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February 26, 2009

Consumers win latest round in overdraft charges case

by Gill Montia

Story link: Consumers win latest round in overdraft charges case

The banks involved in the High Court case brought by the Office of Fair Trading (OFT) to establish the legality of unauthorised overdraft charges, have lost an appeal against a ruling in the case.

Last year, Mr Justice Andrew Smith ruled that the OFT had the right to decide whether or not the charges were fair and could assess the terms and conditions that allowed the banks to charge the fees under the 1999 Unfair Terms in Consumer Contracts Regulations.

The ruling was challenged by the banks’ lawyers, who argued that the 1999 Consumer Contract Regulations are not intended as a method of price control.

The Appeal Court has now upheld the original ruling.

However, according to a BBC reporter, the British Bankers’ Association (BBA) will be applying to the House of Lords for permission to appeal the Court of Appeal’s decision.

Meanwhile, figures from the Ministry of Justice show that in November of last year, at least 65,000 people had claims for unauthorised bank overdraft charges frozen in the court system.

The number is in addition to the thousands of consumers and businesses who have lodged complaints about unauthorised overdraft fees with their individual banks.

A waiver that allowed banks and county courts not to process the complaints was introduced by the Financial Services Authority in 2007 and has recently been extended until July of this year, when a final judgment in the High Court case was expected.

Should the BBA proceed with its approach to the House of Lords, the outcome could be delayed until 2010/11.

 

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