This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Cookie Policy. Read more

Banks to appeal against bank charges decision

22 May 2008 / by Rachel Mason
The eight high street lenders involved in the High Court test case on 'unfair' bank charges are set to challenge the ruling that the fees are subject to unfair consumer contract regulations.

Today, Barclays, Abbey, Clydesdale, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland and Nationwide Building Society, will seek permission to appeal against the High Court judgement which allows the Office of Fair Trading to press ahead with its investigation to determine whether or not bank charges are unfair.

The appeal will disappoint the hundreds of thousands of consumers who are hoping to reclaim unfair bank charges; the FSA has already put a freeze on claims until after the judicial process is completed, and this latest decision is a further setback, which could see the case drawn out for many more months.

Consumer groups have criticised the decision to appeal, with Phil Jones of Which? calling on the banks to "do the decent thing" and pay compensation to those who have made a claim while lowering the fees they do charge to a "fair level".

But the banks, who are all struggling with their own problems, maintain that the charges are fair and are refusing to back down. If the OFT is allowed to proceed, they could see the fees they are allowed to charge capped and they could be forced to refund the difference between this new capped fee and the charges they have already imposed; it is thought the cost could be in excess of £10billion.

Although the OFT has not yet made any official announcement as to whether it believes the current level of charging is unfair, its ruling on unfair credit card charges two years ago – which saw charges cut from £35 down to £12 – is thought to be a good indication as to their likely ruling.

Despite the hostile reaction to the bank's application to appeal, it is not thought that the OFT will contest and analysts believe it unlikely that Mr Justice Andrew Smith, who made the original ruling, will refuse permission due to the significance of the case.

©Fair Investment Company Ltd