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Friday 27th July 2007
The Office of Fair Trading (OFT) and a group of big-name banks will tomorrow commence High Court proceedings to decide the legality of unauthorised overdraft charges.
The OFT has said that it believes the charges to be unfair and is seeking to prove it in court, in a test case that could open a can of worms for the banks if the ruling goes against them.
In the interim of the case, the Financial Services Authority (FSA) has allowed banks to put all claims for refunds of unauthorised overdraft charges to be put on hold.
This means that many people will have wait months or even years to see if they will be refunded.
The British Bankers' Association (BBA) issued a statement, saying: "The FSA has agreed to issue a waiver, with immediate effect, to suspend the handling of customer complaints on bank charges pending a decision by the court.
"Other banks who are not party to the court action will be applying to the FSA for a waiver and as such will be bound by the outcome of the court case.”
"Banks believe the fees customers pay for unarranged overdrafts are fair and clear.
"However, this is clearly an issue where customers, as well as the banks, would welcome legal clarity."
Banks will be writing to their customers who have complained about the charges to advise them of the situation and the trial, which will be the first time the banks have taken the risk of directly defending their charges in court.
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