Bank Charge Claims and Disputes
All banks apply various fees to manage client accounts or for interest on personal and business loans and overdrafts. These charges are typically added as a percentage of an overdraft or management fee.
Almost everyone has incurred bank charges at some point. However, sometimes they can snowball into a stressful cycle of debt.
Many banks have also recently introduced additional charges to bank accounts, including offering ‘packaged’ bank accounts that can include perks like travel insurance. These accounts often come with a monthly fee and potential interest on overdrafts.
Disputes between customers and banks can arise regarding charges on current accounts, overdrafts, or loans. Common issues include inflated fees for exceeding an overdraft or credit card limits. These are known as bank charge disputes.
If you believe your bank has unfairly charged you, you may be able to make a bank charge claim.
Can I reclaim bank charges?
You can dispute various bank charges if you genuinely believe they are unfair. While refunds are not guaranteed and often depend on your bank’s goodwill, it’s worth complaining if you think you’ve been unfairly charged.
Unfair bank charges don’t include fees imposed for services like using cards abroad or packaged bank accounts if you were fully aware of these charges and agreed to them. Unfair charges are the ones that catch you off guard. If you want to reclaim such charges, you should put together your case and formally present it through your bank’s official complaints process.
Common bank charge disputes
Bank charges that can be a common source of contention between customers and backs, often leading to disputes, include:
Other common issues around bank accounts include issues with business loans, fraud, mistakes made by professionals, financial problems, or disputes between banks.
Am I eligible to reclaim bank charges?
Banks have to treat you fairly, and their products and services should match your specific needs.
Therefore, you may be eligible to reclaim or reduce bank charges if:
You’re struggling to pay their charges
Banks can charge daily interest for using an overdraft and unpaid transaction fees. Usually, there’s a monthly limit on the total charges for unpaid transactions and unarranged overdraft interest (where a payment goes through even if you don’t have sufficient funds).
If you believe a charge is incorrect or unfair, you can ask the bank to review it. In response, they might reduce or remove the charge.
If these kinds of charges are making your financial situation more challenging - e.g you’re struggling to cover necessities, pay bills, or you’ve lost your job - the bank should help you find ways to manage this. For example, they might refund charges or agree to an interest-free repayment plan to help clear your overdraft.
You’re in financial hardship
If you are in financial difficulty, banks must treat you fairly and be considerate. You might be able to reclaim bank charges if:
You’re struggling to pay for necessities;
You’re having difficulty in making loan and credit card repayments;
Your income is being eaten up by bank charges;
Payments are being returned regularly because of insufficient funds;
You’re experiencing a substantial drop in income;
Your spending has increased because of disability or serious illness;
You’re consistently relying on credit or increasing credit limits;
You’re regularly using credit card cash withdrawals to meet expenses;
You’re regularly going over your overdraft limit.
If you find yourself facing financial hardship, you should seek help as soon as possible. These kinds of issues can happen unexpectedly and rapidly spiral out of control. It’s important to know that you aren’t alone and help is available.
You are stuck in a cycle of charges
Some individuals might find themselves in a position where they aren’t able to clear charges before new ones are added. This is sometimes called snowballing.
The charges are disproportionate
You might also be able to dispute bank charges if they aren’t proportionate to what happened. For example if, as a one-off, you exceeded your arranged overdraft by £5 and the bank charged you £35 as a result.
These kinds of claims are generally only successful if the incident is a blip rather than a pattern where the individual regularly exceeds their limits or has payments bounce while not experiencing financial hardship.
You’ve been mis-sold a packaged bank account
Packaged bank accounts come with their perks if you make use of the benefits on offer. However, if you have a packaged bank account that you pay a monthly fee for, and you have no idea what you’re paying for, it might have been mis-sold to you.
You can request a full refund of all the monthly payments you’ve made (plus interest) when you opened the account:
You were told you couldn’t have a free account or weren’t given a choice;
You didn’t want or need the insurance or service included;
You couldn’t use any of the account’s benefits;
You weren’t told how much the packaged account would cost;
You were told you had to open the account to qualify for a different product.
How much could I reclaim in a bank charge dispute?
How much you could reclaim in a bank charge dispute depends on the fees that were applied to your account and how frequently. Generally, you should be able to reclaim the charges.
