Recovering the bank’s overdraft fee
There have been countless occasions when, due to financial operations, late payments, delays in transfers or simply a lack of funds, the bank has had to “advance” us a certain amount to cover a bill that has been issued.
Such transactions – sometimes small, sometimes larger – always result in the financial institution charging and collecting a fee known as an “overdraft fee”, for having granted us, albeit briefly, a certain amount of “credit”.
Now, thanks to the latest rulings from our courts and tribunals, you no longer have to put up with the abuse involved in this banking practice, and today, at Auris Advocats, we’ll explain why:
The abuse of “overdraft charges”
In this article, we shall focus on outlining, in broad terms, the arguments and grounds that have led our case law to conclude that the transaction in question is unfair and, therefore, void, entailing the possibility of recover the bank’s overdraft fee, requiring him to refund all sums paid in respect of this:
Every discovery is different
To begin with, not all overdrafts are the same and, consequently, not all of them allow for recover the bank’s overdraft fee on the same terms.
A payment for an overdraft of a few euros or cents – possibly the result of a minor accounting error – cannot be treated in the same way as a payment for an overdraft running into thousands. Nor can the same be said of a customer who has never shown any signs of default, as compared with another who has a long history of debt.
How many times have you found yourself in the red simply because your payslip didn’t arrive on time, or because the transfer you made from one of your other accounts didn’t go through in time?
They didn’t tell me about it before, and they haven’t told me about it now either
Another point of contention concerns the disclosure of the existence of the overdraft fee itself at the time the account is opened, as well as its subsequent application.
The fact is that there are many occasions when The overdraft charge goes unnoticed by the end customer when they open their bank accounts, just as it does when it is applied, when the organisation simply informs you that you must pay a certain amount for that fee, without providing any justification whatsoever.
Its relationship with interest on arrears
Also, given that I am paying off a “debt”, am I not already paying interest on arrears for it?
Given that commission charges typically exceed market rates, with percentages ranging from 5% to 20% of the overdrawn amount being applied, the nature of these charges shifts from being a result of the cost of managing the overdraft to being purely compensatory.
If I’m already paying late payment interest as compensation, am I not paying twice?
These are situations, exceptional circumstances and, ultimately, realities that have not gone unnoticed by our courts and tribunals, which have therefore concluded that the Bank’s automatic and excessive application of the overdraft charge is entirely unfair.
The fact is that the Bank will never be able to charge an overdraft fee when:
- Whether the overdraft was caused by an accounting error or resulted from banking operations.
- The customer has not shown any signs of default that would suggest they are taking advantage of the Bank’s overdraft facility.
- It has not correctly and expressly stated its inclusion in the contract.
- It must have expressly notified the customer of the application of this fee, and not via computer-generated automated emails.
This leads us to consider whether a right to be able to… has arisen for the customer recover the bank’s overdraft fee or, at the very least, justify why the “advance” debit balance is incorrect”
- Clearly, it hasn’t been applied automatically.
- Late payment interest is already accruing on that debt.
What does case law say about recovering the bank’s overdraft fee?
These are the arguments on which courts such as the Court of First Instance in Oviedo have based their judgement of 31 January 2018, or the Provincial Courts of Madrid, Álava, Seville, Jaén and Toledo in their judgements of February 2016, December 2016, April 2017, May 2017 and 1 June 2017, to rule that the unfairness and invalidity of the “overdraft clause”, which give rise to a more than valid claim for any sums that may have been incurred as a result of its application.
For further information on how to claim back the bank’s overdraft fee, please do not hesitate to contact our experts at Auris Advocats.
Juan Torrecilla
Lawyer
Insolvency Department
Commercial Department
Civil and commercial litigation