What Are My Overdraft Reclaim Rights?
- Know How to Reclaim Overdraft Chargespiggy bank image by pershing from Fotolia.com
In 2007, the British Office of Fair Trading (OFT) took one building society and seven banks to court over overdraft charges. The OFT charged that financial institutions had collected unfair overdraft fees and called for legal action to ensure consumers could reclaim overdraft charges. While the OFT dropped the case in December 2009 after the Supreme Court ruled the OTC was outside its jurisdiction, consumers may still have overdraft reclaim rights. - Understanding your bank's policies for overdraft charges is an important right as a consumer. Banks like HSBC provide online information, as well as written information, on their overdraft services and policies. If you don't receive a copy when you open a new account, ask the bank representative to provide you with a written copy.
As part of their overdraft services, UK banks may extend an overdraft in one of two categories: formal or informal. In a formal overdraft, you submit a request to the bank asking it to allow you to charge beyond the funds in your account. Your request typically acts as an agreement on your behalf to pay any overdraft charges. In an informal request, the bank allows you to spend more money than you have in your account under the assumption you plan to pay the bank back. In this circumstance, you do not submit a formal request to the bank, which allows you more room for negotiating any charges. - As a consumer, you have the right to ask your bank to remove or refund overdraft charges. You can make an initial request over the phone, but you may also need to submit a written request to the bank. While the bank may not have a legal obligation to refund charges or repay you for past fees, it might feel it's in the bank's best interest to do so. If this is the case, the bank may offer you a partial or full refund. When a bank refuses a request, you may need to pursue legal action under your overdraft reclaim rights.
- Parliament established the Financial Ombudsman as an independent organization with the mission of settling disputes between consumers and financial organizations. The Ombudsman provides its service for free and will work to resolve a complaint within nine months. When you file a complaint with the Ombudsman, it will investigate the matter. If it believes the financial organization acted in a fair manner, it will explain to you why it reached its conclusion. On the other hand, if it finds the financial institution acted in an unfair manner, it can order the organization to make financial amends.
Once the Ombudsman reaches a decision, it is your right to accept or decline the ruling. If you accept, the agreement becomes binding. If you refuse the ruling, you still have the right to take the matter to court; however, you'll have to pay any legal fees associated with the process.
Financial Ombudsman
South Quay Plaza
183 Marsh Wall
London E14 9SR
+44-08000-234-567 (calls from landline)
+44-0300-1239-123 (calls from cell phones)
financial-ombudsman.org.uk - While it is your right to take a financial organization to court, websites like MoneySaverExpert.com do not recommend it. In order to apply to the court, you'll need to pay a filing fee ranging from £50-£100. You also have to present untested arguments to the court to prove you have reclaim rights for the overdraft charges. If you hire an attorney to help you with the process, you'll have to pay the fees for his services. Additionally, you may find yourself liable for any costs the court awards the financial institution, which could be more than the sum you're trying to collect in the first place.
