Bank charges decision on Thursday

By SIMON LAMBERT, THIS IS MONEY PUBLISHER
Updated: 06:32 EST, 24 April 2008

The long-awaited decision in the bank charges case against major High Street banks will be delivered on Thursday.

Imminent: A judgement on the bank charges case will be handed down on Thursday April 24th 2008

The Office of Fair Trading has confirmed that a judgement will be passed down on April 24th on the case which aims to decide whether unauthorised overdraft charges fall under the Unfair Terms in Consumer Contracts Regulations.

The test case will not decide whether overdraft charges are fair or not, instead it will establish whether banks' terms and conditions can be assessed for fairness by the OFT, under the Unfair Terms regulations.

Claims by those who argue the charges are unfair have been put on hold since the case was announced last summer, after the FSA granted a waiver allowing banks to postpone considering complaints.

Banks were estimated to have paid back almost £800m worth of fees in 2007. The case between the OFT and Abbey, Barclays, Clydesdale, Halifax Bank of Scotland, HSBC, Lloyds TSB, RBS NatWest and Nationwide Building Society began in the High Court in January.

Until today it was believed that a judgement would not be made until summer.

An OFT spokeswoman said Thursday should see a decision on whether the charges can be considered under the Unfair Terms regulations and the watchdog would then decide how to take its case on.

Banks have argued that their charges are not covered by the Unfair Terms regulations, which means they can be judged as unfair and thus unenforceable, as they are either a services integral to a current account, or are laid out in plain and intelligible language and so excluded.

The OFT blasted these claims that charges are a service, and says not only do bank charges fall under the Unfair Terms regulations, but that banks are actively encouraging customers to go into unauthorised overdrafts by claiming this is a service and then hitting them with unclear charges.

Despite the freeze on customers reclaiming charges, banks have continued to levy fees of £15 to £30 per time or more on those who go overdrawn without permission, while also imposing daily charges and high interest on balances.

This is Money and our sister publication Money Mail (Daily Mail) has campaigned against unfair bank charges since 2005: see the full campaign.