bank charges ruling expected Thursday

  It has been announced that the judge hearing the bank charges test case will be handing down his judgement this Thursday.

The case, which started in January this year, involves the Office of Fair Trading (OFT) and the UK’s eight major banks and building societies.

Advertisement

The OFT took on the banks and building societies over the fees charged when someone goes over their agreed overdraft limit on their current account or when a direct debit or cheque bounces.

According to the OFT, banks receive almost £10m revenue a day in ‘unauthorised overdraft fees’ which amounts to as much as £3.5bn in a year.

Banks levy charges of as much as £39 for a bounced cheque, direct debit or standing order.

Those in criticism of the current system claim that this amount is not a fair amount to charge because it does not reflect the true amount it costs the bank to recover their money.

In legal terms, the OFT is claiming that the charges are illegal as per the Unfair Terms in Consumer Contracts Regulation 1999.

If the OFT wins the test case, it will likely force those providing current accounts to reduce the fees they levy under the above circumstances. Additionally, banks could be made to return the millions of pounds worth of ‘unfair’ charges already paid by customers.

The judge hearing the case, Mr Justice Andrew Smith, listened to 14 days of evidence presented by the OFT and the banks, who represent 90% of the current account market, in January this year.

According to consumer group Which?, the ruling could result in one of these possible outcomes for the test case:

The OFT could win: The ruling could say that all the terms and conditions used by those banks involved in the test case over the past six years can be assessed by the OFT for fairness
 
The banks could win: The ruling could say that none of the terms and conditions used by those banks involved in the test case over the past six years can be assessed by the OFT for fairness

banks still claiming bank charges are legal

Banks use a “strange language” to pretend their overdraft charges are fair, the High Court has been told. Brian Doctor QC, for the Office of Fair Trading (OFT), said the language of bank contracts did not reflect “objective reality”.

He was addressing the court on the eighth day of a key test case to decide whether the OFT can rule on the validity of overdraft charges.

Seven banks and the Nationwide Building Society deny their charges are unfair.

 

They agreed to the test case to clarify their legal position after a mass of litigation, which has seen hundreds of thousands of consumers claim refunds totalling hundreds of millions of pounds.

‘Strange world’

Barristers for the lenders have told the judge hearing the case, Mr Justice Andrew Smith, that current account customers get a package of services for which they are charged a package of prices.

But Mr Doctor accused the banks’ QCs of trying to “cast a spell” over the court.

“We are entering a strange world in which the banks speak a strange language, in which customers are deemed to have done one thing by doing another,” he said.

Mr Doctor argued that some banks have, in the past year, been rewriting their contracts for running a current account to avoid any application of the 1999 unfair terms in consumer contracts regulations.

reclaim bank charges

A High Court test case which could bring a fundamental change to UK High Street banking has been delayed. The Office of Fair Trading (OFT) is challenging banks and the Nationwide building society on bank charges.

The outcome may decide how much banks can charge millions of account holders who go overdrawn without permission.

The case had been set to begin on Wednesday but the judge’s commitments mean it has been postponed. There are hopes it will get under way this week.