The Guardian - Banks cave in at the 11th hour in face of legal challenge

Cases settled to stave off ruling that would apply to all 'victims' of excessive fees

More evidence emerged this week of how banks are backing down when customers challenge them over "illegal" penalty charges.

On Thursday, Leeds county court was packed by people seeking refunds, plus the banks' lawyers. Almost all the cases were settled at the 11th hour. The banks are desperate to avoid an adverse court ruling that they would then have to apply to all customers.

The Leeds case management conference came on the same day that Office of Fair Trading boss John Fingleton launched a far-reaching study into current account pricing that will sit alongside its existing inquiry into fees for unauthorised overdrafts and bounced cheques.

The 77 demands for repayment of allegedly unfair charges had already been moved from Leeds small claims court, which was buckling under the weight of bank charge cases, to the mercantile division of the high court, where a test case could prove binding on the banks and their customers.
Judge Roger Kaye QC was ready to choose a representative case, and even hinted to the banks' lawyers that it might help if they underwrote the costs on both sides to allow one to proceed. None of the major banks in court, including Natwest, Barclays, Halifax and Lloyds TSB, looked very keen.

The judge noted that another 70-odd cases were due next month in Leeds alone, following 100 in February, most of which saw the banks settling at the last minute. The same happened on Thursday as the judge patiently adjourned while litigant after litigant was escorted into a side room with bank lawyers and emerged smiling. Out-of-court settlements were negotiated by all litigants, apart from a handful of cases adjourned for technical reasons or because one or other of the parties failed to turn up.

Victoria Hardwick, 39, a housewife with three children from Otley, near Leeds, was celebrating winning back £2,500 in charges. "There are so many people like me doing this now because the banks don't seem to know what they are doing. But until we have got some sort of law, or somebody manages to get their case to court, the banks are going to carry on charging people excessively," she said. Ms Hardwick was phoned at home the night before the hearing by Barclays, offering a deal, but she came to court to get it in writing.

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