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Reclaim Bank Charges

It's still possible to get £1,000s back
Get your money bank from the banks

Rumours of the death of bank charge reclaiming are greatly exaggerated. People still regularly get some of their excess charges back. They can add up to £1,000s, joining the £1bn already repaid.

Yet reclaiming the up-to-£35 a pop charges for breaching your overdraft is now primarily for those in financial hardship. This is a step-by-step guide to doing just that, including free template letters.

Rumours of the death of bank charge reclaiming are greatly exaggerated. People still regularly get some of their excess charges back.

Reclaiming the up-to-£35 a pop charges for breaching your overdraft is now primarily for those in financial hardship. This is a step-by-step guide to doing just that, including free template letters.

While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can't assume responsibility and don't accept liability for any damage or loss which may arise as a result of your reliance upon it.

Bank charges: Key info

Bank charges key infoReclaiming bank charges from current or closed accounts specifically for busting your overdraft limit, bounced cheques and direct debits was once an open door. You simply threatened to take a bank to court or the Ombudsman, and it sent you a goodwill cheque for six years' worth of charges, plus interest.

In recent years, charges have dropped to an average of around £15, but you can still be charged up to £35 a pop for going overdrawn. And it may still be possible to get this back.

It's been more difficult since a November 2009 Supreme Court ruling, but some payouts are still possible for those in financial hardship.

If you're reading this after a one-off recent bank charge or a charge applied in error, just call the bank and see if it'll wipe it. This guide is aimed at those who've had a number of charges that have snowballed over a longer period. For many people, especially those who've had charges on charges, payouts could still be possible. Done right it's free, and risk-free.

Some inspiration before you begin

We continue to receive reports from MoneySavers saying they're getting their money back. Here are just a couple of examples:

I reclaimed my account fees by sending your template to my bank, they called to check a few details. A day later they refunded £1,560 straight to my bank account. Without your help I would still be paying bank charges for my overdraft...Thank you!

May 2014

Wrote to HSBC in January relating to £583 of overdraft charges from last year when I lost my job and was living on benefits. I received a letter today saying they'll refund £250 as a gesture of goodwill.

February 2013

Report your own successes and failures in the forum

How easy will claiming be?

There's no guarantee of winning. Yet for some, primarily those in hardship, there's still a risk-free, cost-free process which could see you get your charges back.

The independent Financial Ombudsman Service will still look at certain cases (see the step-by-step process below), and there's no risk in doing so. Yet even so...

The safest thing to do is plan your finances on the fact you WON'T get a payout, but cross your fingers in the hope you will.

Some find battling their bank stressful, so go in with a positive mind. Even if you don't get a refund, don't feel let down.

Remember the best way to avoid bank charges is not to have them in the first place – for help avoiding them, see the Bank Charges Compared guide.

Step-by-step reclaiming guide

Reclaiming bank charges has always been an art, not a science. In many ways, this guide is about negotiation. It's designed to try to get back the money we believe has been unfairly taken off you as quickly and swiftly as possible. It's important to remember the basics, though:

You want your money back, the bank isn't keen to give it. Yet it's obliged to treat customers fairly and stay within the law.

If the bank believes your complaint could be investigated by the Ombudsman, it may offer a partial settlement - even a full one sometimes - if you just write a letter or two. After all, if it ends up paying out, it's better to do it sooner, and offer a bit less, rather than incur the expense of fighting it.

So acting confidently and pressing your case if you think you've had unfair charges is crucial. If you've a strong case, you could get some of your money back.

Of course, there are no guarantees. While in the early days of reclaiming banks never fought, and often gave a full payout, that's far less likely now. So if you're offered a settlement, think about taking it.

Step 1: Are you eligible?

Financial Ombudsman service logo Before you even start to reclaim, we need to assume your complaint to the bank could be rejected, so you may need to take it further. Most will do this via the free Financial Ombudsman Service. Some may decide to go to court, which is explained later in the guide.

