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Monday 25th of May 2009
April 25, 2008

Decision is made on unfair bank charges


by Kay Murchie
”Decision

A decision has been made on the case between the Office of Fair Trading (OFT) and the eight major High Street banks over unfair bank charges.

Mr Justice Andrew Smith decided that OFT can rule on the fairness of the charges, which many customers have been trying to reclaim.

The judgment by Mr Justice Andrew Smith allows the OFT to begin its overview immediately and it is expected to deliver its assessment in July, which will then go to another High Court hearing.

The banks include Abbey, Barclays, Clydesdale, Halifax Bank of Scotland, HSBC, Lloyds TSB, RBS NatWest and Nationwide Building Society.

It is expected the OFT will consider the charges unfair as a study was carried out in March 2007 about the subject.

The organisation did not say outright that the charges were unfair but believes that banks charge consumers more for unauthorised overdrafts than it costs them to provide them.

It is thought that the entire case may not be resolved until late 2009. Since the end of 2005, thousands of people had successfully reclaimed hundreds of millions of pounds in fees by threatening to take their banks to court.

A statement by Angela Knight of the British Bankers’ Association (BBA) said that the judgment was ‘complex’ and the banks were currently considering its implications.

The BBA added as previously agreed with the Financial Ombudsman Service and the Financial Services Authority, customer complaints relating to unauthorised overdraft charges will currently remain on hold.

According to price comparison group uSwitch, banks earn roughly £3.5 billion a year from the charges.

An estimated £800 million worth of fees has already been paid back to consumers.

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