Reclaim Unfair Bank Charges

Customers who want to reclaim unfair bank charges they have paid out over the last six years will not be able to continue claiming them back until a test case has been settled in the High Court next year.

The Office of Fair Trading has called time on customers wanting to pursue the unfair bank charges levied at them while they conduct a test case, the outcome of which will determine a set amount of charges that banks must adhere to in the event of customers breaching the terms and conditions of their accounts.

Many customers have been attempting to claim back unfair charges, in particular for exceeding overdrafts, bouncing direct debits and returned cheques. The test case is intended to clarify the legality of the charges levied at customers.

In April 2006, the OFT branded penalties of more than £12 as being of a “significantly higher level that is legally fair,” and said that a default amount should “only be used to recover certain limited administration costs”.

It has been ascertained that the costs of dealing with a breach of contract are around £2.50, but customers have been forced to pay out around £12 for a bounced cheque and up to £35 for exceeding an overdraft limit.

The courts could have been avoided had a compromise been reached between the OFT and the eight major high street banks, but as this did not materialise the case will go to court in January 2008. When a decision is reached by the courts, banks must then agree to comply with the ruling and customers can begin the charge reclamation process. However until this is settled, all claims will be put on hold.

Andy Baynes, head of current accounts at Alliance and Leicester is dubious about the amount of time it will take to settle the case, because it has been ongoing for some time. He explains: “If they don’t have an idea now after looking at this for nine months, you have to wonder how long into next year is it going to take them to be definite? You could be looking at half-way through the year.”

According to thisismoney.co.uk, the banks have already paid back around £800 million in unfair bank charges and it is believed that a total of around £4.7 billion is owed to UK bank account holders. Now the wait is on and customers will have to bide their time before they are able to continue the process of reclaiming what is owed to them.