| Unauthorised overdraft fees. These are | | | | Are Unauthorised Overdraft Fees Legal? |
| three words that worry every bank | | | | There is some question as to the |
| customer. An unauthorised overdraft fee | | | | legality of unauthorised overdraft |
| is the fee charged by a bank when | | | | charges. Penalty clauses (such as |
| customers go over their overdraft limit. | | | | unauthorised overdraft charges) are |
| These fees can be very steep, with some | | | | illegal under breach of contract law. |
| banks charging high premiums for | | | | However, banks do have the right to |
| customers who exceed an agreed overdraft | | | | claim damages from customers who breach |
| limit by as little as a few pence. A | | | | their contract with the bank. To avoid |
| recent consumer report suggests that | | | | going to court every time, most banks |
| bank customers paid more than £4 | | | | write these charges into the contract. |
| billion pounds in unauthorised overdraft | | | | They are then able to raise those |
| fees in 2004. | | | | charges at regular intervals. |
| Scale Of Overdraft Fees | | | | The banks see the unauthorised overdraft |
| The BBC have reported that the seven | | | | fee as a fee for services rather than a |
| major banks charge unauthorised | | | | penalty. This could alter the legal |
| overdraft fees of £25 to £38 pounds. | | | | position. |
| Interest rates on the unauthorised | | | | In many cases, it is the people who can |
| amount can also be high. While some | | | | least afford it who suffer these |
| banks charge under 8% interest, others | | | | overdraft charges. This can become a |
| have interest rates that hover around | | | | cycle, with some people having to pay |
| the 30% level. | | | | unauthorised overdraft fees month after |
| The banking industry has been slated for | | | | month. |
| this practice by customers who feel they | | | | Help With Your Banking Rights |
| have been treated unfairly. The Office | | | | Consumers who want to find out more |
| For Fair Trading has also criticised | | | | about their banking rights should check |
| banks for overcharging customers for | | | | information from the Bank Action Group, |
| unauthorised overdrafts. Late payment | | | | a self-help organisation for banking |
| fees for credit cards have also been | | | | customers. This organisation can guide |
| criticised. The OFT suggests that late | | | | consumers through the lengthy process of |
| payment fees for credit cards should be | | | | recovering unauthorised overdraft fees |
| no more than £12 and should only cover | | | | from their bank. |
| the administration fee. | | | | Many organisations say that the banks |
| Getting A Refund | | | | should make it easier for consumers to |
| Consumers who feel they have been | | | | see what charges might be applied to |
| overcharged by their banks may be able | | | | their bank accounts. Until they do, |
| to receive a refund if they go through a | | | | consumers should read the fine print as |
| time consuming process. | | | | the terms and conditions of each bank |
| First of all, consumers can use the Data | | | | account contain information about charge |
| Protection Act to request details of all | | | | that might apply. Finally, when banks |
| charges on their account over the past | | | | send variations of terms, it is useful |
| six years. Next, they need to inform the | | | | to read these to see what new conditions |
| bank that they intend to sue in County | | | | might apply. |
| Court to get this money refunded. | | | | |