Banks win landmark court battle
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A stream of high street banks have won their battle against refunding millions of bank customers charges for unauthorised overdrafts.
The Supreme Court has today overturned earlier court rulings that allowed the Office of Fair Trading’s investigation into the fairness of unarranged overdraft charges issued by seven banks and one building society.
The court said it “unanimously” held that the charges for unauthorised overdrafts fell within a core terms exclusion.
The FSA says that in light of the Supreme Court’s judgement its waiver on banks dealing with complaints has now ended. The waiver meant firms did not have to deal with complaints about unauthorised overdraft charges in the eight-week-period required under FSA rules while the outcome of the case remained unclear.
A British Bankers’ Association spokesman says: “We recognise this issue has been of real concern to a large number of our customers and we are pleased that this decision now brings clarity for all parties. The Banks will work with the regulators to ensure that the outstanding customer complaints are brought to a swift conclusion. We will also continue to work together with the OFT in connection with its on-going market study.”
Law firm CMS Cameron McKenna head of retail for City Jean Price says: “This is not only very good news for the banks but for the millions of people who never incur charges. Customers opening a bank account should realise that charges are part of the package.”
However, Which? chief executive Peter Vicary-Smith says: “This is a bitter blow for the millions of people who have been patiently waiting to get their bank charges back.
“Not only does it give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance. The banks now have no excuse for introducing other fee charges.”
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Readers' comments (43)
John Cowan | 25 Nov 2009 12:07 pm
Whilst i whole heartedly agree that people were breaking their contracts and therefore had little room to complain about being charged, the level of charges is quite ridiculous. Yet again the banks, the majority of which we own as tax payers, are being allowed to ride rough shod over the general public. Am I the only one massively frustrated with the way that they have completely cocked up the economy and the rest of us are paying the price whilst nothing is really changing at their end?
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JG | 25 Nov 2009 12:07 pm
And next up will be these loan and credit card idiots that just want to prey on individuals with no morals. You borrow mony, you sign the contract, you pay it back. You dont look for legal loop holes to get you off paying back your debt. I think the banks deserved this win.
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Evan Owen | 25 Nov 2009 12:09 pm
No doubt this will not be the end of it because the OFT used the wrong legislation, silly billies. However I have never understood the arguments, do 'consumers' and their 'representatives' not accept that opening an account involves signing up for the terms and conditions of the bank which set out what happens if someone spends more than they have in the account i.e. the bank's money!
How much has your bank wasted in legal fees? Does the OFT pick up the tab, or Which?, if not then why not?
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Anonymous | 25 Nov 2009 12:09 pm
Simple - don't spend money that isn't yours without prior authoriastion!
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Henry Gewanter | 25 Nov 2009 12:10 pm
We're lucky to have overdrafts in the UK: in the USA, it's illegal to write a cheque that isn't covered by cash in the account. Unauthorised overdrafts are simply taking someone else's money without their permission: why isn't that different from stealing and why shouldn't they pay for the privilege of helping themselves to money that's not their?
Kind regards,
Henry
Henry L Gewanter
Managing Director
Positive Profile Limited
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Stephen Phillips | 25 Nov 2009 12:11 pm
OK, I am sick and tired of the way banks behave. Who will join me in starting up a new bank that puts customers at the heart of the business?
We could call it the Treating Customers Fairly bank.
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John Blackmore | 25 Nov 2009 12:11 pm
Excellent news. A victory for the idea of contact over the idea of TCF. I have no love of the banks but had they lost this one we would have moved further down the road of the rule of the mob. People must learn that contracts should be enforced. If you don't like the charges then don't go overdrawn without permission or find a bank that charges less.
Hopefully this decision will give the FSA cause to re-consider the concept of TCF. The danger with TCF is that the FSA have taken on the "right" to say that anything they don't approve of is not TCF. If having dictatorial powers was not their intention then they should perhaps back off from TCF and go back to rule based regulation. They also need to learn that contracts are at the very heart of our world and to simply ignore things they do not like is unacceptable.
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Anonymous | 25 Nov 2009 12:20 pm
Whilst I agree that the charges the banks have imposed have been too large, I am glad that this ruling has gone in their favour.
Claims management companies are swarming over us like a plague of locusts, moving from one product to another with no morals whatsoever.
I hope this is the end of many of them.
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Anonymous | 25 Nov 2009 12:22 pm
This is a black day for the protection of the public and our judicial system should hang its head in shame. I cannot believe that the banks have been given clearance to carry on levying the ridiculous levels of charges they had in the past.
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John Lacy | 25 Nov 2009 12:25 pm
Thank God for a bit of sanity in a court judgement. As Evan Owen has rightly pointed out taking someone elses goods or money without permission is theft. Would you make such a Hoo-Haa if the same person had stolen a television from someone like Comet? No of course you wouldn't!!
Perhaps this will make the indisciplined take responsibility for their actions which after all would otherwise be funded by those of us who don't abuse the system.
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