Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

Banks in current account charges test case

The OFT believes the penalty fees are unfair


Twenty pound note and coins

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

Which? has welcomed news that Britain’s leading banks are being taken to court over unauthorised overdraft charges.

The Office of Fair Trading (OFT) has announced it’s launching a test case in the High Court into the legality of the fees.

Banks are raking in billions of pounds a year in penalty fees,  which are charged when customers go over their overdraft limit or if a bank bounces a cheque.

The OFT believes the charges – which are typically around £30 – are unfair and it is now seeking legal clarification.

Speedy process

The test case will also involve Abbey National, Barclays, Clydesdale, the HBOS group, which includes Halifax, HSBC, Lloyds TSB, and the Royal Bank of Scotland Group, which includes NatWest, and Nationwide Building Society.

Which? personal finance campaigner Doug Taylor said: ‘This announcement is a victory for common sense. In April 2006, we called for the FSA to investigate whether bank customers have been treated unfairly and this process will finally give legal certainty.  

‘A lot of time and money could have been saved if the banks had not tried to evade questions about their charging structures for the past year. It’s unfortunate that it has to go to court, but at least we will get a decision that banks cannot dispute.

‘If the court does find that banks have been acting unfairly we hope they will proactively compensate all consumers who have been charged for going over their overdraft limit in the last six years.

‘We hope that this will be a speedy process so consumers are not left in limbo, but in the meantime people should not stop claiming. Anyone who thinks that they have been charged unfairly by their bank should use the template letters on our site.’

Template letter

The British Bankers’ Association said the banks were working with the OFT and the Financial Services Authority to ask the UK courts to clarify the legal position regarding overdraft fees.

But it added that the banks still believed the fees for unauthorised overdraft charges were clear and fair.

Back to top