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What do you think of the bank charges ruling?
Banks 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?
Stop clock ticking on bank charge rebates
Britain’s largest banks and the Office of Fair Trading remain locked in a case management hearing in court over the thorny issue of current account default charges, but the judge has already indicated that the banks will be given the green light to appeal the ruling against them. The appeal — on at least part of Mr Justice Andrew Smith’s ruling, which relates to “fairness” and the rights of customers to sue banks — is a hammer-blow to scores of consumers whose claims for compensation have been put on hold while the matter trundles through the courts.
The issue could now go to the Appeal Court and the House of Lords before the full case goes to court — and that could take two years or more. In the meantime, the Financial Services Authority has put on hold customer complaints and court cases relating to the charges, putting the brakes on any compensation payments. And, as the legal process rumbles on, the banks continue to rake in vast sums of money by hitting consumers who go over their overdraft limit or write a cheque that bounces with exorbitant charges. Analysts have estimated that that banks make up to 3.5 billion pounds in overdraft charges every year: by delaying the case, they could amass some 7 billion pounds.
Time, it seems, is money. But despite the ban on compensation payments, those who believe they have been hit with “unfair” bank charges should not delay. Customers can’t stop the banks from appealing – but they can stop the clock from counting down the time allowed to submit their claims.
Currently, bank customers can reclaim “unfair” charges plus interest from the past six years — as far back you can go in the courts. Submitting your claim as soon as possible might not mean you’ll get any subsequent rebate sooner, but it will stop the clock from ticking on how far back the claim can stretch.
“Anyone who plans to appeal should write to their bank to ask for the charges to be refunded,” advises David Kuo, head of personal finance at Fool.co.uk. “Follow up with a letter threatening court proceedings. Many courts will probably stay the majority of claims, but at least the six-year limitation on your claim will be halted too.
“Banks know that time is money, which is why they are appealing — they want to hang on to your money for as long as possible. But bank customers can get their own back. Submit your claims without delay so you can get your refund in full when banks run out of time — and options.”
Apparently it is fairly standard practice in other countries to charge a regular fee for bank accounts; not so in Britain, and consumers are highly resistant so any such services (anyone ever considered an RBS Royalties account or the like?) And why would you when there’s free ones on offer. This does mean however that British banks top up their income by penalising those who are, by definition, the least able to pay, who have gone overdrawn. No-one is saying banking should be free (and it isn’t – just try getting a loan at 3% interest), just that any fees charged be proportionate to the costs incurred by the banks, as the law states they must. I was charged a fee of £20 by my bank to make a direct debit payment of £3 to Save the Children. Does anyone seriously thinks that’s fair and reasonable?
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The Wall
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.