Supreme Court finds for banks in charges case

25/11/2009

Britain's Supreme Court announced today (November 25th) that it supported banks' position on penalty fees.

The judges decided that the fairness or otherwise of overdraft charges lay outside the remit of the Office of Fair Trading (OFT).

A test case on the issue has been fought between banks and the OFT since mid-2007.

All customer claims for compensation have been suspended pending the outcome of the case.

It is thought likely that the OFT would recommend that banks refund the charges to customers, if it is empowered to investigate the issue.

Therefore, the Supreme Court's ruling lessens customers' ultimate chances of compensation.

Commenting on the case, EuroDebt director Kevin Still said: "Despite the OFT losing, the current court case has probably signaled the end of ‘free banking’ as we know it. Recent media stories have highlighted that most banks profits come from 'stealth charges', which will be increasingly scrutinised. There will inevitably be a bank led changes in practices with the introduction of more ‘transparency’ and this will probably mean the re-introduction of monthly management fees, higher interest on overdrafts and less discretion by staff who deal face-to-face with clients to remove or reduce charges, as we are seeing now."

He added: "It is difficult to see how customer service can improve with huge lay-offs by the leading banks and more of a ‘jobs worth’ mentality for the survivors. EuroDebt has set up a bank switching facility to enable people in financial difficulty to establish a bank account with totally transparent monthly fees and no penalty charges at www.bankswitching.co.uk."

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

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