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.

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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

Cosumer victory a year on

This April will mark a year since the Office of Fair Trading (OFT) forced providers to reduce their fines for late or missing credit card payments from £20 plus to £12. But whether ot not this amounts to a ‘victory’ for the consumer, is questionable. Since then credit card companies have been sneakily introducing new credit card fees and increases to rates in a bid to recoup around £1bn in lost revenues.