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What is the appeal case about?
The appeal case follows a high court test case between seven banks and one building society and the Office of Fair Trading (OFT) over bank charges, brought after hundreds of thousands of frustrated consumers attempted to reclaim money from their current account providers. The case, which began in January, was designed to determine whether the Unfair Terms in Consumer Contracts Regulations 1999 apply to bank charges. In April the judge found that it did, clearing the way for the OFT to assess what amounts to a fair charge for entering into an unauthorised overdraft, and perhaps to order the banks to refund customers who have paid more than this figure. It is that decision the banks are appealing.
What bank charges are we talking about?
The court case revolved around the fees levied by banks when an account goes over its agreed overdraft limit or a cheque or direct debit is bounced. Most banks charge around £25-£30, but some charge up to £39, and do so each time you go further overdrawn. Some customers have managed to rack up thousands of pounds in fees, falling deeper into the red as more and more charges are applied.
Will the government's bail out of the banks impact on the case?
The judges should make their decision "on the basis of the law rather than the economic situation", says Phil Jones, head of personal finance at consumer group Which?. "Stability is important in the banking system and we recognise that is the primary concern. We do not think there is a contradiction between having stable banking and treating customers fairly."
What happens if the banks lose the appeal?
The OFT could decide to set a maximum level for fees, as it did a couple of years ago with credit card default payments, ruling that they should not be above £12. Account providers could be asked to repay any charges above that amount. Because many of the banks have changed their terms and conditions over the years, the court is considering whether these older contracts with consumers are sufficiently similar to the present ones for the judgment to apply to all.
How much can I get back?
This will depend on the final outcome of the case. However, claims can only go back six years. The OFT's report into credit card charges resulted in default fees being cut to a maximum of £12. If the same level of charging is decided on in this case, many consumers could be entitled to reclaim at least half of what they have paid. This will be less than had they made an uncontested claim before the case went to court. Customers who did that got back all their money.
What if I have new charges - can I reclaim them?
Not at the moment. Last summer when the test case was first announced the Financial Services Authority (FSA) said the banks were allowed to sit on letters from consumers asking for charges to be refunded. At the same time cases that had reached the county courts were put on hold. The FSA's waiver has been extended until January next year.
Despite that, Which? says customers who have paid charges should carry on downloading letters and writing to their banks to make sure their complaint is in the system.
Should I instruct someone to handle my claim?
There are plenty of firms promising to recover charges on a "no win, no fee" basis, which can take up a big chunk of your compensation. This month a new company called Client Cartel Review promised customers a free service, but Which? says consumers do not need to use a claims management service.
Will banks and building societies start charging for current accounts?
They could well do. The £3.5bn the OFT estimates the banks make each year from the charges is likely to be replaced by another revenue stream.
There is a precedent for this: since the crackdown on credit card charges providers have increased charges elsewhere, with some even introducing annual charges for customers.
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