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Confusion over bank charge reclaims
Alan O'Sullivan, This is Money
11 August 2008 Chat | Vote | Guide
Confusion over whether business bank account holders can reclaim their bank charges may force the Financial Ombudsman to launch an official inquiry into the issue.
This is Money first reported in April that business bank account customers will no longer be able to reclaim unfair bank charges due to a landmark ruling in the High Court.
Although the High Court bank charges battle pertains to mainly to personal accounts, the judge at the centre of the case said at the time that business account charges are not penalties as such and can be enforced by banks.
The Financial Ombudsman's Service (FOS) has been processing business bank account claims since then, but is seeing an increasing number of small banks refusing to take part in the negotiation of business account reclaims.
Emma Parker from the FOS said: 'The judge said he didn't think that business account charges were penalties. It's a technicality, but it's affecting the stance of some of the smaller banks. The big banks are still settling claims on a goodwill basis but smaller banks are taking a step back.
'We're not at a point where we will have to have a formal inquiry yet, but that may be on the cards.'
The issue of business bank account charges has been frustrating for those small businesses wishing to reclaim their charges over the past few months as the High Court has refused to clarity its ruling.
Official bodies such as the FOS, the Financial Services Authority or the Office of Fair Trading also do not know whether these customers can technically continue to reclaim.
Up until the April ruling, business account holders were able to continue reclaiming despite the general waiver granted to banks on reclaims as, unlike personal accounts, business accounts are covered by common law instead of consumer law.
However each type of customer can still suffer charges of up to £39 a time for incursions into 'unauthorised' overdrafts.
The judge said in the small print of his ruling in April – which is now being appealed by the eight High Street banks involved – that 'the terms now generally used by the banks' in relation to business accounts could be enforced.
Some commentators have suggested the phrase 'now generally used' means only charges levied over the past 18 months cannot be reclaimed – and those customers with charges going back over a longer time period may still be successful.
The situation will remain unclear however until one of the official bodies mentioned above clarifies the meaning of the original ruling.
Alan O'Sullivan, This is Money
11 August 2008 Chat | Vote | Guide
Confusion over whether business bank account holders can reclaim their bank charges may force the Financial Ombudsman to launch an official inquiry into the issue.
This is Money first reported in April that business bank account customers will no longer be able to reclaim unfair bank charges due to a landmark ruling in the High Court.
Although the High Court bank charges battle pertains to mainly to personal accounts, the judge at the centre of the case said at the time that business account charges are not penalties as such and can be enforced by banks.
The Financial Ombudsman's Service (FOS) has been processing business bank account claims since then, but is seeing an increasing number of small banks refusing to take part in the negotiation of business account reclaims.
Emma Parker from the FOS said: 'The judge said he didn't think that business account charges were penalties. It's a technicality, but it's affecting the stance of some of the smaller banks. The big banks are still settling claims on a goodwill basis but smaller banks are taking a step back.
'We're not at a point where we will have to have a formal inquiry yet, but that may be on the cards.'
The issue of business bank account charges has been frustrating for those small businesses wishing to reclaim their charges over the past few months as the High Court has refused to clarity its ruling.
Official bodies such as the FOS, the Financial Services Authority or the Office of Fair Trading also do not know whether these customers can technically continue to reclaim.
Up until the April ruling, business account holders were able to continue reclaiming despite the general waiver granted to banks on reclaims as, unlike personal accounts, business accounts are covered by common law instead of consumer law.
However each type of customer can still suffer charges of up to £39 a time for incursions into 'unauthorised' overdrafts.
The judge said in the small print of his ruling in April – which is now being appealed by the eight High Street banks involved – that 'the terms now generally used by the banks' in relation to business accounts could be enforced.
Some commentators have suggested the phrase 'now generally used' means only charges levied over the past 18 months cannot be reclaimed – and those customers with charges going back over a longer time period may still be successful.
The situation will remain unclear however until one of the official bodies mentioned above clarifies the meaning of the original ruling.
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