Lloyds TSB fends off overdraft fee court challenge

16 May 2007
A county court has ruled against a customer's claim to be compensated for overdraft penalty charges, in what many will see as a crucial test-case on the legality of the charges.

Thousands of customers have challenged their banks over what they claim are 'unfair' penalty charges, and the fees are currently the subject of an Office of Fair Trading investigation.

But the Birmingham County Court judge this week ruled that Lloyds TSB customer Kevin Berwick had been fairly charged after exceeding his overdraft limit.

Mr Berwick was claiming £2,545 compensation in what he claimed were unfair fees, but district judge Cooke ruled the charges represented the legitimate costs of servicing his overdraft.

"The charges complained of are not charges for breach of contract but part of the price of the services provided by the bank," the judge said.

The ruling "is highly unlikely to be the final word in what has been a long campaign to stop banks overcharging their customers", moneysupermarket.com's editor Nic Cicutti claimed.

But the ruling could mean banks become more confident about refusing out-of-court refunds to customers submitting reclaim forms.

Find out more about reclaiming bank charges

track© Adfero Ltd