Bank charges case could be "heads I win tails you lose" for the consumer

15 January 2008 / by Rachael Stiles
Whatever the result of the test case which the Office of Fair Trading has brought against banks for implementing high charges, the banks' customers could still lose out from lower compensation or higher fees.

If the banks are victorious in the unfair bank charges test case which starts tomorrow and is intended to determine and clarify the legality of the charges, then they could be allowed to charge as much as they want, disadvantaging the consumer. But, if the OFT is successful, the consumer may not have as much cause for celebration as they expect, because previous to the announcement of the test case, and subsequent freeze on reclaiming the charges, customers were often claiming back bank charges in their entirety.

If the banks are defeated, they might only have to refund the difference between a newly stated 'fair' level and the total which the customer paid in fees, according to David Kuo, head of personal finance at, a source of financial information for the consumer. Customers could be offered lower levels of compensation, but they will not have to face such high fees for becoming overdrawn, exceeding authorised overdrafts, bouncing cheques and having insufficient funds for standing orders and direct debits. urges bank customers to "pay close attention to their finances. As far as banks are concerned, the outcome of the court case may be one of heads I win, tails you lose. But vigilant customers can take proactive steps to ensure that banks never win regardless of which side the coin falls."

Commenting on the forthcoming test case, the National Consumer Council said that it is "calling for justice for all." and that the outcome of the OFT High Court case against the eight high street account providers "needs to make it clear once and for all that consumers charges must be fair." said National Consumer Council finance expert, Carl Belgrove.

"We believe that it’s time that high street banks stop making easy money and take a responsible attitude to the impact of their actions on vulnerable consumers - a charge of over £30 for an unpaid standing order is enough to trigger a spiral of debt that many people on low incomes may never fully recover from."

If the OFT wins the case and the banks have the lucrative, £3.5 billion bank charges racket taken away from them, it is feared that they will try to recoup the money from other means, such as implementing monthly fees for all current account holders and putting an end to free banking.