The BBC - Banks will appeal on charges case

The UK's banks have been given permission by the House of Lords to appeal against a recent Appeal Court judgement on bank charges.

In March the Appeal Court upheld a High Court decision that the fairness of overdraft charges could be investigated by the Office of Fair Trading (OFT).

The latest move will extend the long-running legal test case over the fairness of bank charges.

The first stage of the litigation has already lasted for 18 months.

During this time nearly all new claims for the return of bank charges have been put on hold in the county courts and at the Financial Ombudsman Service.

Marc Gander of the Consumer Action Group (CAG) said he was not at all surprised by this latest development.

"We expect them to lose and when the process is finally exhausted we hope they will come quietly and return £30bn to the High Street," he said.

Rulings

Last year, Mr Justice Andrew Smith ruled in the High Court that the OFT had the power to scrutinise the fairness of bank charges, under the 1999 Unfair Terms in Consumer Contracts regulations.

The seven banks, along with the Nationwide building society, which were party to the test case with the OFT, appealed against the ruling.

However, their arguments were firmly rejected by three Appeal Court judges, led by the Master of the Rolls, Sir Anthony Clarke.

Handing down his judgement, he suggested the banks might be wasting their time taking the issue to the House of Lords because four judges had now come to the same conclusion.

The banks clearly did not agree.

Behind the scenes, both sides have been preparing their arguments for the eventual second round of court hearings, in which the fairness of bank charges will be decided.

The OFT has already made it clear that as a result of its own investigations it does consider that overdraft fees are unfair.

It may argue that the charges should therefore be reduced substantially from their current levels, which sometimes amount to more than £30 for bouncing a cheque.

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