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Banks win latest round in legal case about charges - 10/10/2008
The High Court has ruled in favour of banks in the latest round of the legal battle with the Office of Fair Trading (OFT) over overdraft charges as reported by credit today.
The judge yesterday backed lenders' arguments that fees imposed over the past several years when customers went into the red or had a cheque bounce could not be classed as unlawful penalty charges.
The High Court had already decided, following a three-day hearing in July, that current terms and conditions could not be penalties but could be assessed whether they are fair or not under Unfair Terms in Consumer Contracts Regulations (UTCCRs)
Similarly the judge in yesterday's trial said historic unarranged overdraft charges can be assessed for fairness under the UTCCRs but could not be considered penalties.
The ruling means that most bank customers will not be able to contest under common law overdraft charges levied mostly between 2001 and 2007.
"This is a positive decision for the banks," said Angela Knight, chief executive of the British Bankers' Association.
"The question of penalties was one of the claims made by the OFT which triggered the initial court case. Now we have had this judgement we are keen to move on to the next stage as quickly as possible.
NatWest customers, however, may still have a case as the judge failed to reach a verdict on their terms and conditions.
"This is another staging post in a complex legal process," said an OFT spokesman. "We are progressing our investigation as quickly as possible and are in continuing discussion with the banks about our provisional views on the issue of fairness."
The next hearing will take place at the end of the month when the banks will appeal the summer decision, which allowed fairness regulations to be applied to overdraft charges.
