Bank fee refunds could be delayed for years

[Legal Beagles]

Customers face long wait over bank charges - totalling £10m a day - as appeal goes to court

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Re: Bank fee refunds could be delayed for years

Bank fee refunds could be delayed for years

· Customers face long wait as appeal goes to court
· OFT said overdraft charges brought in £10m a day.
Bank customers hoping to reclaim billions of pounds in "unfair" bank charges could have to wait years to receive rebates after the banks lodged an appeal against a court ruling yesterday.
Last month, a judge ruled that bank charges for breaching overdraft limits were subject to regulation by the Office of Fair Trading under unfair contract rules.
But at a case management hearing yesterday, commercial judge Mr Justice Andrew Smith indicated he would give the banks leave to appeal against his earlier ruling which had opened the door for the OFT to challenge the controversial bank fees.
Consumers had hoped the earlier ruling would lead to a cap on the fees and allow them to reclaim excess charges paid over the past six years. However, the case will now go to the court of appeal, delaying any rebates.
The OFT has been investigating the charges for a year and yesterday was asked by the judge when it might conclude its work. After initially indicating that it had no idea when the investigation would be completed, the OFT indicated it was working to a July timetable.
In a statement, the OFT said it "recognises that this is an issue of major public interest.
"It is also a complex legal process with a number of steps. The OFT is committed to ensuring that the process moves forward as quickly as possible to resolution and is taking all necessary steps working together with the interested parties."
It said it aimed to be ready to talk to the banks in July about its preliminary views on whether the charges were fair. It would then identify what would be its next step.
According to the OFT, banks earn up to £3.5bn a year, or nearly £10m a day, from fees on unauthorised overdrafts. They charge up to £39 for each bounced payment, when the actual cost to the bank may be as little as £2.
This prompted the competition watchdog to launch its investigation of the charges. But the banks agreed to a test case after they faced thousands of claims from disgruntled account holders in the county courts.
The test case should determine whether the OFT regulates the bank charges, though this question is now the subject of the appeal by the banks. It should also decide whether the charges are fair, which is the subject of the investigation by the OFT.
Before the test case was announced last summer, more than 1m form letters were downloaded from websites by consumers hoping to claim back charges.
In some cases, customers were able to win back thousands of pounds from the banks, which refused to contest the claims in court. Banks are thought to have repaid about £500m so far.
The British Banker's Association, on behalf of the current account providers, noted yesterday that the court had adjourned until today. It said: "Once the precise terms of this permission are agreed tomorrow the banks will progress the appeal with expedition. A further statement will be issued at the conclusion of the hearing." The OFT also promised a further statement today.