The Sun

BRITAIN’S banks can appeal against a court ruling on overdraft charges which could cost them billions.

The decision means any claims against such charges will probably not be settled until next year.

The High Court ruled five weeks ago that the Office of Fair Trading may investigate charges on unagreed overdrafts.

If the OFT decides such charges are unfair, banks could be forced to repay millions to customers charged for bounced cheques or for going into the red without permission.

But Mr Justice Andrew Smith said yesterday he “was minded” to let the banks appeal against that decision. The banks — ABBEY, BARCLAYS, CLYDESDALE, HBOS, HSBC, LLOYDSTSB, RBS and building society NATIONWIDE — are now likely to do just that.

They say the OFT should not be allowed to examine the charges as they are not subject to consumer contract regulations.

The banks also argue that, in any case, the charges are not unfair because they represent legitimate fees.

An appeal is now likely to be heard in the autumn, by which time the OFT should have made a decision on whether the charges are fair or not.

In reaching his decision, Mr Justice Smith said he wanted the OFT to decide by then whether the charges were unfair.

He said the delays were not fair to the tens of thousands of bank customers whose claims are currently suspended by the courts.

He told a case management conference: “How long should we hold up the county court litigation?

“Are we talking months, years or weeks?

“We are facing a lot of litigants who have not had their claims struck out and who should be in a position to pursue their claims.”

The British Bankers Association said: “Once the precise terms of this permission are agreed, the banks will progress the appeal with expedition.”

But David Kuo, of personal finance website Fool.co.uk, said last night: “Banks know that time is money, which is why they are appealing — they want to hang on to your money for as long as possible.”

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A HIGH COURT test case begins today to determine whether banks charges of up to £30 a time are illegal.

Banks have raked in billions of pounds from unauthorised overdrafts and missed direct debits.

But they have also refunded about £1billion in out of court settlements to around three million customers who have claimed they have been overcharged.

Since the announcement of the test case – brought by the Office of Fair Trading in July - all claims have been put on hold.

And if the judge rules the penalties are NOT legal and fair, it could lead to millions more having their charges refunded.

The case is expected to last up to three months.

Doug Taylor consumer lobby group Which?, says: “The banks will be asked to demonstrate that the charges are a core term of the contract between the bank and the accountholder or that they are service charges.

“The OFT will try to demonstrate they are not.

“If the High Court judge agrees with the OFT, this should open the floodgates for compensation on a large scale for victims of unauthorised overdraft charges.

But critics say even if the test case does rule the charges illegal it could be bad news for the consumer.

Shorn of the £3.5billion revenue the charges bring in, the banks may well start charging for everyday banking, such as bringing in monthly fees.

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THERE’S a double sting in the tail for customers as they fork out almost £50 a pop for going overdrawn.

A one-off mistake landing you in the red can mean being charged TWICE, once through an arrangement fee and again if a cheque or direct debit is bounced.

Research from comparison site MoneyExpert shows that one in three accounts rack up a fees of up to £60.

It contrasts with the cost of defaulting on a credit card which has been capped at £12 after a ruling by the Office of Fair Trading.

Sean Gardner of MoneyExpert, said: "Some people might think that their bank charges are on the verge of being reduced or scrapped, but the court case continues and the charges remain.

"People need to pay careful attention to their spending and the arrangement they currently have with their bank.”

The analysis shows the average unpaid item fee is £31.38 and the average one-off charge is £13.60 adding up to an average overall bank charge £44.98.

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