Good news for banks over bank charge test case

The start of this year also saw the start of a High Court test case into overdraft charged imposed by banks in the UK. Banks had been receiving millions of pounds worth of claims over bank charges going back as far as 2001, but in the summer of 2007 the claims that were still pending in the courts were all put on hold following the decision to take the matter to the High Court.

The first round of the battle was won by the Office of Fair Trading, which had accused the banks of unfair and unlawful practices over the charges. However, it seems that round two has gone to the banks, with the presiding judge deciding that most consumers will not be able to challenge the terms and conditions of most of the banks under common law, with the exception of Intelligent Finance and NatWest, which are still being looked at.

After the recent announcement the Consumer Action Group said: “Some banks will be breathing a sigh of relief as the judge appears to have decided that these charges were not penalties under common law.” The British Banker’s Association added: “The question of penalties was one of the claims made by the OFT which triggered the initial court case. Now we have had this judgement we are keen to move on to the next stage as quickly as possible.”

An official from the OFT said: “This is another staging post in a complex legal process. We are progressing our investigation as quickly as possible and are in continuing discussion with the banks about our provisional views on the issue of fairness.”