The Ombudsman is an independent service created by Parliament to help settle disputes between financial companies and their customers. The worst thing that can happen is you wait a couple of months and get rejected (read more about it in the Financial Ombudsman guide).

It's free and virtually risk-free, so if you have a chance of complaining there rather than going to court, it's much safer and more desirable. You don't need to go in person, it's just a matter of filling in forms.

The Ombudsman says it's willing to look at specific types of bank charge reclaims (see below), primarily involving severe hardship. If you can go this way, it's a far safer option. It doesn't mean you'll win, but the risk of losing is less.

Who can go to the Ombudsman?

The Ombudsman has said it will only look at cases based on ‘fairness' criteria – in other words, if you have been harshly or unfairly treated. It's specifically noted three different situations where it may take up cases.

They can either apply to your situation now, or at some point in the past. Importantly, if you're no longer in hardship, the Ombudsman will look at how your bank treated you at the time and whether you're still struggling. To help your case, you should have contacted your bank for help when you had the difficulties.

So check whether you fit in one or more of these categories…
  1. You're in financial hardship

    Climbing a pile of pound coins Under both standard banking regulations and the Lending Code (an agreement that all major banks have signed up to) banks must treat you fairly and be considerate if you are in financial difficulty.

    We've used these criteria, as well as guidance from the Ombudsman, to give you some ideas as to what would count as hardship.

    You're likely to have to meet several of these criteria to be successful, not just one, and you'll need to give the bank full details about how you've been affected.

    • Can't pay for necessities.

      You're struggling to meet basic necessities, including your mortgage, council tax, food and utility bills.

    • Can't pay debts.

      You're struggling to make loan and credit card repayments.

    • Income eaten by charges.

      Your income's being eaten up by repaying charges (for example, you're being asked to pay £50 of charges from a £100 weekly benefit income). Note: This doesn't specifically cover the deduction of bank charges from your benefits under the Social Security Administration Act 1992 - this is an urban myth.

    • Payments regularly returned.

      Your payments regularly get returned unpaid as you don't have enough money in your account.

    • Substantial drop in income.

      For example, you've lost your job, started a lower paid job, needed to take parental or carers' leave, your partner has died, you've separated from your partner, you've started full-time education or you/your partner has been in, or gone to, prison.

    • Disability or illness.

      You've needed to increase spending on something due to a disability or serious illness.

    • Going bankrupt or into debt management.

      You're going bankrupt, getting an IVA or debt relief order or are in a debt management plan.

    • Continually living off credit.

      You're living off credit and regularly need to increase your credit limit.

    • Regular credit card cash withdrawals.

      You're using regular cash withdrawals from credit cards to make ends meet.

    • Frequently over your overdraft limit.

      You frequently go over your overdraft limit. In earlier incarnations of hardship rules this was defined as having more than £500 of charges a year – so that seems a good benchmark.

    • Bank charges have hurt your situation.

      The charges have contributed to making your financial hardship situation materially worse.

  2. The charges are disproportionate

    If you unintentionally slipped over your limit by a few pounds and the charge is a lot higher than the ‘offence', eg, you go £1 over but are charged £35.

    The FOS stresses these cases are not "black and white" and those who continually slip over their limit, while not in hardship, are unlikely to be successful.

  3. You are / were stuck in a cycle of charges you can't break out of

    Bank charge cycleThis is known as snowballing. It effectively means you've had charges on charges, so you've been stuck in a trap of not being able to clear charges before new daily or monthly fees are added on top.

    This is very common for those with larger reclaims, and is often the reason why some people are being paid back many £1,000s. Of course, it tends to go hand in hand with being in hardship.

    Which category do you fit into?

    After reading the list above, here's how to decide what's next:

    • You're pretty sure you fit into these guidelines.

      If so, follow the Ombudsman route laid out below.

    • You think you could fit into these guidelines.

      If it's touch and go, then it's worth trying this route as it's safest and you've nothing to lose. You are still allowed to go to court if you lose at the Ombudsman – though you can't go to the Ombudsman once you lose in court.

