Excessive bank overdraft charges


New Member
Jan 13, 2006
To put my hands up straight away, this is a shameless plug for a new forum which has just been launched at

This is not an issue which affects cycling but it is an issue which affects cyclists - so I hope that I won't be flamed to hell for this post.

Banks make an estimated £3 billion per year from penalty charges levied for exceeding agreed overdraft limits, bouncing direct debits, standing orders or cheques.
A minor infraction by a bank customer could lead to a rapid build up of charges so that you will have difficulty recovering from what seemed to be a small initial financial problem.
You may have had direct experience of this.

The imposition of excessive penalty charges by the banks is unlawful. It is well established rule of Common law that penalty charges may only reflect actual losses suffered by the bank. How much do you think that it costs a bank to refuse a direct debit and to generate a letter? Less than a pound, perhaps. Yet the banks typically charge £35 - at a time when clearly the customer is in a period of difficulty.

Recent regulations - Unfair Terms in Consumer Contract 1999 confirm clearly that penalty charges are unlawful if they are disproportionate.
The Office of Fair Trading has announced that any Charge which does not reflect actual losses is disproportionate. Yet the banks continue to apply these hefty charges. To ignore their customers. To ignore the OFT and to ignore the Law.

However, some bank customers have started taking their banks on. They have started challenging extortionate charges and where the banks have refused to return them, some customers have even sue their bank in the County Court.
Everyone has won their case. In every case the bank has returned the money to their customer.
However, the banks never go to court. They bluff it out until the last moment and then settle the matter "as a matter of goodwill".
This could be because the banks consider that it is uneconomical to defend the case. However, it is far more likely that the Banks do not want to be in a situation where a judge has actually pronounced that the charges are illegal. If this happened, the floodgates would open, everyone would start claimimg and the Banks would be forced to repay a huge amount of money.

The Bank Action Group is a small group of bank customers who have suffered and succesfully sued their bank to recover excessive overdraft charges.

The Bank Action Group forum is a new initiative. It makes no money and is funded from the pockets of its organisers. It hopes to provide a meeting place where people in a similar position can ge advice, be encouraged and supported in theri fight to recover unlawfully seized bank charges.
It is also trying to build up a useful library of materials, documents and templates to assist people in their claims.

The Bank Action Group is also a campaign and strategy group and hopes to begin campaigning on behalf of bank customers in a structured, aggressive and visible way.

If you have been forced to pay excessive fees by your bank, then visit

to find out more. It is a new forum but will become much more useful as a resource in the coming weeks and months.