Judge has not yet delivered ruling on bank charges
February 20, 2008
Over the past couple of years the rows and controversy over the charges that banks apply to the accounts of customer’s have been getting more pronounced. The charges referred to are those for exceeding the credit limit, and for bounced cheques and returned direct debits. Campaigners claimed that dealing with these things only cost the banks between £2 and £5 yet the banks were applying fees of around £30-£40 per charge to the customer.
This resulted in the Office of Fair Trading branding these charges unfair and unjust, and banks were suddenly flooded with claims from consumer demanding back their charges going back up to six years in some cases. The controversy reached the stage where a firm decision needed to be made with regards to whether bank charges were fair and if so how much banks should be able to charge by way of a fee – a similar ruling was made in 2006 with regards to credit card charges, which meant that card providers could charge no more than £12 per fee for late or missed repayments or for exceeding the credit limit.
In the summer of 2007 it was decided that a test case would need to take place in order to make a determination with regards to bank charges. At that stage banks were able to put all pending claims for returned bank charges on hold, and the case, which involved the Office of Fair Trading challenging seven major banks and the Nationwide Building Society, was scheduled for January. Just a couple of weeks later, after both the lenders and the Office of Fair Trading had put their arguments forward, the case concluded.
Although the case has now been heard and both sides of the argument have been considered the presiding judge, Justice Andrew Smith, has still not delivered a ruling on the case. According to the judge he has a lot to consider following the court case, and he has a lot of work to do before he can make and deliver his ruling. However the judge has been confident that once he has made his ruling public the claims that are currently pending can be dealt with and the country courts, which deal with these cases, will have the clarification necessary to deal with the thousands of claims that are on hold.
Although nobody knows which way the judge will vote there are signs that the banks may be panicking. For instance, representatives for the banks have asked that the ruling be delivered on a Friday because of the mass of calls that they are likely to receive in the event that the judge rules in the favour of the OFT. By receiving the ruling on a Friday the banks state that they will have the weekend to put together a strategy to deal with the mass of enquiries rather being thrown in at the deep end.
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