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Judge warns banks over penalty charges action

Some tactics put pressure on customers, he says


Twenty pound note and coins

If you’re not getting the most from your account provider, you should take your business elsewhere

Banks have been warned by a High Court judge to stop putting unnecessary pressure on customers seeking to reclaim ‘unfair’ penalty charges.

Judge David Mackie QC said some banks had employed tactics that placed needless work and anxiety on claimants seeking to take their current account provider to court.

As such, he warned banks that such behaviour would be deemed to be ‘unreasonable’ and could open the way for claimants to demand further compensation.

The comments made at London Mercantile Court highlighted a growing frustration within the legal community over the lack of a test case over the legal status of fees that can go as high as £39 for going over an agreed overdraft limit.

No test case

Judge Mackie said: ‘Over three hundred cases have now been referred to this court, over 140 in April alone.

‘There has been no test case decision because despite putting in detailed written defences the banks have always settled or paid up shortly before or at the hearing.’

He added: ‘On the face of things, each case raises serious issues which a court would permit to proceed to trial. But this is fantasy because, at least for the moment, we all know that there will be no trial.’

Judge Mackie noted that in some instances banks had requested detailed information from claimants as if a case were heading for trial.

He said: ‘Looked at in the real world where there will be no trial, these steps, which place completely pointless work and some anxiety on litigants in person, constitute unreasonable behaviour.’


As such, claimants who have been put to unnecessary work and inconvenience may be entitled to compensation.

Judge Mackie added: ‘Of course a claimant may in some cases face the same risk if he or she behaves unreasonably.’

Brian Capon, spokesman for the British Bankers’ Association, said banks take the court process ‘very seriously’ but that ultimately they prefer to settle disputes with customers outside the court room.

He added: ‘Where a customer’s complaint dates back over a long period or is complex the bank will need longer to investigate the complaint properly.’

Successful challenges

Which? personal finance campaigner Emma Bandey says: ‘While they are determined to stay out of court, it seems that the banks are deliberately dragging their feet in the hope that their customers will either give up or accept part of the money they are owed. We are urging people not to be put off by these stalling tactics.

‘We know many people are successfully challenging their charges. If you are unhappy with the bank’s response to your complaint then you should go to the Financial Ombudsman Service. So far banks have chosen to settle all cases referred by consumers to the Ombudsman.’

Anyone who thinks they have been unfairly charged by their bank for going overdrawn in the last six years can access easy-to-use resources on our bank charges site, including a step-by-step guide to reclaiming and downloadable template letters to send to their bank.

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