If you had a NatWest or RBS student current account between November 2002 and March this year and you haven't already been contacted about receiving a refund for wrongly charged interest, you can expect a letter detailing how much you're being refunded by 1 November.

RBS Group, which owns RBS and NatWest, started writing to affected customers from 12 August informing them that they were wrongly charged interest on their accounts. Many have already received refunds.

Further tranches of letters will be sent out on 12 September and 17 October.

The bank says that if you've moved address since holding the account with NatWest or RBS you'll be tracked down using publicly available records.

For help with wrongly applied bank charges, see our Reclaim Bank Charges guide.

Martin Lewis
Get Our Free Money Tips Email!

What went wrong?

NatWest and RBS offered interest-free overdrafts on their student current accounts (and still do). However, some customers were given the option to increase their arranged overdraft limit. If they chose this option they were then charged interest on the larger overdraft.

After a business review in March this year, the banks discovered that terms and conditions of the accounts fulfilled properly on these accounts.

The issue arose in cases where the customer’s arranged borrowing limit exceeded the interest free limit they had in place and this interest free limit was not increased (for a number of reasons) to bring it in line with their borrowing and to ensure that the customer did not pay any interest.

Update Tuesday 6 September: Since we first published this story, RBS Group has been in contact to correct information it previously provided us. An earlier version of this story stated that 1 November was a hard deadline for refunds, that all affected customers could expect to hear from the banks within 14 days of publication, that the banks discovered that terms and conditions of the accounts weren't as clear as they could have been regarding these interest charges and that customers should not have been charged interest on any authorised overdrafts.

Any interest they charged on these authorised overdrafts between November 2002 and March 2016 will be refunded, plus interest.

How do I know if I'm affected?

RBS and NatWest have been writing to all affected customers since 12 August. If you've opened a student current account with NatWest or RBS since March 2016 then you won't have been affected.

'Staff claim to know nothing about it'

A number of our users have tweeted us claiming that frontline staff know nothing about the letters or what to do or say if you think you've been affected.


We put these concerns to RBS Group and it claimed that all frontline staff should be aware that letters have been issued. It confirmed that letters would be sent out during September and October and recommended waiting until the end of this period before contacting NatWest or RBS if you haven't received a letter. This applies even if you no longer hold an account with either bank.

How much could I be refunded?

Affected customers will receive a full refund of the interest they were charged, plus interest of 8% calculated on a daily basis up to the actual date the refund will be paid, from the date you were first affected.

If you're still a NatWest or RBS customer this will be paid into your account with either bank. If not, you'll receive a cheque for the amount of refund you're due.

RBS Group says that typically refunds will be in the tens of pounds, though it'll vary.

Basic-rate tax will be deducted from the 8% interest it adds onto the refund. If you're a non-taxpayer or living abroad, you'll need to contact HM Revenue & Customs to reclaim the tax deducted – if you're a higher- or additional-rate taxpayer, you'll need to contact it to pay more.

RBS Group says that if you believe you may have incurred any additional costs (eg, bank charges) as a result of these overdraft interest charges, you should contact it with further details.

What does RBS Group say?

"When we make a mistake we do everything we can to make it right. It was highlighted after a business review that between 2002 and 2016 our terms and conditions on our student account were not fulfilled. As a result we are refunding all interest charged over that period."

Have your say