What do you think of the bank charges ruling?

November 25, 2009

courtBanks have won a two-year court battle, dealing a major blow to hundreds of thousands of customers seeking to claim back billions of pounds of what they say are unfair overdraft charges.

The new Supreme Court found that the Office of Fair Trading cannot use customer protection rules to investigate whether the fees were levied unfairly.

The landmark ruling in favour of seven banks and one building society overturns two previous rulings that said the OFT had the power to investigate the unauthorised overdraft fees because the charges fell under the scope of consumer contract law.

The Supreme Court, however, said the charges form part of the fees for current account services and could not be assessed for fairness under the Unfair Terms in Consumer Contracts Regulations.

Consumers now face the choice of giving up their claims or taking on the might of the banks through individual claims, which could prove costly. To read more on how the decision affects you, read this guide from moneysavingexpert.com

What do you think of the ruling? Have the banks behaved unfairly and therefore have been made to pay the money back, or is it right that consumers should pay the price for breaking the terms and conditions of their current account?


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That is not what we are asking, we are asking, are the charges fair? we have no choice but to use a bank. So in effect the banks can charge what they like.

Posted by G Pennell | Report as abusive

The “unauthorised” overdraft is not as far as I know a product that banks market, or indeed would wish to price attractively – in the same way as Tescos would want to encourage shoplifters!I’m sure there is a make the punishment fit the crime argument, and that some of the discretion to do that may have been removed from local branch staff – but where we are dealing with persistent offenders, there needs to be some deterrent effect in my view.Clearly the banks have a rate of return they seek to achieve on their personal current account product, and the pricing “menu” can be varied, but I doubt that the majority who do not avail themselves of unauthorised borrowing would welcome more of the burden being passed to them.So – in summary I welcome this ruling, and I would just like to see front line bank staff given some discretion to be more flexible for those who are only human and miscalculate from time to time.

Posted by David Ashton | Report as abusive

The ruling, overall, is a good thing and appears to be, on the surface at least, a very sensible way of looking at things. A raft of refunds would only have damaged some of the more fragile institutions and would also have had wider implications.The fact remains that, so long as you do not abuse your facilities, you can bank for free in the UK. You don’t have to have minimum balance and can use your debit card pretty much anyway. Each time you take cash from an ATM not owned by your bank, it costs your bank 40p – but you don’t get charged that, it just disappears. This, to a large extent, has been subsidised by fees. If the OFT remove the account fees, this will dry up very quickly.The ramifications are much bigger than the likes of Martin Lewis et al think. If the OFT end up removing overdraft fees, the Banks will simply levy a fee for using your account – probably a few pounds per month. That way,everyone will pay for it. They will become much more strict with their T’s & C’s so, for example, bounce three items and the account closes. Overdrafts will cost you money each year, loans will have arrangement fees, Credit Cards will see a return of the annual fee.Then you have to look at the other end of the ‘fees’ – the DD that is paid when there are insufficient funds. Will the copany at the other end charge you less? Probably not.Over-riding all of this, people need to understand, using an unauthorised overdraft is stealing – taking money that is not yours. I’ve heard the excuses “I’ve got to feed myself”. Ok, would you mug a stranger in the street to do that? Would you take money from them? No, and if you did run off with several hundred quid from their wallet, you’d be facing a damn site more trouble than a few charges, you’d have a criminal record and face prison.

Posted by Adam K | Report as abusive

Have any of the supreme court judges ever had to worry about money?It is not possible to negotiate the terms of a current account with the banks. The charges are imposed on the customers by virtue of their stance which is take it or leave it.This is bullying. .The only alternative is to not have a bank account. This is what is unfair.Once Lloyds , all on the same day, paid a cheque out of my account made a charge and only then credited the cash I paid into my home branch that very morning. Did they refund the charge ? of course not;!

Posted by Raymond Andrews | Report as abusive

This ruling is really only dealing with a fairly technical aspect of the matter. The thing about the way banks operate that really needs changing is the deliberate complexity and lack of transparency of their terms. There should be a simple cap on the number of products they offer, a prohibition on complex and multiple charging structures and, just as important, a prohibition on complex interest payment structures. For example, you shouldn’t need to have an accountant to work out when to switch money from one “attractive” interest-bearing account to another (the banks are of course counting on you getting this calculation wrong once they’ve lured you in as a customer). If these issues were sorted out, everyone would be a lot happier and have less reason to complain, and the government should make sure that the relevant people have the necessary powers to make the appropriate rules.

Posted by Matthew | Report as abusive

Have to disagree with some of the comments’The only alternative is to not have a bank account. This is what is unfair’ Incorrect. You can have a Basic account that will not charge you. It will pay direct debits/standing orders and give you a cash card. If you want extra functions, they cost money, so it is unfair to expect them for free. We come back to the point – don’t abuse your account, don’t take money that is not yours and you won’t be charged – what’s wrong with that?My personal view is that you should be given a choice at account opening – the account is operated with a controlled limit – 1p short and the DD bounces and there is no charge from the bank, or the bank takes a view on each case and charges you for using money THAT IS NOT YOURS. Then there will be a queue at the door of the bank, screaming that their mortgage has bounced and the lenders are coming in for possession. “I was only £20 short, why didn’t you pay my Mortgage???”The Banks do have to take some of the blam here. They have given overdrafts too freely, overdrafts that are never repaid. This was a hangover from the minimum wage, something that the credit scorecards didn’t adapt quickly enough to. In turn, the country is used to being in the red and it doesn’t cause any worry to be £000’s into an overdraft, pushing the limit every month, it’s just normal behaviour.Time to accept resonsibility for our own actions, time to stop blaming other people for our own mistakes and time to learn how to manage money!

Posted by Adam K | Report as abusive

A banker lends money by taking deposits from people. The loan generates interest which is what capital does as a factor of production. This interest is income and supposed to be divided among the people who deposited the money while the banker charges a nominal fee for the above services. Did savers see any of the billions in bonuses the bankers gave each other? Ok on the other side, people who got charged £000s in fees then had to bail out the same banks again?Where is the justice in this?

Posted by Raj Pathak | Report as abusive

well i am just thankful there has finally been a decision made, i work for hsbc and its good to be able to let the customers know where they stand, everyone should go to hsbc they have the cheepest and fairest charges believe it or not

Posted by Kerri | Report as abusive

My belated thoughts regarding this issue. In this world today, you can not proceed without a bank, this is how we have now evolved financially.
Banks do need to make money, but this needs to be in a Fair and Proper manner. If you go overdrawn and dare I say most people do at some point, then a charge needs to be levied accordingly.
This debate, as I understood it, was about the amount charged. I do think that Banks have an almost FREE HAND on how they run. The amounts they charge are discretionary to them and in their favour. A serious control needs to be taken with the Banking world as they have almost brought the Globe to its knees because they have been able to do as they please. A Bonus from a Bank can make you a Millionaire!
Now, some months later, interests are at an all time low, 0.5%, yet most High Street banks are charging in excess of 4% on mortgages and more than 9% on personal loans. Who is saving money now? Who is making money now? what can we, the people of the country, land and world do about it? Nothing. Because we need Banks to survive.
So was the decission correct? For me, No it was not. Bank Charges should be capped and subject to amounts involved. Banks should not feel they have the ability to do as they please.
My anger and disappointment comes from recent news of RBS making £3.5billion LOSS and yet feel it correct to pay out £1.5 billion in Bonuses.
If you were £10k overdrawn, could you inform your bank that you are going to withdraw a further £1,500.00 without question?
And add your future Taxes to this question too.

Posted by 1ceman | Report as abusive