Cashzilla

The Which? survey found that 85% of consumers who demanded a refund were at least partly successful in their efforts to reclaim charges back from the bank.

“Claiming back unfair bank charges is a simple process that won’t take up hours of your time,” said Emma Bandey of Which?

“If your bank does not co-operate, you should refer the case to the Financial Ombudsman Service (FOS) as so far the banks have chosen to settle all cases referred to FOS,” she added.

Despite the fact that most charges can be easily reclaimed following a simple quick phone call, it seems that currently only a third of people who believe that they may have been overcharged actually request that the charges be repaid.

The survey which covered 2,228 adults found that some were scared of their bank’s reaction if they asked for a refund.

To make the process easier and help consumers to reclaim money that is rightfully theirs, Which? has for the last 10 months been calling for current account providers to take a new approach to the way consumers are charged when they slip into unauthorised overdraft. They have also added consumer information and legal rights details to their site along with template letters to send to credit card and current account providers, in order to empower consumers to effectively challenge any unfair charges which have been levied.

Over the past year, in part thanks to increased consumer awareness, the banks in the UK have received a deluge of complaints regarding the excessive charges which have been added to their accounts for slightly exceeding authorised borrowing limits.

While the banks are allowed to recoup their administrative costs for unauthorised borrowing, they are not allowed to impose the exorbitant punitive fees which are currently commonplace.

Which? lists some of the banks’ more common “Dodgy practices” as:

• Banks automatically charge (normally around £30) if you slip into unauthorised overdraft, even if the amount of the unauthorised overdraft is just a few pounds.
• Banks may charge a higher rate of interest on your unauthorised overdraft than they do on your regular, authorised overdraft. However, we have found that some banks charge the higher rate on the full amount you are overdrawn. For example, if you have an account with a £250 arranged overdraft and you accidentally go £1 over, you could be charged the higher unauthorised overdraft interest rate on the full overdraft of £251.
• If you slip into unauthorised overdraft you won’t just be charged for going into the red. You could also be charged a similar amount each time a transaction, direct debit or standing order goes through your account while you are in the red.
• Banks do not give you any grace period in which to pay off the amount of your unauthorised overdraft before they charge you.

As customers have complained that the charges are far too high to possibly present a fair reflection of the actual administrative cost they are therefore illegal. This is something that the banking industry refutes, however none of the banks have yet decided to go to court in order to contest any refund claims, preferring instead to settle out of court, with offers of full or partial repayment.

One organisation who have been involved in claims for bank refund, Consumer Action Group, has stated that so far it knows of 6,342 people who have been repaid a combined total of more than £9m by their banks.

The moral of the story: if you don’t ask, you don’t get.

If you think that you have been unfairly charged, it is definitely worth spending a few minutes to download one of the free draft reclaim letters, from websites such as those of the BBC, Which?, or any of the other campaigning consumer organisations or legal firms. As the Which? report shows, just by phoning up or sending off one of these letters to the banks can lead to you getting back your £20-30. Better in your pocket than in theirs.