OFT Bank Charges Test Case - Summary, and how it will affect people claiming bank charges back

Last Updated: 9:40pm, 1st August 2007

Please Note: Rather than adding a number of new posts which will be hard to keep track of, I`m sticking to this single page to display all the relevant info. Nothing will be deleted, but info that has changed will be struck through, and the updates noted. Please check this page on a regular basis to get all the latest up to date news on the current situation.

The OFT Bank Charge Test Case

On Thursday, 26th July 2007, a shock announcement was made about the biggest event in the history of bank charge claims!

The OFT (Office of Fair Trading) have announced that, in agreement with seven major banks, a test case will be launched in the High Court to decide once and for all whether bank charges can be claimed back.

At the same time, the FSA (Financial Services Authority) announced that until the conclusion of the bank charges test case, the banks could put a hold on dealing with bank charge claims. The Financial Ombudsman is also putting a hold on all the bank charge claims they are currently dealing with, and the courts are putting a hold on all the bank charge claims currently in the court system, until the results of the test case.

This announcement comes as a total shock to everyone involved in bank charge claims, as there was no previous warning or indications that this test case was being planned. The news actually broke a day early, due to a leak, as the planned announcement date was tomorrow, Friday, 27th July 2007. There is no current date for the test case, but due to the vast implications of the result it's likely to take a lot of planning, and consequently will not be for several months, and could even be one to two years away!

Updated: 31st July 2007 - On July 31st 2007, Commercial Court judge Mr Justice David Steel ruled that the trial will take place on a date which has yet to be agreed, but will be between mid-January and the end of February.

The FSA have currently granted a hold on bank charge claims for one year, so this is the timescale they are estimating for when the test case will be heard in court. This situation could change in the next year however.

The bank charges test case will set a legal precedent, as it will be heard in the high court, and will give a definitive answer as to whether or not bank charges can be claimed back. If the banks lose, it could cost them as much as £10 billion pounds, and will make it much easier for everyone to get their bank charges refunded.

One consolation is the OFT do think that bank charges are unfair, and are taking the test case to court in order to prove this once and for all. If they win, then it means that the banks will have to refund your charges without question, and without you having to take them to court. However, if the banks win, it means that no one will be able to claim bank charges back any more.

How this affects people currently claiming their bank charges back

Although it's great news that this test case is going ahead, as it will end the unfairness of some people being awarded their charges back in the courts while others are refused, the fact that the banks are allowed to put a hold on claims is a blow to everyone currently claiming, as it could now be months, if not years before they see a refund.

First of all, if you have already agreed a settlement with the bank already, but haven't actually been refunded yet, the good news is that the bank will still have to honour the settlement and refund you. You have 2 months from the date of the banks offer to decide whether to accept or to wait for the test case. If the bank give you any problems regarding paying out when they have made you an offer, you should complain to the FSA (Financial Services Authority) straight away. The banks have only been granted a hold on claims if they accepted the conditions imposed by the FSA, one of which is that they must still pay out when an offer has been made and accepted.

For everyone else, who's claim is currently in the system, the situation isn't as good.

Basically, whichever route you took to claim back your bank charges, whether its through the courts or the financial ombudsman, your claim will be put on hold. This means that the process effectively freezes, and you claim will not progress any further until the outcome of the bank charge test case has been decided, which is likely to be a long way off. Unfortunately, there is nothing that can be done about this. Each claimant will shortly be contacted by the bank they are claiming from informing them of the hold.

If you are currently at the stage of writing letters to the bank complaining about your charges, once you have sent the second letter, the letter before action, it is still a good idea to file your claim in court, if that is the route you have chosen to go down. Currently, the statuate of limitations allows you to claim back the last 6 years worth of charges. As a result, you should still file your claim, as when the claims are resumed the date the 6 years starts from ie the date you file your claim will be held. If you do not file your claim now, and the test case is not finalised for the next 2 years (as an example), then you could possibly lose the right to claim the first two years worth of charges, as the 6 years will start from that date.

Updated: 1st August 2007 - The FSA have announced on the 1st August 2007, that banks won't be allowed to use the rule restricting you to claiming back the last 6 years of charges only, to get out of paying claims which are delayed because of the hold.

If you have filed your claim in court already, then your claim will be put on hold, and the court will contact you to let you know the situation. It's very important now to follow the instructions from the court to the letter. If they write to you asking for evidence to support your claim, you still need to send it, its important to carry on as normal until the court tells you otherwise. If you don't follow their instructions, it could invalidate your claim.

If you are going to the financial ombudsman, then you can file your complaint, again so you can claim back the last 6 years of charges from now, but it will not be dealt with until the test case reaches a judgement.

Update - Can I still claim back my charges, if I haven't started my claim yet?

The answer to this is a definate YES!. Because the banks now can't use the 6 year rule to get out of paying claims delayed by the hold on claims, its important that if you have any intention of claiming, you should do so now!

All you need to do is to write the bank a letter asking them to refund your charges, you can use our template letter for this. It's important that you send it by recorded delivery, so you can prove the bank received it, and on what date.

Although nothing will happen regarding your claim, the bank have to log it, and confirm this in writing with in 5 days. However, this will "lock" the date that your claim was filed, so you will still be able to claim back to August 2001. For the price of a stamp, you could potentialy save yourself hundreds if the OFT win the test case. If they lose, you are only losing the cost of your stamp, so its well worth doing!

Update - When will the OFT Bank Charge Test Case take place?

On the 31st July 2007, Commercial Court judge Mr Justice David Steel ruled that the trial will take place on a date to be agreed between mid-January and the end of February.

It is not currently known how long the case will take before it reaches a resolution, and there are likely to be appeals against the judgement by the losing party.

How can I keep up to date with this situation?

Obviously, this situation will have a major effect on everyone claiming their charges back. At the moment, with the news being released just hours ago, the situation is still far from clear, and new developments may occur in the coming weeks.

If you would like to be kept up to date, I will be sending out a newsletter informing everyone of any progress or changes. I will also let everyone know when the date of the test case is known, and also the result once it has been decided.

If you would like to sign up to the newsletter, so you are kept abreast of all the developments, and information about when you can carry on with your claim (which could be a quite a while) please create an account by clicking the link below and you`ll be kept informed of any developments.

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Your email address will be kept private, and not given to any third parties. You will be able to unsubscribe at any time.

Help if you would like to Claim your Bank Charges Back, but are worried about the current situation

If you are worried about the process of claiming back your bank charges now that the situation has become more complex, or are simply too busy and would like to leave it to the professionals, we can help you! We've partnered with Claims Financial, who are a fully regulated claims company who can claim back your bank charges on your behalf, on a No Win, No Fee basis.

Although Bank Charge claims are currently on hold, Claims Financial are still open to accepting new claims, ready to act as soon as the current hold is lifted!

To find out more, click here to fill in their simple application form, and a Claims Financial representative will get in touch with you shortly.

Is this the end of Bank Charge Claims?

The answer to this is a definate no! At least for the time being any way. If the banks lose the case then they will have to refund your charges without question, and the process will be much simpler and quicker.

Unfortunately, if the banks win, then it will no longer be possible to claim back your bank charges.

Important Note

Please note that this information is currently, to the best of my knowledge, accurate. However, at the moment the situation seems be changing on a daily basis, as new information comes to light.

As soon as I receive any new information (that can be verified as true), then this page will be amended accordingly, and of course the updates will be added to this site.