Further delays in bank charge court case
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UK banks have been granted an extension to the time they can put off customer complaints about excessive overdraft charges prompting outrage from consumer groups. Both sides are waiting for the outcome of a test case in the high court that could see a flood of claims as people demand the banks return the money taken from their accounts as charges for unauthorised overdrafts or bounced cheques.
A spokesman for the Office of Fair Trading said “the test case between the OFT and the firms is a crucial step in establishing certainty about the legality and fairness of unauthorised overdraft charges, when this certainty has been established complaints about unauthorised overdraft charges can be dealt with consistently and fairly.”
Banks have been making billions of pounds from the charges and have consequently been reluctant to change the disputed policies, despite growing numbers of claims being successfully settled in the small claims courts before the moratorium caused by the test case.
The point about which the whole case revolves is whether or not the charges are a fair fee for a service provided, as the banks claim, or are an unfair and illegal penalty charge as claimed by the OFT. The cost to the bank of an unauthorised overdraft or bounced cheque is usually around two pounds yet the customer is charged up to thirty pounds. There are further issues regarding the terms and conditions and whether or not they are liable to mislead customers.
“At the moment consumers pay for banking through surprises and through stealth,” said the head of the OFT, John Fingleton. “They don’t see what they pay - very often they pay when an unexpected event happens like an unauthorised unexpected overdraft,” he added.
Despite the moratorium on complaints being settled while the high court case is settled the consumer group Which is urging customers to continue making complaints. “Even though the banks won’t process the complaint, they will still have to acknowledge it. And if the OFT wins, as we hope it will, that means your complaint is already in the system and so you should be paid out more quickly.”
