Bank charges: Court of Appeal win for consumersJudges rule in favour of OFT in landmark ruling

26 February 2009

The Court of Appeal today struck a victory for consumers as it threw out the banks' appeal over unfair bank charges.

As the Court of appeal ruled in the Office of Fair Trading’s favour in the ongoing bank charges legal case, Which? chief executive Peter Vicary-Smith, says:

‘The banks need to throw in the towel. This case has been going on too long and it’s about time they tried to regain some of their dignity and paid customers their dues.

‘This whole saga has severely damaged the banks’ reputations. If they appeal, having had two consecutive court decisions go against them, they will suffer further losses in the court of public opinion.’

What happens next?

The banks asked the Court of Appeal for the right to take the matter to the House of Lords, but were refused permission. However, a spokesman for the British Bankers' Association (BBA) has confirmed that the banks intend to ask the House of Lords directly to review the case.

If this happens then the FSA waiver is likely to remain in place during the appeals process. This means that all pending cases in the county courts or with the Financial Ombudsman Service (FOS) are likely to stay on hold and banks will continue to charge overdraft fees.

If the banks decide not to appeal, then their Terms & Conditions will be assessed for fairness. Where current terms are unfair, the OFT will agree a fair charging regime with the banks – effectively placing a cap on the level of overdraft fees. This will be similar to the approach taken for credit card late payment fees.

Action: What should consumers do now?

Anyone who has had an unauthorised overdraft charge levied against them since July 2001 should write to their bank and ask for their money back. Under the terms of the waiver, their bank must acknowledge their complaint within five working days.

If they have settled claims already then that is the end for those claims irrespective of the outcome of the Test Case. However, they can claim for any new charges incurred since their settlement. The same applies to people who have already claimed, they can make a new claim or otherwise add new charges to their existing claim.

For more details, including template letters, read the Which? guide to reclaiming bank charges.

Bank charges – the story so far

Red mug with slogan

Make sure you claim back your unfair bank charges.


  • July 27 2007 – OFT and banks announce court case
  • January 14 2007 – Test case begins in High Court
  • April 24 2008 – Test case ruling in favour of OFT
  • July 21 2008 – FSA announced six month extension to waiver
  • October 28 2008 – Appeal begins in the Appeal Court
  • February 26, 2009 – Appeal Court rules in favour of OFT’s position
  • Late 2009 – Possible date for any appeal to be heard by House of Lords

The Office of Fair Trading (OFT) estimates that the UK’s banks take £2.5 billion from their customers each year in unauthorised overdraft charges. In 2006, a consumer backlash began that led to hundreds of thousands of people reclaiming the money they had been charged.

The huge number of cases put such a strain on the Financial Ombudsman Service (FOS) and the county courts that in July 2007, the banks and the OFT agreed to a test case in the High Court to help determine the fairness of these charges.

The main purpose of the test case, which took place in January 2008, was to determine whether the OFT has the power to decide if the banks’ current terms and conditions are fair. An ultimate win for the OFT would allow it to assess the banks’ T&Cs and decide what constitutes a fair charge for entering into an unauthorised overdraft. It would also pave the way for consumers successfully to claim money back from their banks.

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