There is a further court hearing scheduled for May 22 although Which personal finance campaigns manager Doug Taylor is calling on the banks involved to concede defeat.
He says: “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.”
He says the FSA must now drop its waiver so the thousands of cases pending in the county courts and the Financial Ombudsman Service can be processed because every second that the issue remains unresolved is costing consumers up to £111 in overdraft charges.
He says: “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.”
If the OFT wins the second stage of the test case it is expected the banks will appeal the decision. If this is the case the FSA waiver is likely to remain in place during the appeal process, which means all pending cases in the county courts or with the FOS are likely to stay on hold and banks will continue to charge overdraft fees.
If the banks decide not to appeal their terms and conditions will be assessed for fairness. Where current terms are unfair, the OFT will agree a fair charging regime with the banks, effectively placing a cap on the level of overdraft fees.
Liberal Democrats Shadow Chancellor Vince Cable welcomes the win but says it is only the first step in what will be a very long journey.
He says: “In case after case brought against the banks by angry customers, they have been unable to show that their penalty charges bear any relationship to the costs they incur. The massive penalty charges imposed are yet another example of the major banks taking consumers for a ride.
“The people hit by these charges are often those least able to afford them. Many overstretched families have found their own banks pushing them further into debt. The banks can receive unrivalled guarantees and support from taxpayers when things go wrong, but continue to make huge profits at the expense of their customers.”