The Supreme Court Decision on Bank Charges

What was the Supreme Court decision on bank charges?

The decision of the Supreme Court was a relatively simple one given the issues involved.

The Supreme Court made a ruling stating that the Office of Fair Trade had no legal authority to decide on the matter of whether the bank charges were fair or not. It held that it was not their call to say that the charges were excessive.

Basically, the Supreme Court ruled that the bank charges do not fall under the Unfair Contract Terms in Consumer Contracts Regulations 1999 which therefore puts it outside the jurisdiction of the Office of Fair Trade.

In addition, the Supreme Court ruled that the overdraft charges were merely bank fees for the use of a current account. There was notably no mention made about whether the Supreme Court thought the charges were fair.

What were the major factors taken into consideration for the decision?

The major factors that paved the way for the decision was the judgment of the bank that the Office of Fair Trade had no role in evaluating the bank charges. The other factor was the statement of the Supreme Court that the overdraft charges were in fact charges made for the use of the current account. This therefore puts them outside the jurisdiction of the Unfair Contract Terms in Consumer Contracts Regulation.

There is a lot of talk that the decision was actually made on a technicality. The question was all about jurisdiction– whether the Office of Fair Trade had the legal basis to say if the bank overdraft charges were excessive or not. It did not discuss in particular the nature of the bank charges.  And that’s what the other claimants are banking on: that there will be a way to get a ruling on whether these charges, regardless of whether they are fees, are either excessive or otherwise.

Also, there are many who believe that the Office of Fair Trading challenged the bank charges on the wrong basis. Whilst some doors have been closed, in truth many remain open.

What happens to the overdraft charges that were returned?

The general view is that these will comprise a kind of goodwill gesture by the banks and there will be no attempt to recover them anymore. While this will be a source of joy to those who already received their claims, it is one that will leave the millions who were subject to the unpopular decision even more disgusted with the current situation.

What happens to my application for refund of overdraft which was put on hold?

Applications numbering in the millions were put on hold pending this decision. Now that the decision has been made, the hold has been lifted and processing can resume.

However based on the decision, it is clear that there will be few cases where the charges will be returned except where the consumer can prove financial hardship.

Is this the end of the road for the Office of Fair Trade Battle?

If the major supporter of the movement for claims is to be believed, the battle is not over. Whilst it is true that the Office of Fair Trade cannot appeal anymore since the Supreme Court ruling is final, there are other cases it can pursue against the banks. One case is anti-competitiveness since the bank charges are practically identical. Right now, consumers are being advised not to give up just yet.

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For more information on:

  • What are the major repercussions of the Supreme Court decision?
  • Did the Supreme Court actually make a hint regarding another solution?
  • What are the chances of getting claims based on hardships?
  • What is the impact of the decision on the other claims regarding credit cards and the payment protection insurance?
  • Is there a glimmer of hope for the millions of claimants left in the cold?