Bank charges hardship

You can reclaim bank charges NOW. While reclaiming is on hold for most, if you fulfil the 'financial hardship' criteria, banks must deal with you immediately - find out more here

According to our Money Saving Expert Martin Lewis, more and more people are getting £1,000s back.

The story so far

It's thought up to a billion pounds of bank charges were reclaimed, as people took their banks on saying the traditional £35 charges every time going beyond an overdraft limit were unlawful and unfair.  And as up to six years worth was reclaimable, many were getting £1,000s back.

Then in July 2007, a test case was announced between the Office of Fair Trading (OFT) and the banks, and instantly the regulator, the Financial Services Authority (FSA) said reclaiming had to go on hold.  Yet a little known rule in that hold has only, recently started to be used. It says banks and the Ombudsman CAN'T put cases on hold if someone's in financial hardship. And more and more people are starting to reclaim £1,000s again.

So if you haven't started the reclaiming process or if your case was previously suspended as you weren't struggling then, now's the time to reignite your claim.

What is hardship?

For the purposes of bank charges, the FSA defines hardship as:

"A complainant is considered to be in financial difficulty when his or her income is insufficient to cover reasonable living expenses and meet financial commitments as they become due."

While that's the general principle, there are also specific criteria which count on top; such as needing to withdraw cash from credit cards or having over £500 of charges a year.

When you apply to a bank to reclaim, if you think you're in hardship, tell it so.  It will usually send you a questionnaire; then you can take it from there.

For a full list of which circumstances constitute as experiencing financial hardship, see "Bank Charges Hardship" guide in the useful links section.

How to reclaim

If you've already tried to get your charges back but the claim's been put on hold, don't worry. Whether you've been told to wait for the test case result by your bank, the Ombudsman or court, or if you haven't started the process at all; if you're genuinely in hardship you can still start now.

First find out from your bank how much you've been charged, possibly dating as far back as July 2001. Then write to it asking for your money back, and that you want your case to be looked at right away under the hardship rules.  It's quite likely the bank will say no, but don't worry too much, that's often just a tactic used to try and put you off. 

You have a right to go the Financial Ombudsman, whose job is to independently decide on disputes between customers and financial companies and it's totally free.  And so far the success rate for customers in genuine hardship is quite high.

For practical details on how to reclaim, including free template letters for every stage, see the useful links section.

What about those not in hardship?

So far both the High Court and the Court of Appeal have overturned the banks view that bank charges aren't governed by fairness laws.   The banks are now appealing to the House of Lords, which is due to be heard in June.

Yet that means bank charges must be fair, and now it's for the Office of Fair Trading to decide if they actually are.  It has provisionally said they are. 

In the meantime the hold still remains, yet over 1,000,000 people are now thought to be in the queue to reclaim.   So even if you're not in hardship, if you want to reclaim, the sooner you put your case in the better.