Unfair Bank Charges: The High Court Ruling

The first step in many consumer's fight against unfair bank charges has been won in part. The result is a bit of a mixed bag for consumers still smarting against what they see as unfair bank charges.

Find out what the ruling means for the OFT, banks and you.

A landmark ruling in the High Court means that the Office of Fair Trading (OFT) has won its initial High Court battle against UK banks on assessing unfair charges.

The ruling, however, is not a final judgment on whether current account charges of up to £39 are fair or not. It does mean that the OFT now has the right to assess the terms and conditions underlying overdraft charges and assess them for fairness. It is expected that it will deliver its assessment of this in July 2008. This will then go to another High Court hearing.

Analysts predict that the OFT will find the charges to be unfair.

Can you Make A Claim?

Thousands of people, from late 2005, have successfully reclaimed hundreds of millions of pounds in fees by threatening to take their banks to court. Many pursued these claims through the Small Claims court. An estimated £600m was repaid in 2007, which included payments for previous years.

Many felt upset that the fees they were charged for unauthorised overdrafts appeared to be much higher than the actual costs borne by the banks.

When the OFT took the case to court, the time limit to deal with the complaints was lifted. It is estimated that more than £700m in charges are waiting to be reclaimed in pending cases in the County Courts.

For consumers with a claim waiting it’s not likely to be resolved until after a long appeals process. Both the OFT and the banks lost part of the case and most likely both will appeal on the part that they lost. So it is a waiting game for decisions, but not for claims.

‘The banks will continue to ask County and Sheriff Courts to keep cases relating to unauthorised overdraft charges on hold until the test case process is concluded,’ commented the British Bankers Association.

For consumers wanting to make a claim, they can make a claim through the Small Claims courts (or County Court) but it will join the queue.

Banks earn approximately £3.5bn a year from the charges, which are believed to affect one in 10 of the banks’ 45m customers, according to price comparison group uSwitch.

If you feel your bank has unfairly charged you, your claim will be accepted but placed on hold until a final High Court decision on the “fairness” of the charges is reached.

Futher Information
Need to know how to make a Small Claim?
All your Small Claims questions answered.
Consumer Action Group - join the campaign against unfair charges
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