    • You don’t fit into these guidelines.

      In this case, the only option is to go to court, and that means the landscape's radically different. We need to be honest - while we have a Bank Charges Court Guide which goes into the complex legal arguments you could try, we've not heard of anyone actually winning.

      Success there won't be easy and will involve you using untested legal arguments. There's information in the guide, but do understand it could be very difficult with little guarantee of success. Yet feel free to have a read.

Step 2: How much can you reclaim?

If you're making a new claim, the first step is to find out how many charges you've had (and can therefore try to reclaim). Here's a quick ‘how much?' Q&A (click for the answers):

What charges can I try to reclaim?

Can I try to reclaim if the account's now closed?

Can I reclaim from more than one bank?

Can I try to reclaim new charges if I've had a payout before?

How far back can I reclaim?

Can I charge interest on my bank charges? (Includes bank charges calculator)

Can reclaiming hit my credit score?

What should I do if I don't have old statements?

Now, let's be honest, how many people have years' worth of statements? If you don't have them, don't worry, you've a legal right to force the bank to give you them. Before that, there are a couple of things you can try…

  • Do it online.

    If you use online banking, check out what's available there first.

  • Call or write to the bank.

    Some banks will send you the info if you phone to ask (we've had feedback in the past that sometimes Barclays, Halifax and HBSC have done this) so try this first.

    You can also send a letter to your bank asking for a comprehensive list of all past transactions, including charges (and at this point you may as well try going back for the longest period possible).

Demand your past charges under the Data Protection Act

If the above doesn't give you what you want, you've a legal right to demand the information under the Data Protection Act, though banks are legally allowed to charge up to £10 for it (and banks being banks, they usually charge the full amount).

To speed the process up, you could insert a cheque for £10 as part of your initial request as banks may stall the process by later writing to ask for the money. Of course the counter is that it may send you the information without charge if you don't include the tenner.

Yet there's one crucial fact here…

Never ask for statements, specifically request a list of transactions.

If you do ask for statements you may be charged £10 a time, and over six years that's £720. Yet asking for a list of charges should be fine.

Here's a template to help (and MoneySavers in the forum have kindly compiled bank addresses if you don't know yours):

Banks have 40 days to respond to this request. If you have to wait longer, follow up with a phone call and then report it to the Information Commissioner for a breach.

When you receive your transaction list, go through with a highlighter and find all the relevant charges. You should also be able to note what the charge was for and decide why you think it was unfair.

Step 3: Write asking for your money back

It's now time to contact the bank and ask for your money back.

If you fit into the Ombudsman criteria from Step 1, this is where you use the fairness argument. This is not based on any law, but is about simply telling your story about how the charges have impacted you and caused or worsened your financial situation as well as firmly stating you'll take the matter to the Ombudsman or court if it refuses to hear your case or if it rejects it.

The aim is to make it take you seriously. Yet equally, you need to go into this with your eyes open. Even in the days when banks were paying back millions to reclaimers, almost everyone who wrote got a rejection letter first time. Don't let it faze you, it's a step in the dance. We know from Ombudsman reports some banks use rejection purely as a tactic, regardless of merit.

Free sample letters to adapt and send

Feel free to write the letter to your bank yourself, though below we have sample letters for different circumstances that can be used as a base.

Adapt these letters to your circumstances, and delete all the guidance notes. If you're unsure, ask a friend if it makes sense.

Pick which letter is most appropriate to your circumstances. If you find the letters confusing, then seek any available legal help or speak to advisers at the Citizens Advice Bureau.

The Ombudsman is very keen that people explain why they're in hardship rather than use legal jargon. While this is less important in the letter to the bank, it's good to start here and explain why it's been such an issue. It's to be hoped the banks will be responsible and make their decision based on the Ombudsman's guidance.

So tell your story naturally (and truthfully) and if you fulfil the criteria of hardship do make sure you include points that show it. Here's a short, made up, example...

