Banks' Overdraft Charges Ruled Unfair by the High Court
The Office of Fair Trading has won its High Court claim that charges levied by banks for unauthorised overdrafts are subject to "unfair contract" rules.
There could now be another hearing for the court to decide whether the charges are unfair and, if so, what a fair charge should be.
This was the most important round to win as a loss for the OFT would have ended the case immediately.
It is envisaged that banks and building societies may eventually have to pay back billions to customers.
The Office of Fair Trading took the action after the courts were inundated with claims for unfair charges through the courts.
It was brought jointly by the OFT together with seven high street banks and the Nationwide building society.
Important - If you have not entered a claim yet then remember the 6 year rolling time limit.
Under the 'statute of limitations' you can only claim the past 6 years of charges but the 6 years is constantly moving. So if this test case takes 12 months to resolve then individuals could lose the equivalent period in lost charges due to the six year time limit. So if you are someone that has high charges starting from 2002 and this case is finally settled in say 2009 then you can only claim back six years to 2003 unless you have registered your claim.
If you have only recently incurred charges say 2004 onwards then you can afford to wait provided the case is settled by 2010.
A lot of people will ague that the action started by the OFT suits the banks on two fronts. One, the banks are covered by a "waiver" granted to them by the FSA at the end of July which says they do not have to make progress with any new or unresolved complaints about their charges until the outcome of the court case. There are reports that in excess of one million individuals are affected by this blanket ban throughout he Courts.
Second, and more important, the banks have refused to call a moratorium on their charges and are continuing to rake in millions every month. They now need to do this in light of today's ruling.
The banks will have until 22 May to decide whether they will appeal the ruling and applications for refunds, and cases currently in county courts, will remain on hold.
This does not affect credit cards, you can still claim for these charges, click here to read more...