OFT to act on bank charges, but not until July at the earliest

Millions of UK customers have been charged up to £40 a time for going over their overdraft. Is this charge fair? Personally, I think not, but I am not the law. Everyone bar the banks seem to think the charge imposed is too high and it is thanks to the pressure from thousands of consumers which brought the banks to their knees. Finally, after months of dragging their heels, they agreed to a High Court test case which would be carried out in two parts.

Last month saw the initial hearing in which Mr Justice Andrew Smith said the OFT had a legal right to investigate whether or not the charges levied by banks were fair. He also said that if the OFC considered the charges to be unfair that it should look at how the banks can compensate their customers. At the same time, he also gave the banks the right to appeal that decision.

Since the decision last month, the OFC have been unable to reach a decision on the case leaving hundreds of thousands people with court claims still unheard having no idea when things will change.

“We are facing a lot of litigants who have not had their claims struck out and who should be in a position to pursue their claim” Mr Justice Smith said, “ How long should we hold up the county court litigation? Are we talking months, years or weeks?”

The banking sector reportedly makes about £3.5 billion from charges levied onto customers and you can bet they don’t want to lose this income.

The judge has indicated he would like things wrapped up quickly which is seen as a positive move for consumers by Chris Warner, a lawyer for the consumers’ association Which? But he went on to warn “the banks are appealing and it will be some time before a judgement is issued in that hearing and so consumers are still some way away from getting their money back”.

It is unclear at this time when the OFC will report it’s findings but yesterday it gave a planned timescale of mid/late July to releases their initial findings. The banks have agreed with the regulator that if no agreement on what is a “fair charge” is reached by Christmas this year, the decision will be made my the courts.

Until then any case brought before a county court will remain on hold.