I lost my job as an electrician in July 2005, and as my wife was ill in hospital at the time things were very tough. Soon we were unable to pay the bills and moved into our overdraft and beyond it. We then started to be hit by charges of £35 a time, which were completely unaffordable. We were trapped, and unable to pay them back.

Tell them about your circumstances, and add any evidence from the time you were in hardship to speed the process up. This could include bank/credit card statements, a redundancy letter, a P45, confirmation of a special payment plan, a letter from a debt advisory service or anything else.

Select which letter you need. Choose 'Reopen complaint' if you need to tell the bank you are now in hardship or have extra charges to add to your claim, otherwise 'Start a new complaint' is likely to be best for you...

What happens next?

You should get a letter back from the bank acknowledging your complaint. Then it has up to eight weeks to deal with it. When your case is dealt with, there are a number of possible outcomes:

  • You're offered a full refund

    There is a small chance your bank will offer you a full refund as a ‘goodwill payment'. It's more likely to happen if you have a small claim or have provided very detailed evidence on how you've been in hardship for the full timeframe you are trying to reclaim for. If it does… hoorah!

  • You're offered a partial refund

    If you're offered anything at all, it's more likely to be a partial refund as a goodwill gesture, such as around six months of charges, but it should depend on your circumstances. The amount should result in you being treated 'sympathetically' plus be a 'reasonable' amount for your situation.

    If you don't think it's enough, call up and ask for what you feel is appropriate – remember this is a negotiation. A quick call saying: “I've had £1,300 of charges, you're offering me £400 – I'll take £800 as it's a fair reflection of my situation." Remember banks have to balance the administration cost of continuing versus clearing this off their books. And you need to factor in your hassle and risk of continuing against getting some cash now.

    If you get a refund, let us know in the reclaims success reports forum thread.

  • It offers a refund but says it should pay off your debt

    You may be offered a refund but told it must be used to pay off the debts you currently have at the bank (whether overdrafts or cards). The Ombudsman has said this is generally acceptable as it's returning you to the position you would be in without charges (and is still a win after all).

    However, if by the bank doing this you are still left in hardship, eg, you have mortgage or utility arrears, tell it. If it doesn't budge, read Step 4 below.

  • It'll ask you to fill in a financial statement form

    If you've told the bank you're experiencing financial difficulties and it's unsure you fulfil the hardship criteria, it may send you an income and expenditure form, or something similar, to complete.

    Fill this in and send it back as soon as possible. Include your original letter once again, adding a line that you've enclosed the info as requested – this emphasises that you're serious and confirms exactly what you're asking for.

    Once you've sent that, you could then get another of the results in this list.

  • It offers to help, but not to refund any charges

    Even if the bank has accepted your word that you're in financial difficulties or does so after you've sent in the financial statement, this doesn't mean it has to give you your money back. It just means it has to treat you sympathetically.

    It could try to help in other ways, such as not imposing any further charges, rescheduling payments or charges to minimise the impact, stopping any debt enforcement action against you or putting you into a payment plan to manage any debts you have with it. If you're not happy with the offer, carry onto Step 4 below.

  • The bank rejects your claim

    By auto-rejecting even people with reasonable claims, the banks succeed in stopping some people either going on to the Ombudsman or taking their claim to court. See below for details on what each means. That's the whole point. Yet whatever it says…

    Don't give up. Call up or write another letter to show you're not going to give up easily. This could persuade it to settle.

    If your first letter doesn't work, before going further you may want to give the bank a call, or write another letter saying you're going to the Ombudsman and you think your case is strong, but would prefer to sort it out quickly. See how that works and carry on if it doesn't.

Step 4: Complain to the Ombudsman

If you haven't been able to negotiate a satisfactory settlement with your bank at this point, then it's time to take it to the Ombudsman.

Here you need to rely on the ‘fairness argument', focusing on the problems charges have caused you, as the Ombudsman has said it is unlikely to consider "templated arguments".

