How I reclaimed £300 in bank fees (and you can too)
One day I logged into my online banking and noticed something weird: a £130 overdraft fee. I called my bank.
"Yes," the operator said, speaking very slowly, "you were overdrawn a couple of months ago. Just like the few months before."
Looking back at my statements with rising panic I realised that in total I had been charged about £300 in total. The money had been going straight out on payday, like a tax on idiocy, and, like an idiot, I hadn't noticed.
It shouldn't happen to a personal finance writer.
In fact, it's so embarrassing that I don't think I'd be telling anyone if it weren't for the fact that I managed to get the whole lot back a few days later.
Here's what I learnt along the way, plus some tips from experts I've spoken to since.
Before you read on
Before that, though, I think it's important to note that I was really very lucky to get back my overdraft fees in full.
Frankly, I didn't think it would be possible.
Since court action in 2008-9 ruled that overdraft fees were fair, banks are free to decide whether they should offer a refund in most cases.
For obvious reasons, their judgement usually points them towards the outcome in which they get to keep their money.
Many claims are rejected or only refunded in part. There are no guarantees and no sure fire way to get your money back.
On that basis, I thought that trying to reclaim might be a waste of time. Happily, I was dead wrong: it is possible and that means it's worth trying.
Get the facts straight
Call or write to ask for
a list of transactions,
you're entitled to them.
First, it helps to get the facts of your claim straight.
As you might have gathered, in my first conversation with the bank I didn't even know basics like how much they'd taken off me.
When I'd had a chance to sit down, go through my online banking and write down what I'd been charged, when and for what I had a much better handle on the important part of the claim: why I should get it back.
You need to give the bank some reasons why they should refund you. Here are a few examples.
Bank at fault
Did the bank act improperly, effectively causing the fees they're charging you?
For example, a standing order that you asked to be cancelled might take you into an overdraft.
Or the bank could have simply made a mistake: charging an unauthorised overdraft fee even though they previously gave an agreed overdraft.
Refunds are still at the discretion of the bank since current account terms and conditions state that they are perfectly entitled to, for example, allow the account to go into overdraft when a cheque is returned unpaid but the bank being somewhat in the wrong helps to strengthen a claim.
It can be especially useful if the claim is rejected and needs to be taken to the Ombudsman.
However, in most cases the bank isn't at fault.
That doesn't mean they can't be sympathetic but, again, you need to give them a reason to be.
Struggling with money
In financial difficulty? Say so.
If you're struggling with money, say so.
Under banking regulations, financial providers must take this into account when assessing your claim.
The Lending Code, for example, states that they should "act sympathetically and positively when considering a customer's financial difficulties."
Any evidence you can supply - proof of essential rent, bills or debt repayments, for example - will help your claim. If your bank can see them leaving the account, all the better.
Be upfront if you're having a hard time, it's worth telling the bank about any distress your current financial situation, and particularly the charges themselves, has caused.
Although banks went to court to argue that a fee of, say, £35 for a £15 direct debit is reasonable and won, they are still amenable to arguments that the punishment doesn't fit the crime.
If you were hit with fees far in excess of the amount you were overdrawn, point that discrepancy out.
If you were charged an unpaid item fee even though the account was only in overdraft for a couple of days, mention it.
This is another reasonableness argument that works for any amount of fees.
If you're a long term customer and have always managed the account well in the past, you cannot have reasonably expected to be hit by charges.
It's also worth noting any reason for not correcting a problem that recurred several times in the first instance.
In my case, for example, the bank had sent warnings that I was accruing fees but I'd moved house without informing them and I never got them.
Now that is a pretty lame excuse - it's not the bank's fault I didn't change my address - but they did take it into account.
Finally, when it comes to bank charges persistence pays.
For one thing, ordinary customer service representatives generally have limited power to offer refunds other than token goodwill payments.
For a claim to be assessed in full it needs to go the bank's complaints department.
Be persistent, but keep calm.
You can ask to file a complaint on the phone and this can be a good option because the representatives know the system and can enter the complaint using terms easily understood by other employees.
If it's a second complaint or the claim is particularly complex, it's often worth putting everything in writing using secure email, if that's a service your bank offers, or by post.
Keep complaints in writing clear and to the point. It often helps to go through what happened step by step.
As I noted above, many reclaim cases end in partial refunds.
That means that many cases require an element of negotiation and compromise.
If you feel their offer of redress is really too low politely but firmly restate why you think a larger settlement is fairer but remember that, in the end, it's a decision in their hands.
If you're asking for a refund on the basis that you're in financial hardship it's likely that your bank will put you in touch with a specialist money management team that can help you juggle commitments.
Banks will sometimes offer this help rather than a refund in order to fulfil their commitment to helping customers in financial hardship.
However, there's nothing stopping you from pursuing your complaint even after seeking this extra help.
Going to the Ombudsman
Persistence can even endure rejection from your bank.
If a claim is rejected or you find it inadequate or you have gone eight weeks from the complaint without reaching a resolution you have the right to take it to the Financial Ombudsman Service (FOS).
Find out more on the FOS site.
Won't be doing that again...
Of course, the ideal is never to pay these fees in the first place.
No, I do need an arranged overdraft
Unarranged overdraft fees are now so ridiculously high, and reclaiming them so perilous, that it really is worth making an extra effort to arrange an overdraft, even if you don't think you'll need it.
To use my own case as an example yet again, my bank had twice refused to give me an arranged overdraft. If they had, I would have been charged about £60 in fees, not £300.
There was no good reason for them not to do it, I tutted after my rejections. But I should have moaned to my bank or moved my main account instead of tutting to myself.
Find more information on reducing overdraft costs here.
Read this news story to see what banks are doing to help prevent customers going overdrawn.