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Banks win overdraft charges case

Wednesday, 25 November 2009 Writes Hazel Cottrell hazel.cottrell@consumerchoices.co.uk

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Millions of consumers will be disappointed today, as Britain’s biggest banks win landmark case.

More than a million people who have submitted a claim for a refund on their overdraft charges are to be left in limbo, after a court ruling today.

The shock decision by the Supreme Court is going to leave some consumers even more disillusioned with banks.

The Supreme Court ruled that the Office of Fair Trading (OFT) (www.oft.gov.uk) could not assess banks’ overdraft charges for fairness under the terms it proposed.

Michelle Slade, spokesperson for financial information company Moneyfacts (www.moneyfacts.co.uk) said: “The shock decision by the Supreme Court is going to leave some consumers even more disillusioned with banks.”

Peter Vicary-Smith, chief executive of consumer champion Which? (www.which.co.uk) said: “Not only does this ruling give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance.”

Previously, the High Court and the Appeal Court both ruled that the OFT could assess banks overdraft charges for fairness under the Unfair Terms in Consumer Contracts Regulation 1999.

The banks then appealed to the Supreme Court, which decided that charges for unauthorised overdrafts were excluded by the terms of the regulation. However, it said that the OFT may be able to assess the charges on other grounds.

Chris Eagle, commercial manager at Creditchoices.co.uk, said: “This might not be the end of the story just yet, but the ruling will certainly come as a sharp blow to the millions of people who have already submitted a claim or were planning to do so.

“Now it’s just a waiting game to see what the OFT will do next and whether the government will get involved.

“Some banks, such as NatWest and RBS have cut their overdraft charges in recent months and I would urge anyone who is facing high charges to compare current accounts and switch to a more suitable deal for their needs.”