October 2020
  • Helen
    Re: What If Your Plumber Makes Mistakes?
    My plumber replaced shower outlet with a design which quickly blocks and is difficult to clean. Should he return to…
    12 October 2020
  • chi
    Re: Dealing With Cowboy Builders
    Avoid Ademola Atobaru from J.Mays Construction Ltd. He did not treat walls before painting, the paint started to peel of…
    12 October 2020
  • Shah
    Re: Dealing With Cowboy Builders
    AVOID AVOID AVOID Mr KAMAL AL WADI WHO CALLS HIS COMPANY S&A Renovation his contact is Mr Mohamed Kamal Alwadi 180 Grove Road…
    11 October 2020
  • moments
    Re: Council Houses - Your Right to Buy
    hi my mum is 80 in a 3 bed council house, my son who is 40 has lived with her for 20 years , can he buy the property , he…
    10 October 2020
  • moments
    Re: Council Houses - Your Right to Buy
    hi my mum is 80, and my son who is 40 has lived with her all his life, can my son buy the house its council, he isnt on…
    10 October 2020
  • EBM
    Re: Dealing With Cowboy Builders
    Avoid JAMES PAUL McGinnity at all costs! He is trading under the name of JPM Construction as a sole trader. He has conned us of a…
    9 October 2020