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What's the deal?
The courts have been hearing an appeal by six banks and one building society who believe they are right to charge as much as £40 to customers who exceed their overdraft limits.
This is the latest act in a drama that has been going on for years. After a series of complaints about the charges banks levy for exceeding borrowing limits, the Office of Fair Trading launched a legal battle in 2007.
So far lower courts have overwhelmingly found that the OFT is entitled to review bank charges and decide whether or not they are fair. Most commentators expect the top court in the land to make a similar judgement.
This Wednesday the UK's Supreme Court will deliver its verdict on the test case, and one bank has already taken action to pre-empt a possible ruling in favour of the consumer by launching a new 'fee-free' current account.
Which banks and building societies are appealing the decision?
Abbey, Barclays, Clydesdale, HBOS (now owned by Lloyds), HSBC, Lloyds, Royal Bank of Scotland Group and the Nationwide Building Society.
What happens next?
The Supreme Court will publish its judgement next week. But that will only be the end of the first half, so to speak.
If, as most people expect, the Lords back previous rulings, the fun really begins.
If it is proven that the OFT are legally allowed to judge whether the charges are fair, it will then have to make a decision whether it actually wants to go ahead and do something about it.
The OFT is already examining terms & conditions from three banks in a bid to determine what might be a fair charge - so it is likely the watchdog will press ahead and say the fees are not fair.
Given the banks so far have dug their heels in and have repeatedly appealed decisions, this means there will more than likely be another long- drawn out series of legal appeals
Why won't the banks just pay up?
The banks have been fighting a PR campaign trying to defend the charges. They concede the charges for mailing letters and going over agreed borrowing levels are substantially higher than the costs they incur. But they say this means they are able to provide free banking to everyone else.
The banks estimate that as an industry they will lose £2.6 billion in revenues if they aren't allowed to apply such charges and they need to supplement the lost revenues with other fees.
HSBC in particular recently said that losing the appeal would cost it £600 million pounds.
But these sums of money are dwarfed by the billions that the taxpayer has already handed over to the banks to keep them afloat during the crisis.
If they lose, will that be the end of free banking?
Many critics say that free banking doesn't exist anyway. The OFT found that 81% of banking revenues in the UK are 'hidden charges.'
Others point out that many banks charge a monthly fee for most current accounts already.
And there are definitely good reasons to favour a set fee (which is fixed and associated with a clear list of services) rather than the various different charges that are currently applied.
In any case, with banks facing increasing competition for business in the post-crunch world, the threat may be overwhelmed by market forces. Can I get my money back?
There is no guarantee that you will get you money back, but there is certainly no reason not to ask. The process is free, there are lots of sites on-line to help you fill in the forms and you don't need the help of a professional. By contacting your bank now, you are basically taking a number in a queue and that means that if - eventually - the matter is resolved, you may be entitled to a refund.
Is it worth it?
It might well be. Many people are owed thousands of pounds and some suggest they will be able to claim interest on the money paid in charges too.
Under the rules you would be able to claim for the last six years. If you were planning to claim charges as much as six years old it is best to get a move on.
When will I get my money back?
The short answer is no-one knows. The OFT has been trying to lay the groundwork to ensure it can come up with its recommendations as soon as possible.
The financial watchdog, the FSA, has told banks they don't have to deal with claims until the legal process is complete.
But if you are in financial hardship, there is an exception.
The FSA says if you have a case of genuine financial difficulty, your bank or building society has to deal with your complaint in the normal time frame. This may involve – or not – the repayment of charges.
If you're not happy with the firm's response to your complaint, you can take it to the Ombudsman, which will consider whether your complaint can be dealt with before the test case process is resolved.
What about credit card charges?
The OFT ruled in 2006 that credit card penalty charges such as late payment fees and charges for going over your limit are unfair. That means you can claim charges going back up to six years now.
Source: Bank charges Q&A: when will I get my money back? | Personal Investor | Citywire
The above is the link to the last page but the article is relatively OKish on some of it.
