Today (Thurs) a High Court judge confirmed what bank charges campaigners have been arguing for two years, that consumer contract regulations do apply to bank charges meaning that 'fairness' counts. The next step is for the Office of Fair Trading (OFT) to assess whether they are actually unfair but as it's the one who took the banks to court, that seems likely. Then it'll try to reach agreement with the banks, and if not, go back to court.
To use a football analogy, before we were kicking the ball around the middle of the pitch, now we're at the penalty spot...though the judgement's massive and the nitty gritty may throw more up.
What happens next?
On 22 May 2008, there will be a case management meeting; at which point it's possible the banks will put in an appeal. Until then, all cases remain on hold. As explained above, my hope is, not long after that, the regulator will lift the hold on reclaiming that was apparently put in place to 'protect consumers' from inconsistencies.
Yet now the law is clear and binding - bank charges are required to be 'fair' - so hopefully it will soon allow people who think they're legally unfair to reclaim again, after all, the banks are still charging these charges!
If it's on hold, why put in a reclaim now?
Simple, the statute of limitations says you can only claim back six years' worth of charges in England, five in Scotland. The longer you leave it, the less far back your reclaim goes... as many people have had lots of charges stretching back over years, this means if you don't put a claim in sooner, you're less likely to get the old ones back.
Plus hopefully when the FSA ends the waiver on reclaiming, it means you'll be ahead in the queue, and should be dealt with more quickly.
What if my case is already on hold?
We’re still waiting for the FSA to end the waiver; as explained above, my hope is that this should happen in the next couple of months. Until then, sadly, you’ll just have to keep twiddling your thumbs. As always, all news will be included in the weekly email.
Is this the end of free banking?
No. We don’t have free banking in the UK anyway. We have 'fees-free' banking for the in-credit; ask most people with overdrafts if their bank is free. The current account market is hugely competitive, two banks offer 0% overdrafts, two pay more than 8% in-credit interest. They're all desperate for business and any bank that levies charges will haemorrhage customers.
And let's put this in perspective, while it's big money for reclaimers, for the banks it’s a fraction of their £bns of write-offs due to the credit crunch. The Bank of England has just pumped £50bn in there. If they do start blaming bank charges for any new nasty fees, it lets them off the hook for their own credit management, don’t believe their spin.
Martin Lewis
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