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Bank Charges for Insufficient Funds

It seems as though we have come to equate payment protection insurance with loans but there are other kinds of insurance products such as those for bank accounts entitled overdraft protection. These types of insurance products are governed in the same way as payment protection insurance and the criteria for being declared mis-sold is exactly the same. Overdraft protection is meant to cover bank charges for insufficient funds whereas PPI, payment protection insurance, is meant to provide cover in the event that the policyholder loses employment or is out of work due to illness.

The Problem with Mis-Sold Overdraft Protection

Just as in the case of payment protection insurance you would expect the lender, or the banker in this case, to give the customer the opportunity to buy into the program. Payment protection insurance as well as overdraft protection are not mandatory and the banker cannot ask you to opt out of them but must rather ask you to opt in. If you were not given that option to have cover on bank charges for insufficient funds then indeed you were mis-sold this insurance and are entitled to make a PPI claim against the bank. There are however some differences. Overdraft protection can be purchased by people who are self-employed or temporarily employed because it doesn't take over payments on loan rather it helps you to avoid bank charges for insufficient funds if the check should go through before other funds are clear. It is a good cover to have if and when you are afforded the opportunity to choose it for yourself.

Claiming Your Money Back

If the financial institution mis-sold you overdraft protection you do have recourse to get your money back. In similar fashion to submitting a PPI claim to recover money you would also submit a claim against overdraft protection for insufficient funds. The unfortunate thing about this particular cover is that it can indeed help those individuals who have trouble balancing their checking accounts and are constantly plagued with bank charges for insufficient funds. Unlike payment protection insurance, overdraft protection can actually be utilized by everyone as we all are subject to making an occasional mistake in keeping records. If your bank or refuses to refund your money when you bring a claim against that financial institution for mis-sold insurance that is supposed to cover bank charges for insufficient funds, you can always appeal the decision with the Financial Ombudsman Service.


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