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• Account providers given right to appeal over bank charges
• Law lords decision puts refunds on hold again
Current account providers were today given the right to appeal a court ruling that unauthorised overdraft charges are subject to regulation by the Office of Fair Trading (OFT).
The House of Lords said seven major banks and a building society could appeal against an earlier ruling ,which found that the charges come under "unfair contract" rules.
The decision is a blow for tens of thousands of consumers who have had refund claims frozen while the test case goes through the courts. The high court ruling had paved the way for the OFT to consider whether the charges were fair, and if not to force account providers to refund fees to consumers.
The British Bankers' Association said it was waiting to receive a date for the hearing.
The test case over unauthorised overdraft charges was brought by the OFT and the major high street banks after thousands of customers started demanding refunds for the charges. Last year a judge ruled that the OFT could look into the charges, and the banks' appeal against that ruling was rejected by the appeal court in February.
People who go into an unauthorised overdraft or breach their agreed limit can be charged as much as £35 for a single bounced payment, although campaigners claim the cost to the banks could be as little as £2.50.
If the banks ultimately lose the test case and the charges are found to be too high, it could cost them £2.6bn a year in lost revenue and lead to them having to make refunds of up to £1bn.
The major high street banks have so far paid out more than £559m in refunds to customers who complained about unauthorised charges.
Members of the industry have also warned that losing the case is likely to lead to the end of free banking in the UK, with consumers instead having to pay a monthly fee or a fee for every transaction they carry out.
However, many of the high street banks have already changed the structure of the fees they charge people who go into the red, with or without permission.
Martin Lewis, creator of MoneySavingExpert.com, who has run a campaign helping people to reclaim the charges, criticised the banks for appealing the earlier decision.
He said: "It's time the banks gave up and paid out. Both the high court and the court of appeal have already said bank charges are governed by fairness rules, and the OFT has said it provisionally thinks charges are unfair."
The banks involved in the test case are Abbey, Barclays, Clydesdale, Halifax Bank of Scotland and Lloyds TSB (which are now part of the same group), HSBC, Royal Bank of Scotland Group and Nationwide building society.
- Bank charges
- Banks and building societies
- Borrowing & debt
- Current accounts
- Consumer affairs
- Banking
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