Bank charges when are they unlawful?

Question

I was recently charged £96.00 for going into an unathorised overdraft. The bank is saying that this is a service fee and for every £25 you go into your overdraft they charge you £25. I did not know this as i have never gone over my overdraft and i was on holiday when it happened so i couldnt keep a track of it. I have asked that they refund it and they have refused saying it is not a hidden charge. Do i have any further rights to get this amount refunded? Does anyone know??

Answer 1

Hi.
In April 2006 the Office of Fair Trading (OFT) published a paper called 'Calculating fair default charges in credit card contracts', and although the paper was specifically concerned with credit card defaults it did have a number of recommendations for other financial services, including overdrafts.

With respect to the specific question you asked, a bank charge is unlawful if it is considered to be a penalty charge, or it is an 'unfair contract term'. An unfair term is one that is onerous, meaning that it's disadvantageous to the consumer and unreasonable to expect a consumer to be aware of it unless it's specifically pointed out to them.

The bank is entitled to cover its reasonable costs in dealing with the situation, and to pass these costs onto you. These costs include stationery, IT equipment, suitably trained staff, and most importantly the time and work involved in dealing with the unauthorised overdraft.

If a bank sets out its fees and charges up front and makes these clear, then that is a defence in their favour; however, there is no reason to suppose that it costs more to administer an account that is £100 in overdraft compared to one which is £25 in overdraft. In this respect, your bank is highly unlikely to be able to justify why it imposes an additional £25 charge for each £25 you go overdrawn.

Your first port of call should be to write to the bank explaining the reasons for your dissatisfaction, and setting out that you do not feel that the bank can justify the additional £25 charges. The OFT paper mentioned earlier in my answer suggested that a fee of £12 was reasonable for default credit card charges, and you have an argument to suggest that a comparable level of work is involved for administering your account whilst in overdraft.

The firm is required to issue a 'final response' to your complaint within 8 weeks, and must write to you within 4 weeks to tell you how their investigation is going and when they expect to issue the final response.

If you remain unhappy with their response, you can pursue your complaint via the Financial Ombudsman Service (www.financial-ombudsman.org), which is free for you but costs the bank £360.

Alternatively, you can pursue your claim via the small claims court, but in any case you should give the bank the opportunity to rectify the problem in the first instance, and go through the FOS / court only if the bank is unable or unwilling to fix the problem.

I hope this helps, however if you need any further information please let me know.

Answer 2

Well, it isn't a hidden charge, so there's not much you can do. The Overdraft Penalty should be in your statements and they should have told you when you opened the account that something like this would happen and what the charges were. If you can prove that they never told you about it and that the information is really hard to get/not available, then you have a slim chance. Other than that, I say pay it and keep an eye out in the future.

Answer 3

If your in the Uk or Europe, YOU CAN CLAIM THESE CHARGES BACK!!!

i think the Watchdog site has a form.

But it was also in several newspapers, One European Ruling that is actually good for europeans!!!

Its nothing to do with hidden charges its OVER-Charging

so far not ONE person who has claimed against the banks has lost.

Will try to find the links for you

it will cost £10 to get the last 6 years of bank statements from your bank, but you can claim against ALL OF IT over 6 years!!

Great eh?

Answer 4

Charges must be 'in proportion to the costs' ... complain to the bank ... most Banks will refund all the charges rather than admit they got it wrong...

Suggest you visit 'Money Saving Expert' site - they have step by step explanation of what you have to do

Answer 5

sure i latterly claimed back 3 years of overdraft expenses. no economic enterprise will pass to courtroom and all pays back. the argument is the fee of the economic enterprise once you pass overdrawn and is it justifiable to fee as much as they do. it expenses them on standard approximately £5 no longer what ever they fee you each and every time something interior the area of £25. they be attentive to they'll unfastened if it went to courtroom. as quickly as they unfastened all and sundry will choose for his or her a refund. this is why they pay you back. sturdy success