Test case into bank charges open
January 16, 2008
This week has seen the long awaited High Court test case into bank charges open, with many consumers and industry officials eagerly awaiting the outcome of a case that could change the banking industry within the UK. The court case is aimed at deciding how much banks can fairly charge customers for going over their overdraft limits, for bounced cheques, and for returned direct debits. Some banks were previously charging close to £40 per fee, but campaigners argued that the cost to the bank was only a few pounds.
Over the past couple of years many banking customers have successfully reclaimed their bank charges going back up to six years, but many banks suspended refunds of charges in the summer after it was decided that there would need to be a test case to determine once and for all what sort of fee banks could charge. As part of the case the Office of Fair Trading is taking on seven well known banks and the Nationwide Building Society in a bid to get the financial institutions to justify their charges or make fundamental changes to their charging structure.
The British Banker’s Association has argued that the charges are fair and legal, with one official stating: “We have always believed that what we are doing is correct and legal. We are confident and think the hearing is an important opportunity to bring some clarity to the legal position.” However, an official from the consumer body Which? stated: “We are very hopeful the OFT will win. We think they have a strong case and so do consumers in the court of public opinion.”
There are concerns that if the OFT does win banks will start charging monthly fees to account holders. One official also stated that even if the OFT does win consumer may not get the full benefit, stating: “…a win by the OFT could result in banks refunding only the difference between charges set by the regulator and the fees in dispute. This is likely to see bank customers being offered lower levels of compensation.”
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