Tens of thousands of people will receive refunds, plus interest, for charges incorrectly applied to student current accounts held with RBS and NatWest between 2002 and 2016.
The RBS Group, which RBS and NatWest are both part of, says it has written to affected customers.
Refunds will be paid within the next fortnight, according to a letter to customers seen by Moneywise.
** Update: RBS has since disclosed only the first batch of letters were sent in August, and some customers will not be contacted until mid-September or mid-October. **
The two banks offered interest-free overdrafts on their student current accounts. However, some people had the option to increase their arranged overdraft limit, in exchange for interest being charged on these higher balances.
But following a business review this year, the RBS Group discovered this went against the terms and conditions of the account, which said students would not be charged interest on any authorised overdrafts.
As such, it is refunding any interest it charged on these authorised overdrafts, plus interest.
A spokesperson for the RBS Group says: “When we make a mistake we do everything we can to make it right. It was highlighted after a business review that between 2002-16 our terms and conditions on our student account were not fulfilled. As a result we are refunding all interest charged over that period.”
How much could I get?
Customers who were incorrectly charged will receive a full refund of their interest charges, plus simple* interest of 8% a year. The largely state-owned bank has not disclosed how much the typical refund is worth, though the payments reported by some of those affected span from £20 to £180.
As these errors date back as far as 2002, the interest payments could substantially boost the value of the refund, and potentially be worth more than the interest charge itself.
How are customers responding?
As you might expect, most are happy to be getting a cash windfall out of the blue, though some are a bit surprised they’re being refunded for accounts they held almost fifteen years ago.
Here’s a couple of the tweets we’ve seen:
How can I find out if I’m due a refund?
RBS and NatWest are writing to affected customers, though if you think you may be owed a refund and don’t hear from them in the next few weeks, give their customers services teams a call.
* This means the interest isn’t compounded. If you had an account for, say, three years, for example, you would receive interest worth 24% of the original amount owed to you.