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Banks using ‘underhand’ methods in overdraft row

Probe shows how banks try to avoid refunding fees


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A Which? exposé has uncovered the tricks that some banks are using to deter customers who challenge their overdraft charges.  

Our ‘Bank Check’ investigation has uncovered evidence of banks threatening to close accounts, passing details on to debt collectors and delaying and charging for statements as they seek to put off disgruntled customers.

We have heard of several cases of banks charging between £3 to £5 per page for the duplicate statements needed to start making a claim, often going back up to six years. The law states that they can only charge a maximum of £10 in total.

One bank tried to charge £5 per page and a £30 an hour labour charge to send duplicate statements, with a total bill of £360.

‘Underhand methods’

There have also been instances of banks delaying requests for statements, as well as delaying their responses to, or ignoring, customer letters.

Which? has also heard of some customers being offered personal loans or increased overdrafts in place of refunds.

Which? personal finance campaigner Doug Taylor said: ‘We believe that banks have been over-charging customers who exceed their overdraft limit for years, charging billions in the process. 

‘In an attempt to avoid paying consumers what they are due, we’ve found that banks are employing increasingly underhand methods to avoid their responsibility to treat their customers fairly and refund the charges.’

The Office of Fair Trading (OFT) announced last year that it would investigate, and with the results due in the spring, time is running out for this particular money-spinner.

Which? will be discussing this dossier of evidence with the OFT, the Financial Services Authority (FSA) and Financial Ombudsman Service (FOS). 

Bank Check investigation

Doug Taylor continued: ‘It is important that the exposure of these tricks does not put people off re-claiming their charges, though, as that would be playing into the banks’ hands.

‘Thousands of people have successfully challenged their bank and had their charges refunded.  With over 150,000 downloads of information and template letters from our bank charges website alone, it seems many thousands more plan to take on their bank.

‘It is really simple to start the process and banks must respond to any query within eight weeks.  If they don’t – go straight to the Financial Ombudsman Service.

‘The financial services industry cannot ignore this issue forever and will soon have to face it head-on when the OFT reports back.’

The Which? ‘Bank Check’ investigation also found that it is not only the customers who try to reclaim charges who are being short-changed. 

Overdraft increases

Some banks are acting to make overdrafts more expensive for all their customers before the OFT announcement. 

From October to December 2006, the Bank of England base rate rose by 0.25 per cent. In the same period, NatWest upped its unauthorised overdraft rate by 2.3 per cent and Lloyds TSB upped its rate by 2.70 per cent. 

Bank Check will be a regular feature from Which?.  We will continue to track interest rates and tricks used by banks and building societies to avoid letting their customers have what is rightfully theirs.

Responding to our investigation,  Angela Knight, Chief Executive designate of the British Bankers’ Association, said: ‘Which? is clearly trying to exploit its position as a consumer body by sensationalising what could be a useful piece of research.

‘The banking industry handles over seven billion transactions a year and occasionally something will go wrong – that’s human nature.

‘But the way in which Which? has approached this is not only sensationalist, it’s also personally insulting to the front line bank staff who do an excellent job serving their customers.’

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