Step 1 - Know Your Rights
When you open a bank account or take out a credit card you enter into a contract. Bank charges for going overdrawn or for bounced cheques are the equivalent of a charge for breach of contract, known as liquidated damages, and the courts can enforce payment. However this sum must reflect the actual costs incurred and not exceed damages the bank suffered due to the breach of contract, otherwise it becomes a penalty, which is not enforceable by the courts.
The argument that the charges exceed the customers losses and are not enforceable by law is covered in the Unfair Terms in Consumer Contracts Regulations 1999, Unfair Contract Terms Act 1977 and at Common Law. Some banks argue that charges are a fee for a service, however if this is the case then they must be reasonable under Section 15 of the Supply of Goods and Services Act 1982.
