Reclaiming bank fees from a closed account: is it possible?
"I want to complain about some overdraft fees that were charged to my current account. The problem is that the account is now closed so the bank told me they can't help.
"Can they really ignore me like this?"
A bank or building society cannot ignore a complaint, even one about an account that has been closed.
The right to make a complaint, and the normal complaints procedures for banks and building societies, still apply.
Closed accounts: your rights
Banks know that they cannot dodge complaints about closed accounts.
"Any former customer who has closed their Santander bank account can of course come back to us to query charges or any other issue that occurred prior to the account closure," Santander told us.
Nationwide agreed. "We'd assess any claim from an existing or previous customer on its own merits," a spokesperson said.
As so often when it comes to dealing with banks, another answer might well be down to poorly trained staff or a misunderstanding of the question.
The solution to that is simply perseverance: the normal procedures for complaints do still apply.
Complaints procedures still apply
The complaints process where an account has been closed is the same as for active accounts.
This means the bank or building society has eight weeks from the date of the first complaint to investigate and resolve the problem.
If, after eight weeks, the customer isn't happy with the bank's final response or if they have failed to satisfactorily sort out the complaint, the next step is the Financial Ombudsman Service.
The Ombudsman can give a final ruling which both parties must adhere to.
When taking complaints to the Ombudsman the same rules that apply to active accounts apply to ones that are closed.
The complaint must be taken to the Ombudsman within six months of getting the bank's final response or, if they haven't responded, from the end of the eight weeks.
If the complaint fails this or other timing tests the Ombudsman can still look at it but the bank may object to their ruling on the grounds that the case is "time-barred".
Getting the facts: six year rule
There are some further restrictions, however.
The Statute of Limitations Act governs the period of time within which a claim can be made, six years in England, Wales and Northern Ireland and five years in Scotland.
In addition, under the Data Protection Act banks have to keep records for six years but can then dispose of them once this time passes.
In practice, this means that consumers can definitely make a claim about charges that were levied in the past six years but may face problems if their problem relates to a period before that, depending on the record keeping at the bank.
Complaints are often more likely to be successful if they include specific information and information about the circumstances of the initial problem, including dates and evidence.
This could prove to be a problem if financial statements or other documentation from the period of the complaint are unavailable.
This is likely to be doubly true when it comes to complaints about overdraft fees, since, following the ruling of the Supreme Court in 2008-09, getting refunds in this area is now very much at the bank's discretion.
As always, however, there's no chance of getting a penny in reclaimed fees without making a complaint, so for significant sums it might always be worth trying anyway.
Reclaiming overdraft fees from closed accounts:
is it worth it?
In theory, banks should assess all claims on their merits and make a decision based on whether the consumer was unfairly treated or suffered harm as a result of the bank's actions.
Plenty claims for overdraft fees get rejected from open accounts so no claim is certain of success.
Setting out a case
However, there are three situations that make a claim more likely to succeed.
- Financial hardship.
- Disproportionate charges. For example, £38 charge for being £1 overdrawn.
- A vicious circle of charges, in which the initial fees triggered further charges creating a cumulative debt.
The complaints about overdrafts that have the best chance of succeeding are confident and get the facts straight, by gathering as much information as possible from the period of the claim.
Including information that explains personal circumstances, for those that are or were currently struggling with money, or evidence to show a period of financial hardship when the fees were charged may strengthen a claim as, under industry regulations, banks must consider this in their assessment.
Similarly, it is worth pointing out when fees were unreasonable or unexpected, for example, being overdrawn for only a few days or if letters were sent to different addresses while moving house.
Getting old statements
While my father drove my mother mad by keeping binders full of monthly statements dating back to the 1980s, the popularity of paperless banking means now many people no longer have their own physical record of their banking activity.
This may be particularly challenging when an account is closed since most banks revoke access to online services like previous statements once an account is closed up.
In that case, it can be worth calling or writing to the bank's customer service department and asking for a copy of all past statements or those covering the important period.
If the bank is playing hard to get it's also possible to make a Subject Access Request under the Data Protection Act for the information.
This is a letter asking your bank or building society for a list of all previous transactions on all accounts, both open and closed.
Banks must send this information by law and there is no time limit on what can be requested, although the bank may not have kept any information that's older than six years as per the statute of limitations - see above.
The Data Protection Act allows organisations to charge up to £10 for these requests so it is advisable to enclose the fee when making the request to avoid having the process delayed.
Of course, there is a chance that a complaint will be partially or even wholly rejected.
Anyone making a banking complaint, particularly regarding overdraft fees, would do well to remember that possibility, and not to plan on getting charges refunded, though it's always nice to hope.
Banks may also give an initial offer that feels too low.
In this case, consumers have the right to negotiate although the decision lies with the bank or, if the complaint is escalated, with the Ombudsman.