The long running dispute between the banks and OFT regarding unfair bank charges will come to a head on Monday when the case is taken to the High Court.
In April 2005, the OFT stated that banks who were charging up to £35 to customers exceeding their agreed overdraft limits and bounced cheques, were behaving unfairly and unlawfully.
This declaration resulted in thousands of customers demanding the money they had paid out in ‘unfair bank charges’ from their banks – many were successful, claiming back in total £800million. But the banks still maintained that they were acting fairly, so it was decided that an official decision would have to be made and the OFT put a freeze on any further claims until the court case clearly defined the legality of the charges in question.
In the case, which will see the OFT take on Abbey, Barclays, HBOS, Clydesdale, HSBC, RBS-Natwest, Lloyds TSB and Nationwide Building Society, the OFT will argue that, due to the fact that bank charges are not explained properly to customers, that they are not part of a contract and that they are far higher than the associated administration costs, they are therefore unfair and illegal.
The banks have long maintained that the fees they charge are fair, and that they are needed to cover the administration costs incurred as a result of the customer going outside of the terms and conditions of their account i.e. exceeding the agreed overdraft limit, with British Bankers’ Association chief executive, Angela Knight, saying last year “The banks have always been firmly of the view that the fees they charge customers are fair and clear.”
The case will begin on Monday, January 14, and could go on for some weeks; it is believe that should the ruling favour the OFT, they will start a second court action to force the banks to refund their customers, a figure which is estimated at nearly £15billion.
