Banks Win Court Battle On Overdraft Charges

#1
http://news.sky.com/skynews/Home/Bu..._Backs_High_Street_Banks_On_Overdraft_Charges

It ruled in favour of the seven major banks and a building society, which had challenged High Court and Court of Appeal decisions that the charges were unfair and should be subject to regulation by the Office of Fair Trading.

The result was awaited by tens of thousands of customers whose refund claims had been frozen while the test case went through the courts.

Handing down the unanimous ruling Lord Phillips, president of the Supreme Court, said: "It may be open to the Office of Fair Trading to assess the charge under other criteria."

The decision was described as "a bitter blow" by Peter Vicary-Smith of consumer magazine Which?, which led a campaign encouraging people to reclaim the charges.

He said: Not only does it give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance.

"The banks have done everything possible to frustrate the OFT throughout this process.

"The OFT and the Government should now explore other avenues to get a fair deal for consumers."

Customers who go into unauthorised overdraft or breach their agreed limit can be charged as much as £35 or more for a single bounced payment.

Campaigners claim the actual cost to the banks could be as little as £2.50.

If the banks had lost the test case, it could have cost them £2.6bn a year in lost revenue and led to their having to make refunds of up to £1bn.

Before refund claims were frozen, banks had already paid out more than £559 million to customers who complained about "rip-off" overdraft charges.

But 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.

The test case was brought jointly by the OFT and 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.

More follows....
 
#2
The Supreme Court has overturned High Court and Court of Appeal rulings and said that bank charges don't have to be fair.

This shock decision in support of banks is a massive blow to the consumer reclaiming campaign launched in 2006 and to the up to 8 million consumers hoping to get their cash back, who have been on hold since July 2007.

The overturning of previous rulings comes at the agonising final hurdle in the legal process to determine an underlying principle of law.

Had the court supported the Office of Fair Trading's (OFT) assertion that fairness rules apply, the OFT would have then decided if charges of up to £35 a time for exceeding your limit are indeed fair. It has provisionally said they are unjust.

In fact, the Court of Appeal had told banks they couldn't take their appeal any further after its decision in February, but current account providers made a special request to the Supreme Court for it to be heard.
Link

Definitely more to this than meets the eye.
 
#4
jew_unit said:
Yes there is more to this than meets the eye. Unusually, it's a completely justified and correct legal decision.
Unless you happen to be on the receiving end. Then it's the reason you can't feed your kids.
 
#5
Alternately, you could not go overdrawn and could stick to the contract with your bank. There is no excuse to be overdrawn.

The other option is that this is banned and banks will therefore have to make money some other way. This would almost certainly be through increased charges for all rather than just for those who go over their spending limit.
 
#7
jew_unit said:
Alternately, you could not go overdrawn and could stick to the contract with your bank. There is no excuse to be overdrawn.

The other option is that this is banned and banks will therefore have to make money some other way. This would almost certainly be through increased charges for all rather than just for those who go over their spending limit.
Yes, in a perfect world you are quite right. In reality things don't always work to plan. Fundamentally these bank charges are ludicrous, and the big problem is that the small people who can least afford them get stung and stung and stung. When a bank charge puts them overdrawn after they have had a small problem, then the bank charges them more fees due to their fees. That's the problem.

Don't get me wrong, I all for people sorting their own lives out, but even I, the great right winger that I am can see that the banks are just greedy and I am very dissapointed with this ruling, it's yet another state handout to banks
 
#8
jew_unit said:
Alternately, you could not go overdrawn and could stick to the contract with your bank. There is no excuse to be overdrawn.
I follow your logic but it's just not applicable, for a lot of people, in real life. Perhaps you're busy and forget about a payment. Maybe a company takes more than you expected on a direct debit. Perhaps your kid has been using the phone to vote on x-factor.

Many people live with just enough income to cover their outgoings, and a very minor slipup can cost them £35 - a significant percentage of their income. Not only that, but a £35 charge puts them into the red and leads to more charges when other transactions come out - and even more the next month, when the original charges mean they're already behind.
 
#9
DON'T become overdrawn,bloody simple answer!,if you pay charges it's YOUR fault
 
#10
263A said:
DON'T become overdrawn,bloody simple answer!,if you pay charges it's YOUR fault
Using that logic, let's make charges £1,000. People can't afford the £35, so they may as well be. And while we're at it, instant charges of £1,000 for speeding offences. There is NO excuse for exceeding the speed limit by 1mph. And a £1,000 fine if your mobile phone goes off in the cinema. What sort of idiot forgets to turn their phone off!?
 
#11
They charge you over 30 quid when you go overdrawn when the OFT reckons that the cost to the bank is no more than a couple of quid.... extortionate.

And as for the arguments that they would have to make the difference by charging the current accounts that remain in credit? They already do. Not on paper, but the interest paid, if any, on the money you have in your current account is around 0.01%, they leand your money to others at 4-8% earning off what is your money.

This ruling just makes it possible for the banks, including the ones bailed out by government funds (ie. ours), to charge what they want for what they want while still earning of the money we have to deposit in accounts. Does anyone (legitimate) get paid cash any more?

There is no realistic choice for the customer on the high street and this ruling ensures that will remain so.
 
#12
Mobile??? A 24 month ban from public places would be better
 
#15
ottar said:
263A said:
DON'T become overdrawn,bloody simple answer!,if you pay charges it's YOUR fault
So if this man had a DD with British Gas it would have been his fault if he'd gone overdrawn?
YES,he should insticate the "8 P's"
 
#18
PinkBayonetPolisher said:
ottar said:
jew_unit said:
There is no excuse to be overdrawn.
So you've never had a utility company take more on a DD than they should have done?
I haven't but in those circumstances, you can always break into your agreed overdraft limit and then go * the utility company over for * your life up.
Assuming you have an agreed overdraft limit, and several hours to spend chasing the utility company for their own screwup.
 
#20
DeltaDog said:
PinkBayonetPolisher said:
ottar said:
jew_unit said:
There is no excuse to be overdrawn.
So you've never had a utility company take more on a DD than they should have done?
I haven't but in those circumstances, you can always break into your agreed overdraft limit and then go * the utility company over for * your life up.
Assuming you have an agreed overdraft limit, and several hours to spend chasing the utility company for their own screwup.
All charges incurred in this type of situation are recoverable.
 

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