Bank Charges Advice

If you’ve been stung by current account fees and overdraft charges, then claiming back your fees and switching your bank account could save you hundreds of pounds.

If you’ve been stung by current account fees and overdraft charges, then claiming back your fees and switching your bank account could save you hundreds of pounds.

With 90 per cent of UK adults holding at least one current account, the Office of Fair Trading (OFT) estimates that banks earn £8.3 billion in current account revenues a year – more than savings and credit cards combined.

And its not just current account holders that face steep rates – in 2006, credit card companies were forced to cap charges at £12 – though you can still challenge these charges.

Many consumers pick one of the big high street banks as a teenager and stick with them, taking their credit card and even their mortgage from the same bank – despite facing frustration and costly overdraft fees for insufficient funds.

Research by the OFT in 2008 found that just six per cent of consumers had switched their current account in the last 12 months.

Claiming back unfair bank charges

An ongoing test case over unfair fees for unauthorised overdraft charges – which can be as much as £39 for a bounced cheque or £28 for each day your account is overdrawn – means that very few new claims have been processed since 2007. The result of the test case is expected towards the end of 2009, and if it finds that the fees are unfair, banks could be forced to repay billions of pounds.

More than a million claims have been made against the banks for unauthorised overdraft charges since 2001, with around £1 billion refunded already.

Although all new claims have been frozen until the result of the test case has been decided, consumer watchdog Which? is advising bank customers not to wait – the sooner your complaint is made, the sooner it will be processed. You can download template letters requesting details of unauthorised overdraft charges or to claim back your fees.

Can my bank close my current account if I make a claim?

The Banking Code only allows banks to close your account if your relationship with your bank has irrevocably damaged – in the case of threatening or abusive behaviour for example. Your bank must still give you 30 days notice if it decides to close your account.

However, the Financial Services Authority (FSA) has made it clear that consumers making claims against their bank for unauthorised overdraft fees should not have their accounts closed down.

Getting copies of bank statements

In order to make a claim for past charges, you need details of the fees you have paid.

Most banks now provide this information for free under the Data Protection Act, but if your bank wants to charge you, make sure you specifically ask for computer printouts rather than copy statements – for which your bank can charge a higher fee.

Banks cannot charge more than £10 for computer print outs and should have them ready within 40 days.

Switching bank account

Most current accounts offer poor rates of interest and some even charge a monthly fee, but switching your current account can save you money and get you a better service. A survey by Which? found that 74 per cent of people who had switched found the process easy.

Think about your needs before you choose a new current account – if you're regularly overdrawn, look for an account that doesn’t charge fees and offers a low rate of interest on authorised overdrafts. Alternatively, if you're always in credit, look for an account that offers a better rate on in-credit balances.