By Martin and Wendy Updated August 2015
Bank charges reclaiming didn't end after the court case in 2009, people still regularly get some of their excess charges back. They can add up to Ј1,000s, joining the Ј1bn already repaid.
Other reclaiming guides.
Reclaim PPI for free. You can be owed Ј1,000. It's easy to reclaim yourself.
Credit Card PPI. Step-by-step guide including free templates.
Council Tax: Up to 400,000 homes could be paying too much council tax.
Bank charges: Key info
Reclaiming bank charges from current or closed accounts specifically for busting your overdraft limit, bounced cheques and direct debits was once an open door. You simply threatened to take a bank to court or the Ombudsman, and it sent you a goodwill cheque for six years' worth of charges, plus interest.
In recent years, charges have dropped to an average of around Ј15. It may still be possible to get this back, but it's been more difficult since a November 2009 Supreme Court ruling, yet some payouts are still possible for those in financial hardship.
If you're reading this after a one-off recent bank charge or a charge applied in error, just call the bank and see if it'll wipe it. This guide is aimed at those who've had a number of charges that have snowballed over a longer period. For many people, especially those who've had charges on charges, payouts could still be possible. Done right it's free, and risk-free.
What's all this about reclaiming being back?
In August 2014 a MoneySaver became, we think, the first person to win a bank charges case in court since 2007 (see the MoneySaver wins 'first' bank charges court case since 2007 news story). With the help of solicitors Howlett Clarke, barrister Tom Brennan and the LegalBeagles forum, Oliver Foster-Burnell reclaimed Ј743 in overdraft charges, plus interest and an additional Ј1,000 in damages, after taking his complaint against Lloyds TSB to court.
This latest ruling indicates bank charges complaints could be reopened but it's too early to say for sure. As Oliver's case was heard at a county court it doesn't set a precedent, meaning other courts in England and Wales do not have to follow the ruling. Yet!
The potential impact of this is monumental – we are talking billions of pounds – but at the moment we are watching and waiting to see what will happen.
Read Martin's full editorial comment on what the recent ruling means. And, of course, updates will be included in our weekly email as they happen.
Some inspiration before you begin
We continue to receive reports from MoneySavers saying they're getting their money back. Here are just a couple of examples:
I reclaimed my account fees by sending your template to my bank, they called to check a few details. A day later they refunded Ј1,560 straight to my bank account. Without your help I would still be paying bank charges for my overdraft. Thank you!
Wrote to HSBC in January relating to Ј583 of overdraft charges from last year when I lost my job and was living on benefits. I received a letter today saying they'll refund Ј250 as a gesture of goodwill.
How easy will claiming be?
There's no guarantee of winning. Yet for some, primarily those in hardship, there's still a risk-free, cost-free process which could see you get your charges back.
The independent Financial Ombudsman Service will still look at certain cases (see the step-by-step process below), and there's no risk in doing so. Yet even so.
The safest thing to do is plan your finances on the fact you WON'T get a payout, but cross your fingers in the hope you will.
Some find battling their bank stressful, so go in with a positive mind. Even if you don't get a refund, don't feel let down.
Remember the best way to avoid bank charges is not to have them in the first place – for help avoiding them, see the Bank Charges Compared guide.
While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can't assume responsibility and don't accept liability for any damage or loss which may arise as a result of your reliance upon it.
Step-by-step reclaiming guide
Reclaiming bank charges has always been an art, not a science. In many ways, this guide is about negotiation. It's designed to try to get back the money we believe has been unfairly taken off you as quickly and swiftly as possible. It's important to remember the basics, though:
You want your money back, the bank isn't keen to give it. Yet it's obliged to treat customers fairly and stay within the law.
If the bank believes your complaint could be investigated by the Ombudsman, it may offer a partial settlement - even a full one sometimes - if you just write a letter or two. After all, if it ends up paying out, it's better to do it sooner, and offer a bit less, rather than incur the expense of fighting it.
So acting confidently and pressing your case if you think you've had unfair charges is crucial. If you've a strong case, you could get some of your money back.
Of course, there are no guarantees. While in the early days of reclaiming banks never fought, and often gave a full payout, that's far less likely now. So if you're offered a settlement, think about taking it.
