Understanding Bank Charges: What UK Banks Can and Cannot Charge
The Regulatory Framework for Bank Charges
FCA rules strictly govern what UK banks can and cannot charge their customers. Understanding these rules helps you identify when you're being charged legitimately and when you have grounds to complain or reclaim fees.
What Banks Cannot Charge
Following the 2009 Supreme Court ruling and subsequent FCA guidance, banks cannot charge unfair or excessive fees for basic account services. Since the 2020 overdraft reforms, banks cannot charge fixed daily or monthly fees for unarranged overdrafts — only a single APR rate on the overdrawn balance.
Banks also cannot charge for refusing a payment that would take you into unarranged overdraft, though this doesn't prevent them from refusing the payment entirely.
What Banks Can Charge
- Monthly fees for packaged accounts (clearly disclosed)
- Interest on overdrafts (at a single APR rate)
- CHAPS payment fees (typically £20–£35)
- Copy statement fees (though most banks now provide free digital statements)
- International transfer fees (though increasingly eliminated by digital banks)
Charges That Are Commonly Disputed
Some accounts have stopped charging for returned direct debits and missed payment fees, though practices vary by bank. If you're charged a fee you weren't clearly told about when you opened your account, you have grounds to request a refund through the bank's complaints process.
Reclaiming Unfair Charges
If you believe charges are unfair or were not clearly disclosed, write to your bank's complaints department. If unresolved within eight weeks, escalate to the Financial Ombudsman Service — the FOS can award compensation beyond just a refund. The service is free and independent.
