Reclaim overdraft fees from First Direct
First Direct gives a fee-free buffer and then charges interest on borrowing above it. If you were lent an overdraft you couldn't afford, or interest kept building while you stayed stuck in your overdraft, you can ask for a refund. It doesn't matter that you applied for it. What matters is whether First Direct lent responsibly and charged fairly. You send the complaint yourself, it's free, and any refund is yours in full.
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Your rights
Under the FCA's overdraft rules from 6 April 2020, banks must use a single simple interest rate, cannot charge fixed daily or monthly fees, and cannot make unarranged overdrafts cost more than arranged ones. First Direct, as part of HSBC UK, also has to lend responsibly. If it granted or increased your overdraft without properly checking affordability, that can be unaffordable lending and you can reclaim the interest and charges. Complaining is free. If First Direct rejects you or doesn't give a final response within 8 weeks, you can take it to the Financial Ombudsman Service at no cost. You normally have six years from the events, or three years from when you realised there was a problem, to raise it.
Step by step
- 1Download your First Direct statements from online banking or the app, or ask for paper copies. Note each overdraft interest charge and any period you remained overdrawn beyond the fee-free buffer without clearing it.
- 2Make a formal complaint to First Direct by phone on its 24-hour line, through online banking messaging, or in writing. State that you believe the overdraft was unaffordable or unfairly charged, and ask for a refund of interest and charges plus 8% simple interest.
- 3Give First Direct up to 8 weeks to send a final response. Keep all correspondence. If they offer part of what you've asked for, you're not obliged to treat it as full settlement.
- 4If First Direct says no or misses the 8-week deadline, refer the complaint to the Financial Ombudsman Service within 6 months of the final response. It's free and you submit it yourself.
What they'll say, and your comeback
“You stayed within your agreed overdraft, so the interest was correct.”
Comeback, Staying within the limit doesn't make the overdraft affordable. The issue is whether First Direct should have given me that limit at all given my circumstances, and whether it checked I could repay.
“Our overdraft is competitively priced and FCA-compliant.”
Comeback, I'm not just disputing the rate. I'm saying the lending itself was unaffordable for me. A compliant price doesn't address whether I should have been lent the money in the first place.
“These charges are too old for us to consider.”
Comeback, The complaint window is six years from the charges, or three years from when I realised they were unfair. If you're refusing on time grounds, please confirm in writing so I can escalate to the Financial Ombudsman.
FAQ
First Direct is part of HSBC. Who do I complain to?
Complain to First Direct directly, as it handles its own customers. It's covered by the Financial Ombudsman Service in its own right, so the free escalation route still applies.
What does the 8% simple interest mean?
When a complaint about wrongly applied charges is upheld, compensation typically includes 8% simple interest a year on the refunded amounts, to reflect being out of pocket. It's standard to ask for it.
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A self-serve tool, not a law firm. General information, not legal advice.