The delayed test case to determine the legality of bank charges which was due to start yesterday will now commence today (Thursday January 17), at 10.30 in the International Dispute Resolution Centre.
Due to the judge’s prior commitments running over into yesterday, the case was delayed, but was expected to start by the end of the week.
The case has been brought against the eight big account providers – Barclays, Clydesdale, HSBC, HBOS, Lloyds TSB, Royal Bank of Scotland and Nationwide Building Society – to clarify the charges which the banks implement when customers exceed agreed overdrafts or bounce cheques. Some customers were incurring charges of £35 each time and the banks are said to have been making a profit of £3.5 billion a year.
Almost two years ago, the Office of Fair Trading declared that these charges were unfair and unlawful, so thousands of customers started to claim their money back, but there has been a freeze on refunds until the charges have been evaluated by the High Court.
The banks maintain that these charges are made for costs incurred by the bank for the administration involved when a customer goes outside the terms and conditions of their account, and refused the OFT’s offer to reduce the charges and avoid further proceedings.
“The High Court test case, which is a key part of the investigation, is seeking to establish the preliminary legal principle of whether the provisions of the OFT’s Unfair Terms in Consumer Contracts Regulations that deal with unfairness apply,” said the OFT in a statement.
“It will also address the additional point of law of whether the charges can be a penalty at common law. It will not lead to a judgment as to whether charges themselves are fair or not. The OFT will decide after the initial judgment what steps to take should it win the test case and conclude from its financial investigation that any of the charges are unfair.”
