Bank charges have come down in recent years, but they can still eat into your income especially during the cost-of-living crisis when money is tight.
If you have incurred multiple charges over the years, they can ramp up to hundreds of pounds – but can you get your money back?
There are many different types of bank charges, such as overdraft fees, packaged account fees, and those applied in error by your bank.
You can try getting your money back if the bank has charged you by mistake or where bank charges have put you into financial difficulty.
You can claim for fees dating back several years. Plus, the account doesn’t need to be open - you can even make a claim if you closed the account a few years ago.
Claiming erroneous charges
When a transaction occurs on your current account in error, you may face charges if for example it pushes you into an unauthorised overdraft. You should inform your bank straight away if a business has taken money out of your account without your permission.
“The bank should put you in the position you would have been in had the error not occurred. So, they can recall the money and then sort out any damage to your credit score and refund charges and interest,” says financial expert Martyn James.
Sometimes there may be a delay or error with money going into your account, which can have a big knock-on effect on your finances. For example, if your wages are paid into your account late, then payments leaving your account can bounce quickly.
If this happens, you should tell the bank as soon as possible as there may be some things it can do. “They may be able to do things like offer a fee-free overdraft to cover you for a short period of time while the problem is rectified,” says James.
Overdraft charges and financial difficulties
Overdraft charges used to be very high but in 2019 fixed daily and monthly overdraft fees were banned. Instead of a fee, many banks now charge around 40% in interest, which works out as a couple of pounds for each time a transaction takes you overdrawn.
Having said that, the interest can quickly spiral, especially if you’re in the overdraft for a long time.
According to James, overdrafts are one of the most expensive forms of borrowing.
Some people have become “overdraft prisoners” where they struggle to get out of their overdraft due to high interest.
While it is hard to reclaim overdraft charges or interest if it’s not the bank’s fault you are in your overdraft, if you are struggling financially, the bank or building society does have an obligation to help you get out of difficulties.
The rules state that the bank should not worsen your situation by adding on fees and charges when you are clearly struggling financially.
According to James, there are a range of ways financial providers can help, tailored to your circumstances: “You’ll need to give them an overview of your cashflow. Once the bank has this, they can come up with a range of solutions for you. If they fail to help, or make things worse, you can go to the free Financial Ombudsman Service (FOS), who may be able to look at your case.”
A spokesperson for the FOS told The Money Edit: “We see a range of complaints about banking charges. Consumers should tell their provider if they are struggling financially as they may be able to help. If they feel they have been treated unfairly, they should get in contact with the Financial Ombudsman Service and we’ll see if we can help.”
Some banks and building societies are automatically giving customers extra support like bigger interest-free overdrafts, while some promise to help customers struggling if they contact them. We have a round-up of the different support on offer, depending on who you bank with.
How to reclaim bank charges
Unless it’s a bank fee that was applied in error (which is normally quite simple to reclaim), you will need to put together a good case to reclaim other bank charges.
Go through your old bank statements to find the charges. If you don’t have access to your old statements, ask your bank for a list of all charges, setting out what each was for, the date the bank charged it and the amount.
Banks must provide a list of account charges going back six years within 40 days, and they are not allowed to charge more than £10 for this.
Your bank should not charge you for sending full bank statements.
Once you have all the information, the first port of call is to complain to your bank or building society. But there is a chance they will do nothing as financial providers can be reluctant to part with money unless forced to.
If you complain to your account provider and receive an unsatisfactory response, consider filing a complaint to the FOS, which is a free service.
The FOS looks at cases based on “unfairness criteria” – they will want to see that you have been harshly or unfairly treated.
For example, if you were in financial hardship and the bank charges made it worse, or the charges put you into financial hardship, you will need to prove the link between the two.
So how far back can you reclaim bank charges? The ombudsman says you can try to claim back as many years as you want to. But generally, six years is a good rule of thumb. If the case goes to court, you can typically only claim within six years in England, Wales and Northern Ireland, and five years in Scotland.
How much will I get?
You could get all or part of your money back. Some customers have reported getting hundreds of pounds in overdraft charges back from major high-street banks after they complained.
You may be offered a refund but told the money must go towards any debts you have with the bank.
Alternatively, your bank could offer other support that may help you in the future, such as making your overdraft interest-free and helping you pay it off at a level you can afford.
Can I reclaim packaged account fees?
You could be owed money if you have or previously had a packaged bank account where you pay a monthly fee for perks like travel, mobile or breakdown cover. Banks are obliged to check these extras are suitable for you, and if they didn’t, this could be mis-selling.
If you were told you needed a packaged bank account to qualify for an overdraft or mortgage, this is also classed as mis-selling.
If you were mis-sold one of these packages, put in a complaint to your bank. You should get back all the fees you paid out plus interest. You will need to give the following information:
- Why you were mis-sold
- When you took out the product
- Copies of your statements or other documents