In some cases, you can try to get interest back on top of your claim, but this isn’t a legal right unless the matter goes to court and you win. In this case, you’d be entitled to add 8% flat interest to the compensation from the date of each charge.
If this is a consideration for you, it’s worth seeking the advice of a money, tax, and debt lawyer to work out how much compensation and interest you can ask for as part of your claim.
When making a claim, you should collect all of the relevant details of charges from your online banking account or paper statements. Alternatively, you can request this information from your bank by asking them to provide a full list of charges applied to your account. This step is really important to understand how much you could potentially claim in a bank charge dispute.
How far back can I claim bank charges?
If you go to court over a bank charge dispute, you can only claim within six years of the charge according to the Statute of Limitations Act (or five years if you are in Scotland).
That being said, if you engage with the Financial Ombudsman, they may recommend claiming as far back as possible. They will look at whether your entire claim is worth pursuing and advise you accordingly.
Can I claim back overdraft charges?
If you think your overdraft charges are too high, you might be able to get some money back. For example, if you were only a little overdrawn and got charged a lot, it could be seen as unfair. However, whether you have grounds to complain depends on the situation.
If you’re usually good with money and overdraft charges are a one-time issue, it’s reasonable to feel unfairly treated if your bank slaps you with a disproportionate fee. However, if you often go into your overdraft and struggle with money, the bank might think the overdraft charge is fair and stick by it.
Can I claim back bank charges from a closed account?
You can still ask for your money back from bank charges, even if the account is now closed and has been closed for a few years.
There are time limits relating to the Statute of Limitations if a claim goes to court, however, which should be taken into account if you’re considering a claim, and technically, the ombudsman can only help with claims within three years of when you realised there was a problem.
How to deal with a bank charge dispute
Banks can make mistakes, and if you think you’re being charged too much or there’s an error, it’s important to act quickly. Sometimes, bank charges push people over their limits, making financial problems worse.
Here are some practical steps you can take to deal with the problem:
Complain to your bank
In the first instance, you should talk directly to your bank. They all have a complaints process. Furthermore, the Financial Ombudsman Service also provides advice on how to complain.
To make a complaint to your bank, you should clearly outline what's wrong and explain why you think the charges are unfair. If you’re claiming financial hardship, share your story honestly and include supporting evidence. You can do this online, by phone, or by visiting your local branch if you prefer a direct approach.
Follow up on your complaint
When you complain to your bank, make sure that your communication with them is acknowledged and follow up as soon as possible.
Your bank has eight weeks to resolve your complaint or provide reasons for not doing so. They should also provide you with regular updates on the progress of their investigation. If they don’t, you have the right to chase them to find out what’s happening.
Usually, your bank will respond with a solution within eight weeks. This might involve a full refund, partial refund, or debt write-off.
In some cases, they might ask you to provide additional evidence or fill out forms, especially if you're claiming financial hardship. If this is the case, be prepared to cooperate, and always ask questions if you need clarification of any requests or requirements.
Escalate the matter to the Financial Ombudsman
If you’re not satisfied with the bank’s response to your complaint, you have the right to escalate the matter to the Financial Ombudsman, who can provide free assistance. You can do this by contacting them either by phone or using their online complaints form.
When the Financial Ombudsman investigates bank charge disputes, they’ll consider the laws in force at the time, industry codes of practice, what is currently considered good industry practice, and the terms and conditions you agreed with your bank relating to charges.
They might also look at other reasons behind your complaint, such as if you are experiencing financial difficulties, or whether the bank acted responsibly in giving you a certain product.
If the Financial Ombudsman decides your bank is in the wrong, they’ll usually tell them to put things right. This could include:
A refund of some or all charges;
Freezing some or all of the charges;
The removal of adverse credit information;
Compensation for poor customer service;
Changing your account to a more appropriate one or removing a product (like an overdraft);
Arranging a repayment plan.
Take legal action
If the Financial Ombudsman doesn’t support your case, you might consider taking legal action.
Dealing with a bank can be stressful, especially if you’re in debt. Lawhive’s charge dispute solicitors can help you complain about bank charges. They’re experienced in handling cases where resolving issues with the bank gets difficult.
Your Lawhive solicitor will manage all communication with the bank about charge disputes, making your case clear. If a bank is taking action against you, your solicitor will act fast to protect your interests.