The courts have been hearing an appeal by six banks and one building society who believe they are right to charge as much as £40 to customers who exceed their overdraft limits.
This is the latest act in a drama that has been going on for years. After a series of complaints about the charges banks levy for exceeding borrowing limits, the Office of Fair Trading launched a legal battle in 2007.
So far lower courts have overwhelmingly found that the OFT is entitled to review bank charges and decide whether or not they are fair. Most commentators expect the top court in the land to make a similar judgement.
This Wednesday the UK's Supreme Court will deliver its verdict on the test case, and one bank has already taken action to pre-empt a possible ruling in favour of the consumer by launching a new 'fee-free' current account.
Which banks and building societies are appealing the decision?
Abbey, Barclays, Clydesdale, HBOS (now owned by Lloyds), HSBC, Lloyds, Royal Bank of Scotland Group and the Nationwide Building Society.
What happens next?
The Supreme Court will publish its judgement next week. But that will only be the end of the first half, so to speak.
If, as most people expect, the Lords back previous rulings, the fun really begins.
If it is proven that the OFT are legally allowed to judge whether the charges are fair, it will then have to make a decision whether it actually wants to go ahead and do something about it.
The OFT is already examining terms & conditions from three banks in a bid to determine what might be a fair charge - so it is likely the watchdog will press ahead and say the fees are not fair.
Given the banks so far have dug their heels in and have repeatedly appealed decisions, this means there will more than likely be another long- drawn out series of legal appeals
Why won't the banks just pay up?
The banks have been fighting a PR campaign trying to defend the charges. They concede the charges for mailing letters and going over agreed borrowing levels are substantially higher than the costs they incur. But they say this means they are able to provide free banking to everyone else.
The banks estimate that as an industry they will lose £2.6 billion in revenues if they aren't allowed to apply such charges and they need to supplement the lost revenues with other fees.
HSBC in particular recently said that losing the appeal would cost it £600 million pounds.
But these sums of money are dwarfed by the billions that the taxpayer has already handed over to the banks to keep them afloat during the crisis.
If they lose, will that be the end of free banking?
Many critics say that free banking doesn't exist anyway. The OFT found that 81% of banking revenues in the UK are 'hidden charges.'
Others point out that many banks charge a monthly fee for most current accounts already.
And there are definitely good reasons to favour a set fee (which is fixed and associated with a clear list of services) rather than the various different charges that are currently applied.
In any case, with banks facing increasing competition for business in the post-crunch world, the threat may be overwhelmed by market forces. Can I get my money back?
There is no guarantee that you will get you money back, but there is certainly no reason not to ask. The process is free, there are lots of sites on-line to help you fill in the forms and you don't need the help of a professional. By contacting your bank now, you are basically taking a number in a queue and that means that if - eventually - the matter is resolved, you may be entitled to a refund.
Is it worth it?
It might well be. Many people are owed thousands of pounds and some suggest they will be able to claim interest on the money paid in charges too.
Under the rules you would be able to claim for the last six years. If you were planning to claim charges as much as six years old it is best to get a move on.
When will I get my money back?
The short answer is no-one knows. The OFT has been trying to lay the groundwork to ensure it can come up with its recommendations as soon as possible.
The financial watchdog, the FSA, has told banks they don't have to deal with claims until the legal process is complete.
But if you are in financial hardship, there is an exception.
The FSA says if you have a case of genuine financial difficulty, your bank or building society has to deal with your complaint in the normal time frame. This may involve – or not – the repayment of charges.
If you're not happy with the firm's response to your complaint, you can take it to the Ombudsman, which will consider whether your complaint can be dealt with before the test case process is resolved.
What about credit card charges?
The OFT ruled in 2006 that credit card penalty charges such as late payment fees and charges for going over your limit are unfair. That means you can claim charges going back up to six years now.
Source: Bank charges Q&A: when will I get my money back? | Personal Investor | Citywire
The above is the link to the last page but the article is relatively OKish on some of it.
