How to claim back penalty charges

Here's a step-by-step guide to claiming back your bank account, credit card and store card penalty charges. We have also provided you with templates for form letters that you can send to your lender.

Penalty charges can be incurred for the following: unauthorised overdrafts, unpaid items such as cheques, direct debits or standing orders. These are also known as returned or bounced items.

You can claim the last six years of charges, or five if you live in Scotland (for claiming back your fees in Scotland, see the special entry below).

Some lenders have threatened to close the accounts of people after they have claimed back their charges. This is rare and unlikely to happen but if you are worried you should open an account with another bank, just in case.

You have all your statements from the past six years

• Highlight all the penalty charges in your last six years of account statements.
• Add up the total and then fill in all the information on the document in the box below, called '14 day letter'.
• Next, post this letter by Recorded Delivery, to the branch address of your bank/lender including a photocopy of the highlighted statement pages.
• The bank/lender will usually respond to the letter by either refusing to meet your claim or by offering to settle in part, or in full.

DOWNLOAD THE LETTER

Bank charges '14 day' letter [14KB] Most computers will open this document automatically, but you may need Adobe Reader


• If the claim is small, the bank/lender may want to settle it quickly to reduce its legal and administration costs. If the claim is large, it is more likely the bank/lender will do nothing - waiting until you actually go ahead and file a claim at court.
• Check online with the Post Office to confirm the date that the bank/lender received your letter and then allow 14 days from that date for it to respond.
• If, after 14 days, you have received no response at all, or are unhappy with the bank/lender's response then the next stage is to file a claim at your local small claims court (see section titled 'File at Court' below). There is a fee to file a claim. If your bank pays up, this fee is refunded at the point of settlement.
• The bank/lender is then obliged to defend its case before the judge or else to pay the amount you are claiming against it. If it chooses not to defend itself, as well as paying the full amount of your claim, it will also refund your court fee. So far no bank/lender, we are aware of, has defended its penalty charges in court. (see section titled 'File at Court' below).

You have only some statements from the past six years

You can submit an estimated claim if you genuinely believe you have been charged during a period for which you have no statements. Calculate all the charges from the statements you have and if you believe the missing statements would also record similar charges, then estimate the missing amount by doing the following equation:

• If one year's statements show £70 of charges then you can estimate the total amount of charges for 6 years will be: £70 x 6 = £420.00
• If you have 5 months of statements and these show that you have accumulated £150 of charges in that time, then you can calculate that you have been charged on average £30 a month. (£150 divided by 5 = £30). There are 72 months in six years so 72 x £30 = £2,160.00 (if your account hasn't been open for the past six years then only multiply the average amount by the number of months the account has been open).
• Fill in the necessary details in the template for the "estimated charges letter" in the box below and post it Recorded Delivery to your bank/lender's branch address.
• Your bank/lender will almost certainly work out how many charges you have actually incurred in the past six years. It may contact you within 14 days to either make you an offer, in part or in full, or to state that it has refused to refund your money.

DOWNLOAD THE LETTER

Bank 'estimated charges' letter [14KB] Most computers will open this document automatically, but you may need Adobe Reader


• If the claim is small, banks/lenders tend to settle the claim quickly to reduce their legal and administrative costs, but each organisation reacts differently. If the claim is large, then it is more likely the bank/lender will do nothing until a claim is filed at court.
• Check online with the Post Office to confirm the date that the lender received your letter and then allow 14 days from that date for it to respond.
• If, after 14 days, you have received no response at all, or are unhappy with the bank/lender's response then the next stage is to file a claim at your local small claims court (see section titled 'File at Court' below). There is a fee to file a claim. If your bank pays up, this fee is refunded at the point of settlement.
• The lender is then obliged to defend its case before the judge or else to pay the amount you are claiming against it. If it chooses not to defend itself, as well as paying the full amount of your claim, it will also refund your court fee. So far no bank/lender we are aware of has defended its penalty charges in court. (see section titled 'File at Court' below).

What to do if you have no - or very few - bank records

Check to see how far back you can access your statements through your bank's or lender's website.

If all your statements are not available online, then phone the bank or lender to ask for the relevant information. You may be charged for this.

If the charge is more than £10 and you are unhappy to pay it, there is the option of submitting a Data Protection Act (DPA) disclosure request (see section below titled Data Protection Act disclosure request for further information).

When the statements arrive, follow the advice from the first section "You have all your statements from the past six years".

Data Protection Act Disclosure request

This request is made under the Data Protection Acts 1984 and 1998 and refers to the "right of subject access" under the acts.

DOWNLOAD THE LETTER

Data Protection Act letter [14KB] Most computers will open this document automatically, but you may need Adobe Reader

Use the draft Data Protection Act letter in the box on the right as it has been written to avoid confusion and delay. Using the DPA route does delay the process of claiming back penalty charges by as much as 40 days. It is therefore a last resort.

Make a note of any calls you make and what the lender tells you. Also note when you post letters etc as this will make it much easier to keep track of everything.

Once the statements or charge details arrive, then follow the advice from the section entitled "You have all your statements from the past six years".

Filing a claim in the Small Claims Court (England & Wales)

If you are unhappy with your lender's response to your "14 day letter", then the only option left is to go to court.

First check that the lender received your recorded letter and that 14 days have passed, then download the form from the link below.

You can access the Claim From online, using the links in the box below.

SMALL CLAIMS COURT FORMS

N1 claim form for the Small Claims Court HM Courts Service guidance
HM Courts Service: how to make a claim
Money Programme guide on filling in form N1 [15KB] Most computers will open this document automatically, but you may need Adobe Reader

• Print out the form and make two additional copies.
• Take all three copies and register the claim at your local County Court.
• You can find the address of your local County Court by calling the High Court on 0845 456 8770.
• If you have all your statements, attach a highlighted copy of them to each claim form.
• If you don't have all your statements and you are estimating your claim then include a copy of the statements you do have that show a charge to each of the claim forms.
• When you file a claim, you are entitled to claim interest on all the penalty charges your bank/lender has levied against you - from the date they were originally deducted from your account. If you decide to claim the interest, attach a copy estimating the interest to each of your three N1 claim forms.

If you are in Scotland

DOWNLOAD THE FORM

Scottish small claim form [102KB] Most computers will open this document automatically, but you may need Adobe Reader
In Scotland, you can claim back five years of penalty charges, not six.

You need to fill out a Small Claim Summons document and take it to the Sheriff Court.

There will be a charge for filing the claim.

Guidance Notes on how to fill out the form can be found here:

Sheriff Court guidance notes

No time but still want to claim?

If you don't have the time or inclination to claim back penalty charges yourself, there are several companies on the internet that will do it for you. They usually keep a percentage of your claim as their fee.

All the advice given and enclosed documents are courtesy of Stephen Hone and his website www.penaltycharges.co.uk and have been used with his consent.

RELATED INTERNET LINKS
Open University money & management forum
Penaltycharges.co.uk
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