Round 1 to the OFT, as The Battle of the Bank Charges Continues
It feels as though the battle over bank charges has been going on forever, but now it seems it may be coming to an end – or at least, the beginning of the end. The Office of Fair Trading has won the first round of its legal battle with the high street banks, as on Thursday, a judge ruled that the OFT has the right to rule on the issue, paving the way for one or more high court decisions as to whether or not the overdraft and late payment charges have been fair, and how much will have to be repaid to consumers. If the OFT case is successful, a cap will be placed on overdraft and late payment charges, and billions of pounds worth of charges may be paid back to members of the public.
Bank charges are big business for banks. It is estimated that the banks collectively receive £3.5 billion from the charges every year. That’s over £10 million a day. The charges can go as high as £39 for a bounced cheque or missed direct debit, when the actual administration cost is estimated at £2 for each instance. Reclaiming the charges can bring a few hundred pounds back to consumers, or much much more – one Norfolk businessman reportedly claimed back over £35,000 last year.
Anyone who feels they have a case to make should send a template letter (many of these are available on the internet) to their bank, and should be aware that there is a time limit on making claims – you cannot claim back charges that are over six years old. But those who are hoping to claim back their charges will have to keep waiting for a while. The ‘freeze’ on repayments, imposed last year, still applies for the time being. It may be a long time before a decision is reached, and there may well be a lengthy appeals process. But the case has made it past the first step at the very least, giving hope to many.
