Unfair bank charges ruling due this week
The Office of Fair Trading (OFT) has confirmed that the much anticipated decision in the unfair bank charges case is to be delivered this Thursday, April 24.
It was originally believed that judgement would not be made until later this year.
The case between the OFT and eight major High Street banks including Abbey, Barclays, Clydesdale, Halifax Bank of Scotland, HSBC, Lloyds TSB, RBS NatWest and Nationwide Building Society commenced in the High Court at the start of 2008.
The eight banks represent 90% of the current account market.
The case was heard by Mr Justice Andrew Smith who listened to 14 days of evidence put forward by the OFT and the eight banks.
Judgement will be passed down Thursday and aims to decide whether unauthorised overdraft charges fall under the Unfair Terms in Consumer Contracts Regulations.
The test case will not decide whether overdraft charges are fair or not, but will determine whether banks’ terms and conditions can be assessed for fairness by the OFT, under the Unfair Terms regulations.
A spokesperson for the OFT said Thursday should see a decision on whether the charges can be considered under the Unfair Terms regulations and the watchdog would then decide how to take its case on.
According to the OFT, banks receive approximately £3.5 billion each a year in unauthorised overdraft fees (the equivalent of almost £10 million a day). Charges include £39 for a bounced cheque, standing order or direct debit.
The Financial Services Authority had allowed banks to put reclaim letters on hold until a suitable outcome was reached.
However, this could be extended until the matter is resolved. Consequently it may be another year before consumers find out if they are eligible for a refund.
An estimated £800 million worth of fees has already been paid back to consumers.