65,000 bank charges claims are frozen in courts

11 February 2009 / by Rachael Stiles
At least 65,000 people who have tried to reclaim bank charges have had their claims frozen in the court system, figures from the Ministry of Justice have revealed.

It was known that thousands of people have had their claims frozen since the Financial Services Authority (FSA) put a waiver in place on reclaiming overdraft charges, but the number of people awaiting a ruling on their case has now been made known.

The claims will remain frozen until an ongoing test case into them matter between eight high street banks and the Office of Fair Trading (OFT) has been resolved.

In 2007, the FSA enforced a waiver on reclaiming bank charges until the case is settled, because of inconsistencies in people claiming them back – some were being reimbursed with interest, while others were refused or had their current account closed as a result.

The waiver, due to run out last month, was extended for a further six months until July 2009 or until the High Court case comes to a conclusion.

The banks are currently in the process of appealing against a decision by the High Court judge Mr Justice Andrew Smith, who ruled that the OFT could determine a fair charge – currently as much as £35 each time a customer goes outside the terms and conditions of their account by exceeding their authorised overdraft.

Consumer rights group Legal Beagles obtained the figures from the Ministry of Justice.

Julian Siddle, a spokesperson for the group, told the BBC that the waiver – which allows banks to defer dealing with complaints made to them about bank charges – is one-sided in favour of the banks.

"People are still incurring charges even though banks have obtained a waiver, so they don't have to deal with new complaints," he said, and many people were successfully claiming their money back without going to court before the waiver was put in place.

According to Nick Spooner of Legal Beagles, the Ministry of Justice's (MoJ) figures are an underestimate of the number of cases on hold.

"The 65,000 figure only applies to the cases which the MoJ was absolutely sure related to claims against banks for the return of overdraft charges," he said. "There are others that the MoJ couldn't pick up when searching its data base, because of the different ways in which people had written their claims.

"Meanwhile thousands more claims are piling up with the banks themselves," he added.

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