Bank charges battle could go to House of Lords

1 April 2009

Bank charge victims could have to wait even longer for compensation after the House of Lords gave banks the right to appeal a recent court decision that could have seen overdraft fees capped.

Last year, a group of Britain's biggest banks appealed a Hight Court ruling, which gave the Office of Fair Trading the right to decide whether bank charges are fair or not. Although the Court of Appeal quashed this back in February, the issue looks set to continue; the House of Lords has now given the banks leave to contest the Court of Appeal's decision.

Consumer groups have condemned the move. Doug Taylor, personal finance campaigns manager at Which?, says banks should accept the Court of Appeal’s decision rather than use taxpayers’ money to “drag this saga out for even longer”.

“Not only are the banks prolonging the misery for their customers, many of whom are struggling to make ends meet, they are doing further damage to their already battered public image,” he adds.

A House of Lords hearing could potentially drag on until 2011, and the European Commission could even become involved at some point. The Financial Services Authority has put a waiver in place removing the obligation of banks to deal with complaints and refund requests surrounding unauthorised bank charges until a final decision was reached. This is currently due to expire in July 2009, but could be extended until the House of Lords comes back with its verdict.

This means that all pending cases are likely to stay on hold and banks will continue to charge overdraft fees, warns Which?.

James Caldwell, director at, says the banks are simply delaying the inevitable – at the expense of their customers: "The test case has been going on for long enough now, and we are surprised that this decision has been made by the House of Lords."

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