As it's free and there are no negatives apart from a few months' wait, it's worth doing even if it rejects your complaint. It's not guaranteed to get you a payout, but the chances of one are greatly increased if you're in financial hardship.

The worst that can happen is you lose the cost of a few stamps.

How to complain to the Ombudsman

The Financial Ombudsman Service is the official independent financial disputes body, and is completely free to use. It's nothing like going to court and can all be done simply from the comfort of your home – either via the internet or post.

The Ombudsman's job is to settle disputes and see if your bank has looked at your situation properly. If it accepts your complaint, it first goes to the bank and asks it about the situation. If the bank doesn't agree to pay you, the Ombudsman may carry out a formal investigation. It's far more common that a settlement is reached without a formal investigation and adjudication, though.

You can't simply go direct to the Ombudsman, you must always complain directly to the bank first. Then you need to wait eight weeks from the date you sent your initial letter to the bank – however, if you've received a rejection or final response from it, you can go sooner. Don't expect an instant decision though – it can take weeks or months.

It's a deliberately simple process. There's a specially-designed complaint form that you need to fill in, which can be obtained in two ways:

  • By phone.

    Call free on 0800 023 4567 (from a landline) or 0300 1239123 (from a mobile).

  • Online.

    Go to the FOS website, where there are Microsoft Word and PDF versions.

You'll need to fill in and post back a copy of the form to explain your case and so it has a copy of your signature. You should also send copies of any previous correspondence you've had with your bank.

What to write on the complaint form

Honestly state what's happened to you; the Ombudsman has specifically said it's not interested in template letter-type applications. It wants to hear the effect of bank charges on you from a human perspective – so make it as personal and specific as you can (though it needn't be over-emotional – stick to the facts and the impact).

You can also ask for interest to be added to your claim (eg, the 8% you'd get if you were going to court or the actual interest you were charged by your bank of around 20%). After all, if you don't ask, you don't get.

To help, we've written a guide in Word so you can easily cut and paste sections of it and/or print it out and have it next to you as you're filling in the FOS form:

The FOS will then send you a confirmation letter that it will look into your case and get back to you if it needs any more information, but otherwise you can then leave the matter to it to resolve and it'll contact you with any offers from your bank.

If it decides in your favour, its aim will be to put you back in the position you would have been in had you not been treated unfairly. This doesn't necessarily mean your charges will be refunded, it may think an alternative solution is more suitable.

Although the Ombudsman resolves around half of bank charges cases within three months, some do take longer (between six to nine months).

Step 5: If you lose at the Ombudsman

For many people that's it, you've lost and there are no further routes. You can still go to court using the argument charges are ‘legally unfair' (you can't go to the Ombudsman if you've already failed in court though) so this may be an option for some.

You shouldn't undertake this lightly. You'll need to do work and research, and be prepared to turn up in court to argue your point. The arguments are complex and untested and it won't be easy to do. It will almost certainly involve paying a fee and also has a small risk of having costs awarded against you.

The legal argument

In the Supreme Court decision in 2009, the chief judge thought it important enough to say this ruling didn't stop people challenging fairness under Regulation 5 of the Unfair Terms in Consumer Contracts Regulations (UTCCR), which the Supreme Court case did not cover.

We hired a top banking QC to suggest possible new grounds for reclaiming to us but they were just thought papers, and are still to make their full way through court. The first argument uses a different part of the UTCCR, the second a new argument based on the Consumer Credit Act.

While we think the arguments certainly make sense, when the Office of Fair Trading looked at them in 2009, it didn't believe they had a realistic chance of success so wasn't willing to take on another case.

Taking this route is likely to be difficult and there are risks involved, so we've written a separate guide to explain the legal arguments involved.

For full details, read the Bank Charges: Court Claims guide.

Bank charge reclaiming: Q&A

What's so unfair about bank charges, it's in the T&Cs?

Isn't it just a punishment for taking money that isn't yours?

A company has said it can get my charges back for a fee, is this true?

Will charges become fairer in future?

Was the campaign wrong all along?

Where can I get further information – are there other sources?