Stop Press:

We've had several people reporting success with our letter (see right), but the OFT's finding will probably have the effect of legitimising fees upto £12, even though they state:

"A default charge is not fair simply because it is below £12. Setting a threshold for intervention is a pragmatic pro-consumer action that is designed to give the industry the opportunity to change its practice without litigation".

OFT press release >

See also our Idler article on debt and bank rip-offs >

Letter for getting banks (and credit card companies) to refund you

The following letter can be used to send to banks or credit card companies which charge you dubious "fees" (eg "late payment fee", "unauthorised overdraft fee").

(Reword to fit your own circumstances)

Dear [bank or credit card company]

A fee was charged to my account on... [list the details].

Government and consumer watchdog organisations are increasingly frowning on the charging of such fees. I draw your attention to a front-page Times story (27/10/04) which quotes legal experts arguing that these charges "are legally unenforceable because they seek to punish the borrower rather than compensate the bank for any losses that they have suffered".

The Office of Fair Trading has also argued that banks may be breaching consumer contract law (which stipulates that penalty charges must reflect only the bank costs incurred).

It's difficult to see how you can incur an administrative cost of £__ from my late payment [or unauthorised overdraft, etc]. I'm inclined to believe the Consumer Association's claim that the charges have less to do with "covering costs" than with "gross profiteering".

I request that you refund me, and I suggest that you change your policy to avoid the possibility of breaching consumer law.

Yours sincerely,


Our experiences with bank "fees"

Many credit card companies will refund one "late payment fee" per year if you phone them and ask. More than that and you'll probably need the above letter.

In 2002, I was charged two "late payment fees" of £20 each by one credit card company (in both cases the amount outstanding on my account was tiny – around £10 – and I paid just a few days late). They refunded the first fee after I phoned, but refused to refund the second. Until, that is, I sent them a version of the above letter, in 2005. They then refunded me immediately and offered a grovelling apology.

A different bank charged me a "clearance fee" of £30 when I went overdrawn by £12 for just two days. Then, after I sent them a version of the above letter, they immediately offered to refund me – on condition that I sign a form confirming that I would take my complaint no further! They're scared that people will find out about their scam.