The High Court test case into unfair bank charges today enters its third week.
The case, a legal battle between the Office of Fair Trading (OFT) and eight banking institutions, was originally intended to last around eight days, but it now looks more likely that it will go on until mid February due to the amount of material that needs to be considered by the court.
The case started on January 17th at the International Dispute Resolution Centre and has been brought about in order for a legal ruling to be made on the issue of unfair bank charges
Back in April 2006, the OFT ruled that the fees being charged by banks to their customers for things like exceeding an overdraft limit or a bounced cheque - which in some cases were up to £40 - were unfair, and that although the banks were within their rights to charge, the amount should only be enough to cover limited administration costs.
The OFT said that it did not cost more than £30 to send out a letter advising a customer of a breech in their current account agreement, and as a result, thousands of customers began claiming back the 'unfair' bank charges that they had paid.
But the British Banking Association continued to argue that the fees were fair and just; it was then that the OFT decided to take the issue to court and get a firm ruling one way or the other.
The financial institutions involved in the case are Barclays, Abbey, Clydesdale, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland and Nationwide Building Society, and all eight maintain their stance that penalising customers as much as £38 on overdrawn accounts is completely within their right.
But there are now mixed opinions into whether an OFT victory would actually be beneficial to consumers; many financial experts are worried that banks would resort to reclaiming their lost profits by taking away free banking.
"If the banks lose the case it will almost certainly be the end to ‘free’ banking in the UK", warned Dale Lovell, Editor of FinanceDaily.co.uk, "because the banks will have to find alternative ways of earning money back from customers."
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