Bank penalty charges...remember them?
We are quite sure that you all do, especially as the High Court test case has been going on for the last few months.
And at long last, the announcement is in...and its gone against the banks!!
As a result, UK banks could be forced to return billions of pounds of overdraft fees to you after a high court judge said the fees could be challenged by the Office of Fair Trading (OFT).
Mr Justice Andrew Smith agreed with the OFT that charges were covered under the Unfair Terms in Consumer Contracts Regulation 1999.
This now paves the way for a further hearing in which the court will decide whether the charges are unfair and, if so, what a fair charge should be.
Martin Lewis, founder of the website Moneysavingexpert.com, told Sky News the ruling was "a massive vindication for bank charges campaigners".
He said up to £9 billion in penalty charges could be reclaimed by all of us who are bank customers.
The judge had listened to 14 days of evidence put forward by the OFT and the banks, who represent 90% of the current account market.
The bank penalty charges became a subject for rebellion for many of you last year after the OFT ruled that similar fees for late and unpaid credit card repayments were unlawful and consumer groups started to encourage you to claim penalty charges refunds.
More than 1 million reclaim letters were downloaded from websites, and some of you were able to win back thousands of pounds from the banks, many of whom refused to contest the claims in court.
Claim back your bank penalty charges here
Claim back your credit card fees here
The case started back in January and it has seen the Office of Fair Trading (OFT) take on 8 banks and building societies over the penalty charges they impose when your current account goes over its agreed overdraft limit, or a cheque or direct debit is bounced.
The OFT have claimed that the banks receive up to £3.5 billion a year in unauthorised bank penalty charges.
That means the banks are making about £10 million a day!
The cost to us
Banks and building societies have been charging up to £39 for a bounced cheque, standing order or direct debit, and their critics (of which there are many) say the actual cost for these could be as low as £2.
Now that it has won the case, the OFT is likely to force the current account providers to cut their fees, and as a result, the banks could be made to return millions of pounds to us (something most of us would like to see).
Collectively, the banks have refunded over £550 million in penalty charges with HSBC, admitting it had already repaid over £115 million of fees and could face claims for a further £300 million.
The Financial Services Authority (FSA) had allowed account providers to put all your reclaim letters on hold until the test case was resolved. This may be extended until the outcome of any appeal, so it could be another year before you find out if you are entitled to refunds.
Cases currently on hold in the county courts will stay on hold until 22 May, by which date the banks must decide whether they are going to appeal against the ruling.
The banks are still deciding whether to appeal the ruling, and even if they choose not to the legal process is set to continue for some months. It will be a month before the timetable for further hearings is even set.
The consumer group Which? called on the banks not to appeal the ruling and said the FSA should drop the waiver with immediate effect.
The group's personal finance campaigns manager, Doug Taylor, said:
"The banks should do the right thing now: concede defeat, agree with the OFT what constitutes a fair unauthorised overdraft fee and refund their customers as soon as possible.
"This whole saga has severely damaged the reputation of the UK's high street banks. If they appeal, drag their heels in refunding their customers or try to introduce back-door charges to recoup their losses, their customers will see this as adding insult to injury."
Meanwhile, David Kuo, Head of Personal Finance at
Fool.co.uk, says:
"We are delighted the High Court has ruled that the Office of Fair Trading (OFT) can assess bank charges for fairness. For two years Fool.co.uk has deemed unauthorised overdraft charges to be excessive and unnecessarily punitive. We are therefore pleased that justice has been done.
"We urge banks to cooperate with the OFT, and we also hope they will not challenge today's verdict. Appealing today's judgment will prolong the pain unnecessarily for disadvantaged customers. It is cruel to make customers wait another nine months or more to recoup what is rightfully theirs.
Customers who have been unfairly penalised should continue to reclaim unfair penalty fees. There is a six-year limit for reclaiming the charges though the clock stops the moment you lodge your complaint with the court. Customers should not delay."
Are you pleased with the High Court ruling?Why not let us know your thoughts on what should happen next with bank penalty charges?
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