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
  • Shannon
    Re: A Guide to the Consumer Rights Act 2015
    I purchased a carpet February 2019. The carpet looks horrendous now, it's all matted and different shades. I was…
    13 August 2020
  • botched nose
    Re: When Cosmetic Surgery Goes Wrong
    the hospital group . i had a nose job by marcos sfozza .he botched it . any one else had the same done ? i'm pursuing into…
    10 August 2020
  • botched nose
    Re: When Cosmetic Surgery Goes Wrong
    this is for sj . comment . i had a nose job back in 2008, but i wasnt told by my surgeon that he cut the bone to make shape ?…
    10 August 2020
  • Gaby
    Re: Dealing With Cowboy Builders
    My 95-year-old great aunt was charged £500 for an approx 6 ft run picket fence. In less than 6 weeks the “carpenter” has already…
    10 August 2020
  • Cowboys
    Re: Dealing With Cowboy Builders
    Anyone having issues with Sean Stanway and Kyle Stanway email the address below with info. letmeknowtstoke at aol dot com
    10 August 2020
  • Tee
    Re: Dealing With Cowboy Builders
    Never use Darren Edward's of Swe Builders from Rushden. He trades under lots of different businesses to. His business is…
    8 August 2020
  • John
    Re: The Structure Warranty on My Sofa?
    Hi, I bought a 2 &4 seater couch from ScS 21 months ago paid for extra insurance cover, found out this morning that one…
    8 August 2020
  • Kev
    Re: Dealing With Cowboy Builders
    Never use Sean and Kyle Stanway from Tunstall Stoke on Trent. Took money for materials during lock down never delivered materials…
    7 August 2020
  • Tracy
    Re: A Guide to the Consumer Rights Act 2015
    Hi, I bought a sofa 10 months ago via Amazon... It was from one of their 3rd party sellers.... Its has now fallen…
    7 August 2020
  • Kim
    Re: When Your Hair Do Goes Wrong
    My friends just had a weave done to cover her alopecia. The weave looks like a wig rather than natural hair (expected natural…
    6 August 2020