Threatening your bank with court action can often result in a speedy response

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The nuclear option

Okay, so you have been nice, polite and reasonable so far. Research suggests that banks have tended to refund two-thirds of customer claims in the past, even before the OFT announcement.

But if reasonableness and politeness do not work, a stronger letter might be necessary. Write to your bank and tell them that if they do not pay back your money, you will either take legal action against them or refer them to the Financial Ombudsman Service.

The third letter

The third draft letter says that you will go to the small claims court if they do not give your money back.

As before, check through carefully and insert your personal information where indicated in red. The fourth paragraph (beginning 'I am only prepared...') is very important. It protects your position in the instance of you losing at the small claims court, and shows that you are acting reasonably. If your bank still refuses to pay back your money, the small claims court is the next step.

[INSERT TODAY’S DATE]

[INSERT YOUR HOME ADDRESS]

[INSERT THE NAME OF YOUR BANK]

[INSERT THE ADDRESS OF BANK]

Re: Default charges on account number [INSERT YOUR ACCOUNT NUMBER]

Dear Sir/Madam,

I refer to default charges relating to unauthorised overdrafts which have been applied to my account by [INSERT THE NAME OF YOUR BANK], amounting to [INSERT THE FULL AMOUNT OF THE BANK CHARGES].

I wrote to you on [INSERT THE DATE OF YOUR LAST LETTER TO THE BANK] asking that you repay these charges as a gesture of goodwill to a loyal customer. Since you have not done so, I intend to take the matter further and claim the amount of [INSERT THE FULL AMOUNT OF THE BANK CHARGES] through the small claims court.

The basis for this request is that under the Unfair Terms in Consumer Contract Regulations and/or the law of penalties, the small claims court could declare such charges unfair and therefore unenforceable.

I am only prepared to pay the charges on the condition that the bank agrees to repay me the full amount if the small claims court finds in my favour and declares the charges unenforceable.

I look forward to receiving your response within seven days of the date of this letter or I will issue proceedings in the small claims court to reclaim the full amount of charges, plus interest and costs.

I am happy for you to contact me on [INSERT YOUR TELEPHONE NUMBER] to discuss the matter.

Yours faithfully

[SIGN YOUR NAME]

[TYPE YOUR NAME]

Or open the letter as a word document