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Bank charges test case decision due

High Court ruling on overdraft fees due out today

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The continuing furore over will move a step closer to being resolved today with a landmark judgement by the High Court.

Mr Justice Andrew Smith will hand down his judgement in a test case brought jointly by the Office of Fair Trading (OFT) and eight leading banks.

The case was brought to decide whether unauthorised overdraft charges come under the scope of the 1999 Unfair Terms in Consumer Contracts Regulations.

Customers incur the charges when they go into the red and the bank hasn’t authorised this, or if they breach their authorised limit. The fees – charged, for example, when a bank bounces a cheque –  can be as high as £38.

Test case

If the judge rules that the fees are subject to the unfair terms rules, the court will decide at a separate hearing later this year whether or not the charges are fair – and give guidance on what a fair fee should be.

Both sides could appeal the judgement.

Which? personal finance campaigns manager Doug Taylor said: ‘Today is a massive day for millions of consumers as well as the UK’s high street banks.

‘If the judge finds in favour of the OFT then the banks should do the right thing and resolve their customers’ claims as quickly as possible.

‘If they try to drag the process out any longer they will only be doing more damage to their reputations.’

Cost to consumers

Mr Taylor added:‘Every second that passes is costing consumers £111. In fact, by Sunday, the banks will have hit their customers with £1 billion in unauthorised overdraft charges since the test case began in January.’

Banks are thought to make between £2 billion and £3.5 billion a year in unauthorised overdraft charges.

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