Barclays scraps overdrafts for some customers despite cost of living crisis rising - how to complain

The banking regulator has responded to Barclay’s actions saying that banks should “consider the circumstances of their customers”

Barclays is scrapping arranged overdrafts for some of its existing customers.

The major high street bank has been sending some customers letters advising them that they will soon lose their overdrafts.

Banks do have the power to close customer overdrafts without notice, but Barclays is writing to customers to inform them about the changes.

The banking regulator, the Financial Conduct Authority (FCA), has responded to Barclay’s actions saying that banks should "consider the circumstances of their customers - especially with the cost of living rising".

Barclays is scrapping arranged overdrafts for some of its existing customer (Photo: Getty Images)

What is an overdraft?

An overdraft allows you to borrow money using your current account - but like any form of debt there is an interest charge, which gets bigger the more you borrow.

Overdrafts are handy but the interest rates are very high so it is best to avoid using them.

One customer tweeted: "I have an overdraft I never go into that’s worth £7500.

“But Barclays sent me a letter telling me it’s being cut to £1750 for no reason… what’s all that about?"

Another said: "Barclays Bank removed my overdraft a few months ago.

“I never used the facility but does seem odd that they’d withdraw it."

A third customer wrote: "I’ve had an overdraft facility on my bank account for over 30 years although I’ve never used it. Suddenly, I’ve had a letter saying it is being removed from 19th September 2022."

Is it the right timing for Barclays to pull overdrafts?

A Barclays spokesperson has said it reviews all personal arranged overdraft limits at least once a year, taking into account all the financial information they have about each customer.

If it decides that the overdraft limit is too high and could result in customers falling into unmanageable debt, it may reduce the maximum amount you can go overdrawn.

Barclays said it also takes into account how often overdrafts are used by a customer.

The spokesperson said: “If the overdraft hasn’t been used at all for a long time, we may remove it.”

The bank said it was giving customers enough notice to allow them to respond and take action.

An FCA spokesperson responded: “When making changes to available credit, we expect firms to consider the circumstances of their customers, including any vulnerability, to communicate clearly and to allow people time and opportunity to challenge and complain if they disagree.

“With the cost of living rising, more consumers may need to turn to the credit market, including overdrafts.

“Lenders need to treat people fairly as individuals and consider their needs."

What to do if you still want to keep your overdraft

Barclays said that if customers feel they are able to afford their current limit, they will need to provide additional information to confirm their income and expenditure.

You will need to phone the bank on 0345 734 5345 to discuss this.

If this works out, the bank should restore your overdraft or offer you a new deal. If it doesn’t, you can escalate the situation and complain.

How to complain about your bank

Banks are required to have a written complaints process that helps customers on how to make a complaint.

It is worth making your complaint as soon as possible as it will be easier to remember all the relevant details to strengthen your case.

You can launch a complaint with Barclays by phoning 0800 282 390 and selecting option one. You can also send a letter explaining your complaint to Freepost Barclays Customer Relations.

If you want to talk to someone face to face, you can visit a branch to discuss your complaint.

Once you have sent in your complaint, the firm needs to give you a response within eight weeks. If you don’t get a response within eight weeks, or you are not happy with the one you do get, you can take your complaint to the free Financial Ombudsman Service (FOS).

If you decide to take your complaint to the FOS, you must typically do so within six months of your provider’s final response. To get in touch, you need to fill in an online complaint form.

If you would prefer to talk it through with someone, the FOS can help you do this if you call 0800 023 4567.

When you get in touch, you need to have the following details to hand:

  • Some basic information, including your name and address
  • What the problem is, and how you want things put right
  • Details such as the policy number or account number that your complaint relates to

The FOS will then look at the evidence provided by both sides and it may contact you for more information.

Once it has made a decision, it will write to you and if it agrees with your complaint, it will say what your bank or credit card firm must do to put things right.

Another way to complain is to post your issue on social media. Most brands have teams responding to queries on sites such as Twitter and Facebook during office hours.