Banks set to appeal charges case

[Legal Beagles]

The UK's banks seem set to appeal against a recent High Court ruling that the OFT can scrutinise overdraft charges.

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[Shazzaw]

Re: Banks set to appeal charges case

EXC also posted this Financial Times artcile on the CMC Bunker thread a short while ago:-

Banks to appeal against overdraft judgment

By Megan Murphy, Law Courts Correspondent
Published: May 21 2008 03:00 | Last updated: May 21 2008 03:00

Britain's largest retail banks are to appeal against a court ruling on overdraft charges in a move that could delay resolution of the closely watched case. Hundreds of thousands of consumers have sought refunds of fees charged for unauthorised overdraftsor bounced cheques.

Tomorrow eight high street lenders, including HSBC, Barclays and the Royal Bank of Scotland, will seek permission to appeal against a High Court judgment that the charges are subject to unfair consumer contract regulations.

The issue, while technical, is at the core of efforts by consumers to reclaim billions in overdraft and other fees. So-called "unpaid item" fees have ranged as high as £38 per transaction. If the charges are deemed to be subject to consumer regulations, the Office of Fair Trading would have the authority to cap the fees at a much lower level.

Analysts say this could cost the banks £10bn in lost revenue, potentially forcing them to impose surcharges on services such as ATM withdrawals and cheque-cashing to make up the shortfall.

The OFT is not expected to contest the banks' application to appeal against the High Court ruling, according to sources close to the litigation. It is also thought to be unlikely that Mr Justice Andrew Smith, who handed down the original judgment in April, will refuse permission, given the significance of the legal principles at stake. Individual compensation claims will remain on hold under an earlier agreement with the Financial Services Authority.

The OFT, which brought the test case in response to a deluge of consumer complaints, has yet to announce whether it believes the current level of overdraft charges is unfair, or what a "fairer" amount would be. However, observers have pointed to the regulator's decision to cap the fees levied on late credit card payments at £12 in 2006 as indicative of its view on the appropriate level of charges.

Consumer groups have consistently argued that overdraft fees are misleading, arbitrary and much higher than the cost of processing the transactions. The banking industry claims that the charges are a legitimate payment for services rendered, such as notifying customers of unpaid debits and taking the credit risk of granting an unauthorised overdraft.

Mr Justice Smith is also expected to set a date for further hearing on whether some historic overdraft terms not dealt with in his first judgment can be classified as unlawful "penalty" charges.



If anyones interested the artcile is being discussed on this thread.