Banks’ behavior in overdraft fee cases called “unreasonable”

A High Court judge has warned that banks will have to stop behaving “unreasonably” when customers bring claims that they have charged too much for overdrafts. The warning came from Judge David Mackie QC at the London Mercantile Court. Judge Mackie said that he will award damages to the claimants if the banks don’t stop wasting the time of both the claimants and the courts by acting as if they will defend the claims and then suddenly settling out of court a few days before the case is due to come before a judge. At the Mercantile Court in Leeds, 77 such cases were brought in one day, all of which were settled out of court. 300 overdraft fees cases are currently pending at the London Mercantile Court.

This is not the first time a court has spoken out against the way that banks conduct themselves in these cases. In January a judge at Lincoln County Court threatened to disallow some of the banks’ defences in the cases because they have been abusing the legal process by acting as if they will proceed in the cases and then settling at the last minute. In Bristol County Court, a claimant was awarded costs of almost £85, saying that Lloyds TSB (LSE: LLOY) had wasted the court’s time because it had never intended to defend the claim.

A representative of the British Bankers Association defended the behavior of the banks in these cases by saying that while the banks take these cases seriously, they would prefer to settle the cases out of court. In addition, that it takes a long time to investigate some claims, and that the banks are confident that the fees they charge are legal.

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