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Time to check for unauthorised fees

OFT Victory Sets Up Overdraft Investigation

25-April-2008, Writes Dan Drage dan.drage@consumerchoices.co.uk

As anticipated, the OFT won the right to probe bank charges in the High Court yesterday.

The ruling in favour of the OFT paves the way for an elongated investigation process to begin. Ultimately, the OFT will evaluate whether banks can legally charge customers who slip into the red without prior agreement.

When handing down the verdict, Justice Andrew Smith reiterated he did not necessarily believe the terms imposed by banks were unfair:

‘I reject the banks' contention that the Relevant Terms (the bank terms under challenge by the OFT) are exempt from assessment as to fairness under the 1999 Regulation’

He continued:

‘This does not mean that the Relevant Terms are necessarily to be regarded as unfair or that they are not binding on consumers under the Regulations. Those are not questions for me to decide in this judgment.’

In the build up to this test case, the seven banks and one building society on trial maintained their fees were both fair and clear. Industry analysts estimate each bank generates £1 billion a year from these unauthorised overdraft fees.

The British Bankers' Association said the eight lenders involved in the dispute were considering the implications of the ‘complex’ ruling. They can appeal the decision. Appeals are likely to be lodged at a May 22nd hearing.

Chris Eagle, Commercial Manager at Credit Choices, has the following to say:

‘So it’s round one to the OFT, but this fight is likely to go the distance. If you haven’t already, write to your bank asking for any unauthorised fees you have incurred over the last six years to be refunded. It may be a long wait, but the first stage in these monies being recovered has been achieved.’

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