Many experts are hailing last week's result on the bank charges test case as a victory for the consumer, but some bank customers are still unsure what it means for them.
A judge ruled last week that the Office of Fair Trading has the right to determine whether or not default bank charges – for exceeding overdrafts and bouncing cheques – are unfair and should be reduced.
However, while consumers could benefit from the decision and earn the right to reclaim the unfair bank charges
they have paid over the past six years, they should not expect a speedy return of their money.
Banks have been making £3.5 billion a year from the lucrative bank charges business and are expected to appeal the decision, which could delay the process for many more months to come. They will have to lodge an appeal at the end of this month to defend their claim that the charges are fair and proportionate – charges can be up to £39 a go for what the OFT says should simply cover their costs, which could cost as little as £2.
If the banks do appeal the high court decision, it could be a long while before consumers can reclaim their money. The Financial Services Authority put a freeze on reclaiming until the issue was clarified in court and defined by law.
Until the OFT has been given the opportunity to decide whether or not the charges are unfair – and experts do not think the banks will be successful in their appeal – a million claims from consumers will remain on hold in the county courts, totalling approximately £713 million, according to price comparison site uSwitch.com.
However, if what experts believe is correct and the OFT does declare them to be unfair, then the race will be on to reclaim bank charges
as soon as it is announced. Therefore, consumer groups and campaigners against bank charges are encouraging customers to get their claims in as soon as possible so they are ahead of the game.
© Fair Investment