Claiming Back Bank Charges Under The Financial Hardship Rule

Have you fallen victim to unfair bank charges? If you feel like you’re stuck in a spiral of charges which keep knocking you down into the red, then try not to worry. You have nothing to lose by trying to reclaim your overdraft charges and have every chance of being successful, especially if you’re in financial hardship.

Reclaiming bank charges for overdrafts, direct debits and bounced cheques used to be pretty much free for all, with the simple threat of taking a bank to court being enough to secure a cheque for years of charges. However, a Supreme Court ruling in 2009 has made it more difficult to reclaim. If your charges are genuinely unfair, payout is still 100% possible.
If you are unemployed, behind on your mortgage or in a cycle of excessive charges that keep putting you further in the red, then you may be in real financial hardship. In these circumstances the Financial Ombudsman Service will investigate the matter for you for free, making success very achievable!

How Do I Reclaim?

It’s important to remember that the worst thing that could happen is that you wait a couple of months to hear back from the Financial Ombudsman and then get rejected, so the process is not only free of charge but also risk-free!

You will need to gather your bank statements from throughout the year. Now I know not everyone will have a years worth of bank statements, however if you have online banking they could be available on there. If not then call or write to the bank as you have a legal right to request them. You will need them in order to prove that you are in financial hardship.

The next step is to contact the bank and ask for your money back! Explain to them your difficult circumstances, and add any evidence from the time you were in hardship to speed things up abit. This could include bank/credit card statements, a redundancy letter or a P45. Once you have done this you should get a letter back from the bank acknowledging your complaint, it then has up to eight weeks to deal with it.

What Happens Next?

At this point you could be offered a full refund, although the chances of this are slim. It’s more likely to happen if you have a small claim or have provided detailed evidence that they couldn’t ignore. The bank could also offer you a refund but only under the conditions that you use it to pay off the debts that you currently have with the bank.

You could alternatively be offered a partial refund as a goodwill gesture, such as around six months of charges but this will depend on your circumstances.  If you don’t think that you’ve received a fair amount then you should ring up to negotiate a higher amount. For example, a quick call saying: ‘I’ve had 2,000 worth of charges, you’re offering me £900, I’ll take £1,200 as it is a fair reflection of my situation’.

There is of course a chance that the bank could reject your claim. At this stage it’s easy to give up hope, however, all is not lost, try writing another letter or call them explaining that you’re going to the Ombudsman if the matter isn’t resolved quickly. The bank might decide they’d rather just settle it there and then rather than going through an Ombudsman.

However if they aren’t playing nicely, it may be time to complain to that Ombudsman! You can find the complaints form online at the FOS here.

Hopefully this will work in your favour and your charges will be refunded within three months of making your complaint. However, you may still be rejected.

If you are rejected, then for many people there are no further routes to go down so it may be time to give in and give yourself a pat on the back for effort. You could still take the matter to court using the argument that the charges are legally unfair although you shouldn’t undertake this lightly. You should be prepared to turn up in court to argue your point.

Although going to court is an option, I wouldn’t advise it as it will definitely cost you a fee and you could even risk having costs awarded against you!

I hope this guide has been useful and I’ll keep you updated with any further information I can find.
CLICK HERE to see a template letter on claiming back your bank charges.