No matter how you deal with a bank dispute, you need to act quickly to prevent things from getting worse. For expert advice on bank charge disputes, contact Lawhive’s legal assessment team for a free case assessment.
What is the likely outcome of a bank charge claim?
As we’ve mentioned, when you complain about unfair or unreasonable bank charges, your bank has 8 weeks to deal with it. Generally, you might expect:
A full refund;
A partial refund;
A refund on the condition you pay off your debts;
A temporary freeze on further charges;
The arrangement of a payment plan to manage debts.
If the bank rejects your claim and you feel you have a strong case, you shouldn’t give up. There are other options available to you.
What should I do if I can’t access my previous bank statements?
Most banks have a process for customers looking to get copies of their statements. Usually, they can be accessed through online banking, or you can make a request by phone or by visiting a branch.
That being said, if your bank isn’t cooperating when it comes to accessing your statements or providing information about your charges, you have the right to make a Subject Access Request.
Usually, this process is free of charge, but in some cases, you might be charged ‘a reasonable fee’ for administrative costs, usually up to £10. If you do this, it’s important to ask specifically for a list of charges only, not all of your bank statements, as you could be charged £10 for each statement.
Business bank charge disputes
If your business has been charged unfair fees by your bank, you can dispute them. If successful you could claim back not only the fees but also any indirect losses caused by those fees.
Lawhive’s small business and corporate solicitors can assist your business in disputing unfair bank charges.
Common business banking charges
Every business bank account comes with its own set of features, services, and fees. It’s important to understand the charges associated with your business account to avoid any nasty surprises, especially limited-time introductory offers or features.
Occasionally, banks make mistakes or fail to communicate the full cost implications of the account, and you may be able to dispute such charges. Common fees for business accounts include:
Can I claim back bank charges on a business account?
Business owners can claim back bank charges as a legitimate business expense, provided the account is in the business name, not your name.
How to dispute bank charge on a business account
Disputing a bank charge, fee, or penalty on a business bank account depends on the specific circumstances.
Before you open a business account, the fees should be communicated and agreed upon. These fees may include monthly management costs, overdraft interest, and service facilitation charges. If your business is unexpectedly charged for reasons that seem unfair or weren’t agreed upon, disputing the fees is an option.
That being said, challenging bank charges can be complex. Lawhive’s solicitors have extensive experience in this area and can represent your business in disputes and negotiations with the bank. They’ll help you resolve the situation quickly, handling all correspondence, gathering evidence, and building a case for you. Contact us today to see how we can assist you.
How long does it take to resolve a banking dispute?
How long it takes to resolve a banking dispute isn’t set in stone. It depends on how serious and complicated the situation is, as well as the evidence available.
Some straightforward disputes can be sorted out in a few weeks, while others might take months.
Should I use a claims management company to reclaim bank charges?
It’s not advisable to use a claims management company to deal with bank charge disputes. While they might complain for you, they’ll likely take a big chunk of any refund you get. Plus, their success rates aren’t any better than if you handled the case yourself.
If you’re looking to reclaim bank charges, the best course of action is to complain to your bank in the first instance. As we’ve mentioned, The Financial Ombudsman provides free advice on how to complain to your bank and you can escalate the issue to them if needs be.
A fully qualified solicitor can assess and advise you on the best next steps to take if the Financial Ombudsman does not resolve your complaint.
Will reclaiming bank charges affect my credit score?
Complaining to your bank about charges won’t harm your credit score, but the fees you’re being charged might if you:
In particular, late or missed payments stay on your credit file for six years, which can make it difficult to borrow money in the future.
In some instances, banks may also take action following your complaint by restricting your account or closing it. Therefore, if you’re committed to pursuing a claim for bank charges, it may be wise to open another account with a different bank, just in case.
How can Lawhive help with a bank charge dispute?
If you’re having trouble with bank charges, our solicitors can help. They can:
Review and explain your bank’s terms and conditions;
Help you draft a letter to the bank about unfair or unreasonable charges;
Write to the Financial Ombudsman to investigate on your behalf;
Guide you on taking your claim to court if the Ombudsman rejects your claim.
For more information and advice on the strength of your bank charges claim, get in touch with our legal assessment team for a free case assessment today.