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Banks ordered to reveal true cost of charges
Press Association
Wednesday July 4, 2007
Guardian Unlimited
A district judge today ordered two banks to come clean over unauthorised overdraft fees in a move that could see the true cost of bank charges revealed for the first time.Judge Iain Besford told the Yorkshire Bank and Alliance and Leicester to disclose how they calculate their penalty fees and what the actual cost to them is of servicing a bounced payment.
Campaigners said they were delighted with the development, describing it as a watershed moment in the fight against "unfair" bank charges.
Of the 44 claims originally due to be heard in Hull today, all except eight were settled by the banks beforehand.
More than £50,000 is believed to have been paid to customers in a run-up to the session, despite earlier indications the judge was minded to dismiss their cases.
In a bid to prevent that happening, CAG and MSE funded legal representatives to argue the case of a number of the claimants.
Sitting in open court today, Judge Besford said he felt as if he was the first judge to see "more of the picture".
"There are a number of issues coming through nationwide. What we want to do is try to narrow the issues down so that if necessary the matter can go to trial," he said.
Of the cases still live, four involve customers at Yorkshire Bank. Rather than strike them out, Judge Besford said they should proceed to the small claims court.
In addition, he agreed to a disclosure order that would see banks explain how they reach fees in excess of £30 for going over an agreed overdraft or bouncing a single payment.
Campaigners claim the real cost to the banks is as little as £2.50, and as such the charges levied are unfair, disproportionate and unlawful.
Under the terms of the disclosure order, Yorkshire Bank will have to show the calculations that make up its charges. They were also told to reveal what actions they take in relation to each charge and what the actual cost incurred by the bank is in administering unauthorised payments.
Yorkshire Bank's legal representative agreed to the terms of the order. Alliance & Leicester, which chose not to be represented in court, were given the same directions. Disclosure is due to be made by the end of the summer.
The two lenders now have a choice either to try and settle the cases or come clean on the charges.
Martin Lewis, said he believed Alliance & Leicester would settle.
But he added: "Yorkshire Bank is in a difficult position. Either they break the ranks and become the first bank to comply with disclosure or, having said they would fight, they then back down.
"Either way today is a watershed moment for bank charges."
Press Association
Wednesday July 4, 2007
Guardian Unlimited
A district judge today ordered two banks to come clean over unauthorised overdraft fees in a move that could see the true cost of bank charges revealed for the first time.Judge Iain Besford told the Yorkshire Bank and Alliance and Leicester to disclose how they calculate their penalty fees and what the actual cost to them is of servicing a bounced payment.
Campaigners said they were delighted with the development, describing it as a watershed moment in the fight against "unfair" bank charges.
Of the 44 claims originally due to be heard in Hull today, all except eight were settled by the banks beforehand.
More than £50,000 is believed to have been paid to customers in a run-up to the session, despite earlier indications the judge was minded to dismiss their cases.
In a bid to prevent that happening, CAG and MSE funded legal representatives to argue the case of a number of the claimants.
Sitting in open court today, Judge Besford said he felt as if he was the first judge to see "more of the picture".
"There are a number of issues coming through nationwide. What we want to do is try to narrow the issues down so that if necessary the matter can go to trial," he said.
Of the cases still live, four involve customers at Yorkshire Bank. Rather than strike them out, Judge Besford said they should proceed to the small claims court.
In addition, he agreed to a disclosure order that would see banks explain how they reach fees in excess of £30 for going over an agreed overdraft or bouncing a single payment.
Campaigners claim the real cost to the banks is as little as £2.50, and as such the charges levied are unfair, disproportionate and unlawful.
Under the terms of the disclosure order, Yorkshire Bank will have to show the calculations that make up its charges. They were also told to reveal what actions they take in relation to each charge and what the actual cost incurred by the bank is in administering unauthorised payments.
Yorkshire Bank's legal representative agreed to the terms of the order. Alliance & Leicester, which chose not to be represented in court, were given the same directions. Disclosure is due to be made by the end of the summer.
The two lenders now have a choice either to try and settle the cases or come clean on the charges.
Martin Lewis, said he believed Alliance & Leicester would settle.
But he added: "Yorkshire Bank is in a difficult position. Either they break the ranks and become the first bank to comply with disclosure or, having said they would fight, they then back down.
"Either way today is a watershed moment for bank charges."
