Press Release
Consumers Score Victory In Refund Battle With Banks
Hard pressed consumers angrily awaiting the outcome of a legal battle on excessive Bank Charges moved a step closer as the High Court decided that the Office of Fair Trading (OFT) can decide what is a ‘fair charge’. Tom Clarke MP welcomes the significant Court Ruling and described it as, ‘favourable towards people who were overcharged and owed money by Banks’.
The OFT has argued the charges are unfair and count as penalties, while Banks have said they are reasonable fees for customers exceeding their overdraft. A quarter of current account holders are estimated to receive charges each year and thousands of claims are currently frozen in the courts until a decision on whether charges are unfair and what a fair level would be. Both the OFT and the British Bankers’ Association (BBA) said they would digest the lengthy ruling before deciding the next step.
The MP said: “Banks have been levying excessive charges up to £38 to customers exceeding their limit. This is probably ten times the actual cost which may be less than £3. This has caused untold financial hardship to many people in my constituency. Meanwhile there is no moratorium preventing the Banks from continuing to levy such charges. We therefore have a situation during this interim period whereby more and more people are being penalised. I find this completely unfair and unnecessary”.
Mr Clarke was harshly critical of the Banks when he added: “This legal battle with Banks has all the potential to become stuck in a judicial quagmire where Banks appear to have deep pockets to fund legal fees in an attempt to delay justice to hard pressed consumers. I am concerned that this process could drag on endlessly certainly beyond what is reasonable and end up in the House of Lords. I want a settlement for my constituents and I want it now. In light of this court judgement the OFT have the capacity to establish the actual amount – not the extortionate charges currently levied by Banks. It would be eminently sensible to take this appropriate action, and avoid more customers from being overcharged. No other company would get away with imposing massive penalty charges. It is daylight robbery and the Banking institution must be pressurised into stopping this malpractice, as it is crippling the personal finances of so many hard working people.”
On the role of the Financial Services Authority (FSA) the MP said: “The FSA should now look again at ending their ‘waiver’. After all, the waiver was initially granted for one year in order to allow the High Court to reach a decision for the purpose of clarity. Therefore Banks should be compelled to respond to complaints already lodged by customers”.
Mr Clarke concluded: “Last year I contacted both the FSA and the OFT outlining that my constituents were most irate about delayed legal proceedings. Taking into consideration this High Court Judgement I have today written to both the OFT and the FSA setting out my views. Essentially I am urging all parties in this legal dispute to reach a speedy and satisfactory settlement. This should include Banks responding to existing complaints, compensating customers who were overcharged, and levying a fair charge of no more than £3 when an account is overdrawn. I believe this is consistent with the representations I have received from my constituents.