How to avoid a banking nightmare: Your rights, fraud and how to complain when things go wrong


Bank accounts are something most of us rely on every day to receive wages, spend our hard-earned cash and pay bills.

So when something goes wrong it is crucial to get the problem fixed as soon as possible.

This is Money takes a look at the most common banking problems, the rights you are legally entitled to, and getting issues sorted out quickly to avoid upheaval.

Know your rights: Keep your bank in line by swatting up on your rights and what to do should things go wrong


What should I do if my bank has paid the wrong person?

All it takes is one wrong digit for your cash to end up in the wrong account when you're making a payment. In some cases, even transfers using the correct details can go astray by mistake.

When this happens it is important to notify your bank as soon as possible. Although providers can not automatically reverse a transaction as a general rule, the quicker mistakes like these are picked up the better.

Even if it was your mistake, banks must make a reasonable effort to recover the money - but it won't have to cover any losses if its efforts don't work.

On the other hand, if your bank made the mistake and sent money to the wrong account, it must refund the amount of the payment to your account, plus any charges or interest you pay as a result.

The process of tracing missing funds did tend to be slow in the past, but new voluntary guidelines mean that banks should act within two working days to claw back cash once an accountholder has raised the issue.

If there are difficulties in getting back the funds, the bank will investigate further and report the results back to the customer within 20 working days.

Although there is still no guarantee money will be returned, the new code will do much to speed up the process and keep consumers in the loop.

If you believe your bank is not fulfilling its responsibilities, you can make a complaint to the Financial Ombudsman Service.

Can the bank refuse to honour a payment?

If a bank refuses to make a payment - either a direct debit or simple payment on your card - this can often leave the cardholder in a sticky spot.

But is your bank allowed to bounce a payment?

The simple answer is yes - but only under certain circumstances. For example:

  • There are not enough available funds in the account,
  • The agreed terms and conditions have been broken,
  • If the payment is made it would be unlawful.

If a bank has returned a payment it must let the customer know as soon as possible. It may also charge customers for issuing a payment that has bounced.

When can my bank charge me?

Is my money protected if the bank goes bust? Under the FSCS customers can claim up to £85,000 for lost funds


Unexpected bank charges can often be the straw that breaks the camel's back for accoutholders struggling with existing debts.

Most people will be aware that banks can make you pay interest on overdrafts, returned and paid item charges and account maintenance fees.

But fewer people realise that banks have the right to take money out of your account to pay off debts in another account, such as loans, credit card payments or other current accounts, with the same provider.

This right to 'set-off' does come with some conditions, though.

Banks must inform accountholders at least 14 days before any money is taken, leave enough cash in the account to meet 'priority debts and essential living expenses' and refund any money it takes that is needed for those expenses.

It must also refrain from taking any money intended for a particular purpose, such as healthcare, or if it is intended for a third party.

In all cases the bank has to inform customers after it has taken the money.

  • You can find out more about bank fees, charges and overdraft costs in This is Money's complete guide here.

What if my bank goes out of business?

If you have a savings or current account with a bank that goes under, you are entitled to up to £85,000 compensation to cover any losses.

Under the Financial Services Compensation Scheme, customers of any bank, building society or credit union that is regulated by the FCA can claim back a decent proportion of, if not all, the money they had sitting in the bank.

The £85,000 cap covers cash lost per individual for each banking institution - meaning those with several accounts with the same bank or banking group can only claim up to this amount.

Joint accounts are covered for up to £170,000.

The FSCS should get in touch with any customers affected by a bank collapse, but they can also be contacted on the FSCS website, or by calling 0800 678 1100 or 020 7741 4100.

If you are owed more than £85,000 you may have to wait until the bank's assets have been divided up as part of the insolvency process to see if you will be able to get any further money back.

The majority of banks in the UK are regulated by the FCA. Check the full list on the FCA website.

Identity theft: One of the best ways to avoid fraud is to be vigilant and check your accounts for unusual transactions frequently.


I have been a victim of fraud, what should I do?

One of the best ways of preventing fraud is to make sure you keep any eye on your bank statement.

Online banking developments and apps helping you manage your account on-the-go mean this can be done at the touch of a button - so there really is no excuse to bury your head in the sand.

Scanning your statement frequently is not only a good way to keeping on top of spending, but it means any unusual or unrecognised transactions are picked up quickly.


  • Make sure everything with your name, address or financial details is shredded before it is thrown away.
  • Never give your bank security or login details, full password or account numbers to anyone over the phone or on the internet, even if they say they are from your bank.
  • Comb through statements carefully to pick up any fraudulent transactions and notify your bank.
  • Contact the bank should any expected letters or statement not arrive.
  • Make sure all address changes are made should you move and make sure any mail is redirected.
  • Check your credit rating for unusual activity made in your name.

For more information on how to dodge fraudsters and protect your account details read This is Money's guide.

The first thing to do if you suspect you have been a victim of fraud is to contact your bank. Most will have a dedicated line for reporting fraud.

Your bank must refund any money that has been taken from an account, unless it can prove you acted fraudulently, were grossly negligent or the transaction was legitimately authorised.

It also has to repay any fees or charges the unauthorised transaction caused.

Banks and building societies may also issue you with a new debit card or pin, and should be able to block any further fraudulent transactions.

What happens if I have been scammed?

Often, crafty scammers will claim to be from an official source, perhaps even from your bank.

If you have inadvertently given out your account details it is important to contact the bank directly to try to prevent any fraudulent transactions.

Most banks will refund any money that has been taken, but again it will depend on whether it can prove you were acting negligently.

What if they refuse?

If the bank refuses to refund the cash, the next step is to ask for a final letter of deadlock and make a complaint to the Financial Ombudsman Services, which will make an impartial decision.

You can submit your claim online for free here. Make sure to include as much detail as possible and lay out how you want the issue resolved.

If the case is successful the bank will repay you. If not, you can still take a claim to court.

How can I complain?

If you want to complain to your about unfair fees you can follow the steps in our complete guide to reclaiming fees here.

But if you have a grumble with your bank and you think you have been poorly treated, making a complaint is fairly simple.

The first step for those wishing to complain is to contact the bank or building society's customer services department.

It is always a good idea to send a complaint in writing or via email so you have a record of your correspondence, but if you would prefer a more personal approach it could be worth following up with a quick call as well.

It is also worth remembering to keep a record of the date and time of the complaint, as well as the name of the customer service representative that received the complaint

You should then give the company a reasonable amount of time, typically 14 days, to respond.

If you are getting nowhere, it is worth warning the bank that you intend to take the complaint further - this could be taking the bank to court or taking your case to the Financial Ombudsman Service (FOS).

The FOS handles complaints about all major banking and building society complaints, as well as insurance, pensions, mortgages and investment issues - and it is free to use.

It will assess whether you have any grounds for a complaint and, if you do, it will request an explanation from the company. If it finds in the complainant's favour, the ombudsman will expect the organisation to provide a suitable remedy.

This could mean anything from putting right what went wrong and providing financial compensation, to a simple apology. All assistance is independent and free of charge.

The Ombudsman's decision is usually final, but if you disagree with it then you can complain to the Ombudsman's independent assessor.


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