Overdraft Claims

Jump to: Introduction Do I Have a Claim? How Do I Claim?

Introduction

Millions of people in the UK have an overdraft (OD) facility, but many do not consider whether an overdraft is suitable for them or if the lender acted responsibly in providing it. Overdrafts can become a very costly monthly expense when consumers rely on them for years without paying them off - this is not their intended use!

The FCA (the regulator for banks and card providers) stated:

"Overdrafts are primarily intended to provide short-term credit. But our research shows that many consumers use arranged overdrafts regularly over long periods, and so incur charges for prolonged periods. For these customers, an overdraft may not be the best way of borrowing."

The charity StepChange highlighted:

More than half of our clients have overdraft debt. Our research found:

• 2.1 million people were constantly in their overdraft.
• 79% of clients surveyed were constantly in their overdrafts in the 12 months before seeking advice.
• 81% of clients with overdrafts used them to cover essentials like food, living costs, or household bills.

Do I Have a Claim?

Lenders must ensure you can repay your overdraft within a reasonable period. It is neither fair nor responsible for a lender to continue charging for or extending an overdraft or increasing credit limits when it is clear it is being used over a prolonged period.

Banks should review your overdraft annually. This is typically outlined in their terms and conditions, and the Financial Ombudsman considers it good industry practice.

If you have been in your overdraft for over 2 years and struggle to get out of it, you may have grounds for a complaint. Below are some factors that could strengthen your case:

• Constantly using your overdraft for over 24 months.
• Difficulty paying direct debits or standing orders.
• Gambling activity appearing on statements.
• Increasing other debts with the same bank.
• Being recently rejected for loans or credit cards by the bank.
• Increasing debts with other lenders on your credit record.
• A worsening credit record (e.g., maxed-out credit cards, new missed payments).
• Use of payday loans.
• Increasing mortgage arrears.
• Arrangements to pay with other creditors.
• A reduction in income going into your account.

How Do I Claim?

If several of the above issues sound familiar with your overdraft (OD), then you need to contact the bank that provides your OD and file a complaint.

Finding the Bank's Complaint Information

To find the correct contact details, log onto the bank’s website and navigate to the “Complaints” section. This will provide information on where to send your complaint via letter or email, along with the correct address.

Filing Your Complaint

Once you have the necessary contact details, write your complaint letter or email using the points mentioned earlier, which are relevant to your situation to support your case.

The bank has 8 weeks to respond with a decision or provide a reason if they need more time. If the bank rejects your complaint, you can escalate the issue to the Financial Ombudsman Service. Learn more about their process by visiting:

www.financial-ombudsman.org.uk

Data Subject Access Request (DSAR)

If you do not know your bank details, you can send a Data Subject Access Request (DSAR) to the bank to obtain this information, allowing them 1 month to answer the request. Include as much information about yourself as possible, and ensure you include your full name, date of birth, address at the time of the account, and anything else you find appropriate.