Browse Sections

• Personal finance 
• Health and beauty
• Dating
• Holidays
• Hotels
• Food and drink

Bank charges verdict effect...

25/ 4/2008

THE High Court ruled that charges levied by banks for unauthorised overdrafts are subject to regulation by the Office of Fair Trading under "unfair contract" rules. The judge, Mr Justice Andrew Smith, did not rule that charges are actually unfair, or say what a fair charge would be. That is now up to the OFT, which brought the case, along with seven high street banks and a building society, to clarify.

Banks are thought to make between £2bn and £3.5bn annually from these charges. Fees can be as much as £35 for a single bounced payment. Campaigners say a fair charge, reflecting the actual cost to the bank, would be around £2.50.

There are as many as 1m further complaints, lodged with banks and courts, now on hold pending this test case.

"I will be surprised if the banks do not appeal and appeals in cases like this take a very long time," says Martin Lewis. "I would be surprised if this does not go all the way to the House of Lords."

So what happens to all those frozen complaints? They remain on hold at least until May 22, by which time the banks must decide whether to appeal. But campaigners such as Lewis will fight for the frozen complaints to proceed.

"If they try and delay this for another three years, it would be outrageous," he says.

Doug Taylor, Which? personal finance campaigns manager, says: "The banks should do the right thing: concede defeat and refund customers." The British Bankers' Association called the judgment "complex".

A spokesman for the OFT says: "We are analysing the implications of the judgment for our overall investigation into the fairness of the terms."

In the meantime, anyone with a frozen claim need not re-submit it.

Most recent 1 of 1 user comments