Thousands Left Deflated as Banks Win Ruling

The case against banks for unreasonable bank charges has been in court for years, and millions of people across the UK were eagerly awaiting the news of the court’s decision. However, their hopes were dashed today as the Supreme Court ruled in favour of the banks.

The Office of Fair Trading (OFT) had been arguing that the millions of pounds claimed in bank charges were unfair, stating the regulation ‘Unfair Terms in Consumer Contracts’. The hardest hit were people who had no funds in their account, but were charged a fee of going over their overdraft limit. Some claim that this is completely unreasonable, as it’s obvious that they don’t have any money to pay these charges. Others say that this is a fair charge, considering that the overdraft facility is the bank’s money and not the customer’s.

There had been seven banks and one building society who had previously appealed against the plans proposed by the OFT and lost their cases in lower courts. This gave people hope that it would be easier for them to claim back their bank charges. However, the Judge Lord Phillips ruled that it was outside the regulator’s remit to decide on the fairness of bank charges.

The Supreme Court said today that bank customers with a current account had agreed to the terms of the overdraft facility, which included paying bank charges if it is exceeded.

Consumers Group were very surprised at the court’s ruling – many expected the Supreme Court to find in favour of the Office of Fair Trading. Millions of pounds from individual claims had been frozen since 2007 when the case first went to court, but now those customers will be disappointed.

There is still a small ray of hope for those who were hoping for a different outcome, however. Although the Supreme Court banned the OFT from taking their claims to the High European Court, they are allowed to question the bank charges by using other means than the Unfair Terms in Consumer Contracts regulations. This gives them the choice to challenge the fairness of these charges; there may be much less hope than there was previously, but one must not forget that the High Court and the Court of Appeal both found in favour of the OFT.

Some of our Bow Escorts are backing the OFT, hoping that they will manage to stop the banks from making any more unreasonable charges in the future.