Banks lose High Court test case
May 14, 2008
Justice Andrew Smith, the judge presiding over the High Court test case into bank charges earlier this year, has now delivered his verdict, and has ruled in favour of the Office of Fair Trading when it comes to the fairness of bank charges. The case was brought by the OFT, which claimed that the charges were unfair, as they were much higher than the costs incurred by the banks. These charges were applied for unauthorised overdraft borrowing, bounced cheques, and returned direct debits.
The judge, who delivered his verdict on Thursday, said that the ruling did not necessarily mean that he found the charges to be unfair. However, the verdict means that the OFT will now be able to rule on the fairness of these charges, and this could mean that bank charges are slashed in the same way as credit card penalty fees were cut by the OFT in 2006. This could mean that banks have to repay billions of pounds to customers that have claimed or will claim for refunds on charges applied over the past six years.
The banks now have until 22nd May to lodge an appeal, and all pending cases will be kept on hold until then. The decision from the judge was greeted with open arms by campaigners. One campaign group official said: “The banks should do the right thing now and concede defeat, agree with the OFT what constitutes a fair unauthorised overdraft fee and refund their customers as soon as possible.”
However, Angela Knight from the British Banker’s Association said: “We need to take what the judge has said very carefully and not jump to conclusions. This is the start of a process.”
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