Claiming Back Your Penalty Charges

Items that have been returned or bounced, such as unpaid cheques, standing orders, or direct debits, are referred to as penalty charges. Unauthorized overdrafts also fall into this category. Many people fail to realize, however, that these penalty charges can be claimed back. Here’s how:

When going over your statements for the past six years, highlight all of the penalty charges and add them up. Then fill in the information in a 14 day letter template. Once completed, post the letter by Recorded Delivery to the lender or bank’s branch address. Be sure to keep a copy of the letter for your records.

After sending your letter, you will usually get one of two responses. One may be that your lender refuses your claim. The other may be that the lender offers to settle for all or part of your claim. Some lenders have made threats to close accounts when people have claimed back their charges, but this is rare. If you are worried that this may happen to you, you might want to open another account with a different bank before starting this process.

With small claims, lenders usually prefer to settle quickly in order to keep their administrative and legal costs down. With larger claims, however, the lender will likely wait for you to file the claim with the court. Before taking this step, be sure to allow the lender a full 14 days from the date it was delivered. If you receive no response or are not happy with the lender’s response once this 14 days is up, you can go ahead and file a claim in court. Keep in mind that there are fees associated with filing claims, but the bank will have to repay these fees if you win your case.

Once you have filed a claim, the bank is obligated to defend itself. Otherwise, it has to agree to ay your claim and to refund your court fees. To date, no lenders have bothered to defend themselves in court.

If you did not happen to keep your bank statement for the past six years, you can still make an estimated claim of what you believe you were charged during that period of time. Do this by calculating the amounts you have on the statements that you do have and estimating that the missing statements would have similar charges. For example, if you have one year’s worth of statements and they show £70 of charges, you could reasonably assume that six years of charges would be equal to £420 because £70 x 6 = £420. Similarly, if you have five months of statements and you were charged £125 in these five months, that averages £25 per month because £125 divided by 5 = £25. You can then multiply this amount by 72 because there are 72 months in six years.

If you had to estimate the charges, you will need to complete an estimated charges letter and then follow the same procedure as when you do have all of your statements. Most lenders will then work with you in order to determine the amount of charges you truly did incur before settling with you.