Money News
Consumer affairs watchdog, the OFT (Office of Fair Trading), has won a High Court legal victory allowing it to continue its probe into bank charges.
In his judgement, Mr Justice Andrew Smith, whilst accepting the OFT's contention that the 1999 Unfair Terms in Consumer Contracts Regulations can be applied to overdraft charges imposed by the banks, added that terms imposed by the banks weren't to be necessarily regarded as unfair, given that answering such a question wasn't within his remit. Therefore, it will be for the OFT to decide.
Last July , seven major banks, the Nationwide Building Society and the OFT, agreed to stage what amounted to a test case to determine the OFT's jurisdiction regarding bank charges. Evidence was then heard in January and February - the result being the judgement handed down now.
Britain's major banks have long contended that the charges they apply to unauthorised overdrafts - typically £24-£39 for each transgression - are both fair and clear.
Bank customers in the meantime successfully forced the major banks to pay back an estimated £400 million worth of charges in the first half of 2007 as the banks proved reluctant to take them on in the courts.
Meanwhile, current claimants looking for immediate recompense will likely be disappointed as further High Court hearings are now expected to decide the exact level of charges.
Cases currently on hold in the county courts will stay on hold until May 22nd, by which time the banks must decide whether they are going to appeal against the ruling.
Longer term, a defeat for the banks will likely mean the end of 'free banking' (for customers in credit) as we know it as they attempt to generate alternative income streams. Cue those hapless customers who never go overdrawn.
24 April 2008 © Moneyextra.com
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