Reclaim Unfair Bank Charges

Banks and financial providers make a whopping £2.5 billion profit annually from unauthorised overdraft fees, figures due to be published by the Office of Fair Trading (OFT) are expected to reveal later this month.

The watchdog’s market study of current accounts and linked unauthorised overdraft charges will for the first time put figures on how much consumers have been overcharged, and will also state what the adequate charge for going overdrawn should be.

In the past bank customers have been charged fees of up to £35 for returned payments, bounced cheques or exceeding their overdraft limits, which led the OFT to file a High Court claim against nine major high street banks including Barclays, Lloyds TSB, HSBC and the Royal Bank of Scotland.

The case was aimed at a decision on whether or not the unauthorised overdraft fees could be regarded as ‘unfair’, and in April this year the High Court ruled that the OFT could go ahead with its investigation to determine once and for all if the bank charges can be deemed as ‘unfair’.

This ruling has been appealed against by the banks and the next phase of the case, which began yesterday, will determine whether bank customers could challenge bank charges going back as far as six years. The case is expected to drag on well into the next year.

The banks’ refusal to accept the April ruling has led consumer groups to accuse the banks of protracting a decision for as long as possible, as attempts of thousands of Britons to reclaim unfair bank charges have been put on hold until a final judgement is made.

Although cases against ‘unfair’ bank charges are not processed at the moment, applications are still accepted and keep piling up into a massive threat for the banks.

If the High Court rules in favour of the OFT, the banks could be forced to cap their fees for unauthorised overdraft fees and to repay a fair amount of the original charges.All in all, the banks could end up paying back more than £10 billion to their customers.

Banks have warned that, should they be forced to repay these charges to their customers, it could mean the end of free banking.