Banks should concede defeat and pay up as OFT wins in high court

As the judge in the bank charges test case rules in favour of the OFT, Which? personal finance campaigns manager, Doug Taylor, says:

“The banks should do the right thing now: concede defeat, agree with the OFT what constitutes a fair unauthorised overdraft fee and refund their customers as soon as possible.

“The FSA must now drop its waiver* so that the thousands of cases pending in the county courts and Financial Ombudsman Service can be processed. Every second that this issue remains unresolved is costing consumers up to £111 in overdraft charges.

“This whole saga has severely damaged the reputation of the UK’s high street banks. If they appeal, drag their heels in refunding their customers or try to introduce back-door charges to recoup their losses, their customers will see this as adding insult to injury.”

What will happen next?
The banks have the option to appeal the decision. 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 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.

Ends

Notes to Editor

Which? is the leading independent consumer champion in the UK, providing up to date, impartial, expert information on thousands of products and services to help make individuals as powerful as the organisations they have to deal with in their daily lives. To find out more visit www.which.co.uk

*The FSA waiver, which has been in place since the test case was announced in July, means that banks can continue to charge people for slipping into an unauthorised overdraft while consumer complaints remain on hold. The waiver was due to be reviewed in July but the test case ruling will mean the review will be brought forward. If the banks decide to appeal, then it is highly likely that the waiver will remain in place until the appeals process has run its course.

Which? is the leading independent consumer champion in the UK, providing up to date, impartial, expert information on thousands of products and services to help make individuals as powerful as the organisations they have to deal with in their daily lives. To find out more visit www.which.co.uk