If your bank has levied charges against you that you think are unfair, you may have some recourse.
Be aware of your rights
Opening a bank account means that you have entered into a contract with the bank. If you bounce cheques or overdraw your bank account, you have in effect breached that contract, and you can be forced to make repayment. However, the sum you pay has to reflect actual costs and not exceed the damages the bank must support. Penalties, in other words, are not to be applied, only the actual cost of the overdrawn account.
Although you have no right to be excused from legitimate charges, you can try to claim back any excessive charges classified as penalties. Again, that’s anything above and beyond what your overdraft costs the bank. For example, if the bank sends out letters informing customers that they had an overdraft and they charge £20, that’s an example of a penalty that can be challenged. Similarly, being charged excessive fees, like £30 for a bounced cheque when it didn’t cost the bank anything, or imposing large daily fines with interest if you go into overdraft, are also examples of these types of penalties.
Figure out what you are owed
To determine the amount of your claim, go back into your records and add up any charges that you know are excessive because they are penalties instead of actual costs incurred by the bank as a result of your overdraft.
Write and ask for the money first before you take legal action
Oftentimes, banks will gladly return the money for unfair charges if you simply ask them. This will negate any need for legal action. There are templates available on the Internet for these types of letters, and it’s helpful if you download one instead of trying to write your own. Keep copies of the correspondence and call up a few days later to see if it has been received, noting whom you spoke to, and the date and time you had the conversation.
Send the letter to your local branch and not the head office, because this will ensure that your case is heard in your (technically the defendant) area. Wait two weeks for a reply, and see what happens.
If the bank says it’s going to respond at a later date, make sure you stay on top of it and write and call back after two weeks.
Open up another account
You should know that when some consumers threaten legal action against banks, banks have been closing those accounts in some cases, as a means to intimidate people into dispensing with their claims. It does not always happen, but it can, so you should open up a second account (with another bank) in case your first is closed.
Make a claim
If nothing happens, it’s time to make a claim. You can go through the court system via Money Claims online service, or you can go to your local county court in person.
If the bank ignores you, you win by default after 14 days, or it may simply repay the money. If the bank acknowledges the claim, they have 14 days to enter a defense. If they do nothing further, you win by default and can demand that you get your money back. This is usually what happens, and banks rarely enter a defense. If they do, oftentimes come you’ll still win by default because the bank won’t show up for court. If you get a court date, make sure you visit The Consumer Action Group’s forum, for further information.