Unaffordable Overdraft Claims | Consumer Claims Handbook

#At a Glance


Difficulty	⭐⭐ Medium
Time to DIY	2 hours
Average Payout	£500–£3,000
Time Limit	6 years
Escalation	Financial Ombudsman Service

#What Is It?

Banks have a duty to lend responsibly. If they gave you an overdraft (or increased it) when you clearly couldn't afford it, that's irresponsible lending.

Signs of unaffordable overdraft:

You lived permanently in your overdraft
Your overdraft kept increasing without affordability checks
The bank could see you were in financial difficulty
Fees and charges pushed you deeper into debt
You were using your overdraft for essential spending

#Am I Eligible?

#✅ You likely have a claim if:

You were regularly at or near your overdraft limit
You stayed in your overdraft for extended periods (months/years)
The bank increased your limit despite seeing you struggle
You were paying significant fees while in difficulty
You had other signs of financial stress (gambling, payday loans, benefit income)

#❌ You're less likely to succeed if:

You occasionally dipped into overdraft and paid it back quickly
The overdraft was genuinely affordable at the time
You've had no financial difficulty related to it

#How Much Could I Get?

Fees refund: All overdraft fees and interest charged
8% interest: Added to the refund
Distress compensation: £50–£500 for the stress caused
Typical total: £500–£3,000+ depending on how long you were trapped

#Step-by-Step Process

#Step 1: Get Your Statements

Request your full account history via Subject Access Request (free)
Or download from online banking (usually 7 years available)
Look for patterns of persistent overdraft use

#Step 2: Identify the Problem Period

When did you go into overdraft?
How long did you stay there?
Did the bank increase your limit during this time?
What fees did you pay?

#Step 3: Submit Your Complaint

Write to your bank explaining:

The period you were in persistent overdraft
That the overdraft was unaffordable
That proper checks would have shown this
That you want fees refunded plus 8% interest

#Step 4: Escalate If Rejected

Bank has 8 weeks to respond
If rejected, escalate to Financial Ombudsman
FOS regularly upholds these complaints

#Evidence That Supports Your Claim

Bank statements showing persistent overdraft use
Evidence of low/irregular income at the time
Benefit income (suggests vulnerability)
Multiple overdraft limit increases
Gambling transactions (banks should have spotted this)
Payday loan transactions
Bounced payments/returned direct debits

#FCA Guidance Banks Should Follow

The FCA expects banks to:

Monitor accounts for signs of financial difficulty
Contact customers who are persistently overdrawn
Offer ways to repay sustainably
Not increase limits for struggling customers
Consider reducing or removing the overdraft

If your bank didn't do these things, your complaint is stronger.

#Common Questions

Q: I'm still with the same bank – will this affect my account?

It shouldn't. Banks can't penalise you for legitimate complaints. You can also complain about closed accounts.

Q: I had overdrafts with multiple banks – can I claim for all?

Yes. Submit separate complaints to each bank.

Q: The overdraft was years ago – is it too late?

The limit is 6 years, or 3 years from when you became aware you could complain.

Q: I asked for the overdraft increase – does that matter?

No. Banks must do affordability checks regardless. You asking doesn't remove their responsibility.