Banks and building societies apply charges to current accounts when the account holder:
- goes overdrawn without an agreed overdraft in place
- exceeds the agreed overdraft limit
- makes a payment (or tries to make a payment) when there isn’t enough money in the account.
When customers complain about these charges they may say it’s because they’re unfair, or too high, or have been wrongly applied. But often there are other underlying reasons why customers have problems with current account charges.
This guidance does not relate to standard monthly charges such as account usage fees or fees for special services such as CHAPS payments.
Types of complaint we see
We see a range of complaints about current account charges. Typically, customers tell us:
- the charges are too high
- their bank or building society shouldn’t have applied the charge
- there was a sudden price increase or other change to the way the charges were applied.
What we look at
When we look at complaints about current account charges we’ll consider a range of things, including:
- the law, rules and regulations in force at the time
- industry codes of practice
- what we consider to be good industry practice at the time
- the terms and conditions of the current account.
We’ll also be considering whether there are other reasons behind the customer’s complaint, for example:
- are they experiencing financial difficulty?
- do they have concerns about how the account was sold to them
- should the bank have given them an overdraft?
‘The charges are too high’
A Supreme Court ruling in 2009 established that current account charges are part of the overall cost of providing services to all current account customers – and can’t be challenged on the grounds that they’re too high in themselves. In other words, they can’t be considered unfair simply because they’re high. As the law is one of the things we consider, it’s more likely that we also won’t consider a charge as unfair simply because of how much it costs.
However, we can still consider the impact of the charges on the customer. And if a customer is experiencing financial difficulty, we’ll look at whether you’ve considered this too, and how you’ve responded. For example:
- have you investigated what exactly the customer is finding difficult about the charges?
- when monitoring their account, have you noticed anything to suggest they might be in financial difficulty – such as regularly occurring overdraft fees, a sudden decrease in income, or an increased reliance on an overdraft?
- if they’re experiencing financial difficulty, have you been in touch with them to see if you can help them sort things out?
- have you asked them to fill in an income and expenditure form or give you a financial statement, so you have a better understanding of their financial situation?
‘My bank has suddenly raised their charges or made other changes I don’t like’
Sometimes customers complain to us after their bank or building society has increased their current account charges, or made other changes they’re unhappy with. We’ll look at the terms and conditions attached to their account, and check the changes don’t breach any of the terms.
We’ll also want to know:
- was the change foreseeable for the customer – in other words, could the customer have reasonably expected the change to take place?
- what are your reasons for making the change? Have you explained them clearly to the customer? And were they provided for in the terms and conditions?
- did you tell the customer about the change in advance, in a clear, easy-to-understand way?
- did you give the customer enough notice?
- can the customer say no to the change – and have you discussed other options with them?
- have you considered the impact this is having on the customer – and have you put anything in place to support customers negatively affected by the change?
Again, we’d expect you to look out for financial difficulty if your customer complains about changes you’ve made to their current account charges.
But if they’re complaining simply because they object to the change in principle – and it hasn’t affected them negatively – we’re unlikely to uphold their complaint (as long as you haven’t breached any laws, regulations, codes of practice or terms and conditions). In this case, we might suggest the customer raise their concerns with a regulator, such as the Financial Conduct Authority.
Handling a complaint like this
When a customer complains to you about current account charges, you should consider the bigger picture, and try to identify why they’re complaining. It’s important to look out for underlying reasons behind their complaint, such as financial difficulty.
We only look at complaints that you've had a chance to look at first. If a customer complains and you don't respond within the time limits or they disagree with your response, then they can come to us.
Find out more about how to resolve a complaint.
Putting things right
If we think you’ve done something wrong or treated the customer unfairly, we’ll ask you to put things right. The details will depend on the nature of the complaint, and how the customer has been affected. We’re unlikely to ask you to reduce your charges, or revert to previous charges (if the customer is complaining about a change).
Instead, depending on the circumstances, things we might ask you to do include:
- refunding and/or freezing some or all of the charges for a given period
- removing adverse credit information about the customer
- compensating the customer for poor customer service
- changing the customer’s current account to one that’s more appropriate for their circumstances
- removing the overdraft facility and agreeing a repayment plan.
If you’re handling a complaint about current account charges, you may find it useful to refer to the FCA’s ‘Fairness of variation terms in financial services consumer contracts under the Consumer Rights Act 2015’.
The Supreme Court’s press summary of Office of Fair Trading vs Abbey National plc & others 2009 explains their ruling on this case.
Another useful resource is the Consumer Rights Act 2015.