(Financial Conduct Authority)
Last updated: 13/01/2018
In most circumstances, your bank must refund you for an unauthorised payment. Find out what your rights when money is taken from your account without your permission.
Money can only be taken from your account if you have authorised the transaction.
If you notice a payment out of your account that you did not authorise, you should contact your bank immediately.
If you did not authorise a particular payment you can claim a refund.
In most cases the bank must refund the payment without undue delay and by the end of the business day following the day on which it became aware of the problem, unless it has reasonable grounds for suspecting that you have acted fraudulently.
Your bank may ask you to answer some questions and fill out a form confirming what has happened, but it cannot delay your refund while it waits for you to return the form.
You should be aware that deliberately making a false claim that a payment was unauthorised is fraud and your bank could report it to the police.
Transactions which have been made incorrectly
You are entitled to make a relevant claim for a refund to the bank with which you hold your account, whether or not they are involved in the transaction in question. More information can be found in our document Payment Services and Electronic Money – Our Approach.
If you make a payment to the wrong person, because you have used the wrong payment details, the bank with which the account is held that your payment was made to has to cooperate with efforts to recover your funds and you may be able to take court action to recover them.
Refund of charges and interest
When your bank refunds an unauthorised payment it must also refund any charges and interest you have paid because of the unauthorised transaction.
Why a refund can be refused
Your bank can generally only refuse a refund for an unauthorised payment if:
- it can prove you authorised the transaction – though your bank cannot simply say that use of your password, card or PIN conclusively proves you authorised a payment
- it can prove you are at fault because you acted fraudulently or because you deliberately, or with ‘gross negligence’, failed to protect the details of your card, PIN or password in a way that allowed the transaction
- you told your bank about an unauthorised payment 13 months or more after the date it left your account, so make sure you contact the bank as soon as possible.
If the payment was from an overdrawn current account or a credit card payment, your bank can only refuse a refund for an unauthorised payment if:
- it can prove the debtor (the customer), or someone acting on their behalf, authorised the transaction – though a firm cannot simply say that use of a password, card and PIN conclusively proves a customer authorised a payment
- the loss was due to the use of a credit token by a person who acquired it with the debtor’s consent
You may have to pay up to the first £35 of an unauthorised transaction if your card has been lost or stolen or misappropriated unless this was not detectable by you, or the bank, its agents or staff were at fault.
However, you will not be liable for any unauthorised payments made after you notified the bank or card issuer of the loss, theft or unauthorised use of your card or password – unless it can prove you acted fraudulently.
If your bank refuses to refund an unauthorised payment, it should explain why.
How to protect yourself
When you receive a debit or credit card, or sign up for online, telephone or mobile banking, you should be told what you have to do to keep your details secure.
It is important that you protect the personal information that allows you to access your account, such as your password or PIN.
Your bank or card issuer will also tell you how to notify it – which you should do as soon as possible – if your card is lost or stolen, or you think someone else knows your password or PIN.
When a bank can claim your money
Your bank may be able to claim money from one of your accounts to pay your debt in another account under its right to ‘set-off’.
This could happen if you miss loan or credit card payments and you also have a current or savings account with the bank.
If a bank wants to claim money from your account to pay a debt, it should:
- tell you about its right of set-off at least 14 days before it is used on your account for the first time, and where appropriate on any further occasion
- estimate how much money needs to be left in your account to meet your priority debts and essential living expenses like a mortgage, rent and food bills
- refund you, in most cases, if the bank later realises that money taken in set-off was intended for those priority debts or essential living expenses
- not use set-off on money it knows or should know is intended for certain purposes, such as where the NHS provided it for healthcare or a third party is entitled to the money
- tell you promptly when set-off has been used on your account
The right to claim money from your account to pay a debt should also be clearly explained in your account terms and conditions.
You must receive a full response to complaints that involve rights and obligations under PSD2 within 15 days. If there are exceptional circumstances, this is extended to a maximum of 35 days and the firm must send a holding letter in the interim.
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