This is Money - OFT victory in bank charges case

Bank charges can now be assessed for fairness by the Office of Fair Trading after the High Court ruled in its favour today.

The announcement could mean bank customers will be able to reclaim billions of pounds in punitive bank charges later this year, if the OFT decides the charges are unfair as expected.

The ruling comes at the end of an appeal case brought in October last year by the eight High Street banks following the High Court's similar ruling in favour of the OFT the previous summer.

However, the banks have the right to appeal this judgment yet again to the House of Lords, potentially delaying the OFT's investigation by a further six months to a year.

The British Bankers' Association confirmed the banks have put in a request to see if they can appeal to the House of Lords, but stressed this does not mean they plan to proceed.

A spokesperson said: 'You have to ask if you can appeal before you decide if you are going to appeal. It's just a legal process. The banks are keeping their options open.'

Even if the banks do not appeal, consumers will not be able to reclaim their bank charges until the OFT delivers its final assessment on whether the charges are fair.

It has already begun its investigation into the overdraft charges and, if banks do not hold up the process further, it expects to report its findings later this year.

The OFT said in a statement: 'The Court found that these terms are not part of the core or essential bargain between a consumer and their bank, and therefore consumers do have protection under the Unfair Terms in Consumer Contract Regulations for these terms. 'We are now analysing the implications of the judgment for our ongoing investigation.

'The OFT has already written to the banks with its provisional view on the fairness of the terms, setting out its concerns that they may be unfair. We expect to reach a final decision on fairness later this year.'

However, it warned the process would be complex as the investigation involves each bank's terms and conditions over the past six years.

Banks have claimed today's ruling could spell the end of free banking in the UK as the banks could lose up to £2.6bn a year in lost revenue as a result. However, campaigners argue it is wrong to subsidise fee free banking by treating other customers unfairly.

Furthermore banking industry experts doubt that banks will pull fee free bank accounts due to the huge cross-selling opportunities they offer compared to their relatively low cost to run.

Banks could have to refund billions in bank charges levied over the past six years. RBS is already planning to proactively refund all bank charges to its customers if it eventually loses its case against the OFT.

Marc Gander, head of the bank charges campaign organisation Consumer Action Group, said the banks will think twice before fighting today's judgement.

He said: 'The only thing that would stop the banks appealing is their public image. To drag this on yet another year by taking it to the House of Lords after delaying the case a year already, I think would mark them out as the people's enemy when their reputation is bad enough already.

'I'm not sure they would have the gall to do that. They may be so reluctant to draw this on that they may throw the towel in.'

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