Do You Know Your Banking Rights?

| March 22, 2013 | 0 Comments

Nearly all of us use a bank account, and nearly all of us have experienced the pain of being charged for overdrawing – or occasionally worse, such as an unauthorised transaction. However, not everyone realises that banks are regulated by the Financial Services Authority (FSA), which will help you to stand up for your rights if you feel you have been unfairly treated. Here we’ll explain some of the most common problems you might run into as a bank customer, and what your rights are.

FSA

Overdrafts

Banks (and building societies, such as Leeds Building Society) will usually allow you to agree an authorised overdraft – that is, an extra amount you can withdraw after the money in your account is gone. You will be charged interest, usually every day, on the amount you go overdrawn, and if you exceed the limit, you may be hit with additional fees.

While your bank is within its rights to charge an amount that reflects the costs incurred, excessive charges can be seen as penalties (which are not enforceable by the courts). If you think your bank is charging too much for overdrafts – or levies unreasonable fees for sending you a letter or bouncing a cheque – keep a record of all the charges and inform a body like the Citizens Advice Bureau or the FSA. You may be entitled to get your money back.

Unauthorised Payments

If a payment has gone out from your bank account that you didn’t authorise, and you inform the bank about it within 13 months, they must refund the money unless they can prove that you were at fault. This could mean that you were negligent with your details – such as giving away your PIN, password or card number – although just the use of these details alone does not prove that you acted negligently. The bank must also refund any charges or interest that you had to pay as a result of the unauthorised transaction.

Your bank may also occasionally claim money from one of your accounts to pay off a debt on another. This is known as its right to “set-off”, and might happen if you have missed a loan or credit card payment on one of your accounts. However, the bank must provide you with information about this 14 days in advance, and should not use set-off on money that it knows was intended for certain purposes – such as when the NHS provided it for healthcare. It must also inform you promptly when set-off has been used.

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