Step 1: Are you
Before you even start to reclaim, we need to assume your complaint to the bank could be rejected, so you may need to take it further. Most will do this via the free Financial Ombudsman Service. Some may decide to go to court, which is explained later in the guide.
The Ombudsman is an independent service created by Parliament to help settle disputes between financial companies and their customers. The worst thing that can happen is you wait a couple of months and get rejected (read more about it in the Financial Ombudsman guide).
It's free and virtually risk-free, so if you have a chance of complaining there rather than going to court, it's much safer and more desirable. You don't need to go in person, it's just a matter of filling in forms.
The Ombudsman says it's willing to look at specific types of bank charge reclaims (see below), primarily involving severe hardship. If you can go this way, it's a far safer option. It doesn't mean you'll win, but the risk of losing is less.
Who can go to the Ombudsman?
The Ombudsman has said it will only look at cases based on ‘fairness' criteria – in other words, if you have been harshly or unfairly treated. It's specifically noted three different situations where it may take up cases.
They can either apply to your situation now, or at some point in the past. Importantly, if you're no longer in hardship, the Ombudsman will look at how your bank treated you at the time and whether you're still struggling. To help your case, you should have contacted your bank for help when you had the difficulties.
So check whether you fit in one or more of these categories…
You're in financial hardship
Under both standard banking regulations and the Lending Code (an agreement that all major banks have signed up to) banks must treat you fairly and be considerate if you are in financial difficulty.
We've used these criteria, as well as guidance from the Ombudsman, to give you some ideas as to what would count as hardship.
You're likely to have to meet several of these criteria to be successful, not just one, and you'll need to give the bank full details about how you've been affected.
Can't pay for necessities
You're struggling to meet basic necessities, including your mortgage, council tax, food and utility bills.
Can't pay debts
You're struggling to make loan and credit card repayments.
Income eaten by charges
Your income's being eaten up by repaying charges (for example, you're being asked to pay Ј50 of charges from a Ј100 weekly benefit income). Note: This doesn't specifically cover the deduction of bank charges from your benefits under the Social Security Administration Act 1992 - this is an urban myth.
Payments regularly returned
Your payments regularly get returned unpaid as you don't have enough money in your account.
Substantial drop in income
For example, you've lost your job, started a lower paid job, needed to take parental or carers' leave, your partner has died, you've separated from your partner, you've started full-time education or you/your partner has been in, or gone to, prison.
Disability or illness
You've needed to increase spending on something due to a disability or serious illness.
You're going bankrupt, getting an IVA or debt relief order or are in a debt management plan.
Continually living off credit
You're living off credit and regularly need to increase your credit limit.
Regular credit card cash withdrawals
Frequently over your overdraft limit
You frequently go over your overdraft limit. In earlier incarnations of hardship rules this was defined as having more than Ј500 of charges a year – so that seems a good benchmark.
Bank charges have hurt your situation
The charges have contributed to making your financial hardship situation materially worse.
The charges are disproportionate
If you unintentionally slipped over your limit by a few pounds and the charge is a lot higher than the ‘offence', eg, you go Ј1 over but are charged Ј35.
The FOS stresses these cases are not "black and white" and those who continually slip over their limit, while not in hardship, are unlikely to be successful.
You are / were stuck in a cycle of charges you can't break out of
This is known as snowballing. It effectively means you've had charges on charges, so you've been stuck in a trap of not being able to clear charges before new daily or monthly fees are added on top.
This is very common for those with larger reclaims, and is often the reason why some people are being paid back many Ј1,000s. Of course, it tends to go hand in hand with being in hardship.
Which category do you fit into?
After reading the list above, here's how to decide what's next:
You're pretty sure you fit into these guidelines.
If so, follow the Ombudsman route laid out below.
You think you could fit into these guidelines.
If it's touch and go, then it's worth trying this route as it's safest and you've nothing to lose. You are still allowed to go to court if you lose at the Ombudsman – though you can't go to the Ombudsman once you lose in court.
In this case, the only option is to go to court, and that means the landscape's radically different. We need to be honest though, we've not heard of anyone actually winning. Success there won't be easy and will involve you using untested legal arguments.