Bank charges case 'could backfire on customers'

30/06/2009

The long-running bank charges case could result in the "end of free banking", an expert has claimed.

Daoud Fakhri, financial services analyst at research firm Datamonitor, made the comments as the House of Lords considers the latest stage of the case.

Customers have complained over the high fees they were obliged to pay to their banks for offences such as exceeding overdraft limits - and are demanding refunds.

Banks reject these claims, resulting in the calling of the High Court test case in 2007.

If the courts decide that the Office of Fair Trading can decide on the legality of these charges, then it is likely that all claims will be refunded - costing banks billions.

Mr Fakhri said that this financial burden could lead to financial firms charging for basic services such as cash machine withdrawals in future.

He commented: "These charges have proved highly lucrative for banks."

The House of Lords is currently considering whether or not to uphold the banks' appeal against a High Court ruling earlier this year, which found that the OFT was indeed allowed to judge on the charges' fairness.

Tags; Debt Management and Banking, Credit Card Lifestyle, Recent Graduate Debt,

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