Bank Charges Latest Updates

For easy convenience any new developments in the bank charges test case will be posted here.

Mike spoke with FSA today 8 October 2008.

Mike asked the FSA what would happen to the bank charges claim that is currently subject to appeal with the High Court in the event that should the banks' lose and a particular bank has been taken over such as Nationwide taking over the Cheshire and Derbyshire.

They informed him that this question had not been asked as yet then after consulting someone else, they then came back to me and said;

"In the unlikely event that the bank does not take on the other bank's liabilities then the Financial Services Compensation Scheme (FSCS) for savings will look at any potential bank charges claim. If it transpires that the bank (taken over) cannot pay by default, i.e. has no assets or funds to make the payment then the FSCS would consider paying the claim. This will only apply should the banks lose the 'test case' appeal and are required to pay the claim, verdict due at the end of the year."

Update - 04 Sep 2008

Read more about the Financial Hardship here.

Update - 28 July 2008

The Financial Services Agency has announced that they are to extend the current blanket ban on consumers that wish to take the bank to Court or complain to the Financial Ombudsman Service, FOS, about reclaiming bank charges. This extension is for another six months; however they have also issued new hardship rules for consumers.

The six month extension

This means that the FOS or the banks do not need to deal with any complaints or claims relating to bank charges. The extension also applies to consumers having their cases blocked by the Courts, unless they can demonstrate hardship.

What are the new hardship rules?

Some individuals may be able to get a part refund if they suffer hardship; this means you may be able to claim before the test case ends. We explain 'hardship rules' on the 'Reclaiming Charges for Personal Accounts' article.

Debtwizard.com

This is grossly unfair to the consumer yet again because banks are still allowed to apply the charges, even though the High Court has ruled in the favour of the Office of Fair Trading, OFT. The only way a consumer can try and get some of their money back is by demonstrating hardship.

Bank charges are a major income to the banks and one would question their stability if this revenue was denied them, in particular in the current economic climate. It is the bank's interest to draw this case out as long as they can as it is worth around £2.6 billion per year to the industry.

Any new developments will be posted on the home page under 'bank charges latest' link and in our member emails.

Why are we waiting?

The OFT is yet to decide whether it thinks bank charges are actually unfair, once they have made their decision they will then go back to the banks and try and negotiate a settlement, if this fails then the Appeal will go ahead around November this year. We are also waiting for the judgement on historical charges.

Further details can be found here.

Update - 03 July 2008

This letter dated June 2008 was sent to one of its customers after they previously entered a claim for 'unfair bank charges'.

Note the statement that the banks are back in Court on the 7th to 9th July 2008, to determine whether the terms and conditions previously used by the Banks are capable of being 'penalties'.

Halifax Reply to unfair bank charges claim
view large pdf

Halifax attachment - attached to the above document
view page 1 | view page 2

 

Update - 05 June 2008

Abbey, Barclays, Clydesdale, the HBOS group, which includes Halifax, HSBC, Lloyds TSB, Nationwide Building Society and the Royal Bank of Scotland Group, which includes NatWest are to appeal against the findings of a High Court test case on penalty charges, in an attempt to stop an Office of Fair Trading (OFT) investigation that could cost them billions of pounds.

The appeal, although not unexpected, will cause disappointment for hundreds of thousands of customers who are trying to reclaim, in some instances thousands of pounds in penalty fees after going overdrawn or missing payments.

The Financial Services Authority (FSA) has granted the banks permission to put claims on hold until the judicial process is completed. There are many more thousands of cases sitting in the county courts or with the Financial Ombudsman Service that have also been suspended, pending a final judgment.

The banks' appeal is likely to be heard this autumn, but if either side then takes the issue to the House of Lords, the OFT's jurisdiction in the matter is unlikely to be settled until next year.

However if the banks succeed in their appeal to overturn his first ruling which granted the OFT power to assess bank charges for fairness the entire case will end in the banks' favour. In the interim banks will still apply penalty charges but the consumer will not be able to pursue claims through the courts due to the blanket stay on all proceedings pending this outcome, not exactly a level playing field.

If you are thinking of registering a claim then bear in mind the 6 year moving time limit in England and Wales.

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.