First round to the OFT in its battle against 'unfair' bank fees

However, if you're waiting to claim back charges, there is still a long way to go, says James Daley

What does this week's ruling mean for me?

Although Thursday's judgment moves us one step closer to a potential clampdown on bank charges by the Office of Fair Trading, this was only the end of the first stage in a very long process. Unfortunately, if you've made a claim against your bank for unfair charges – and have been told that you have to wait for a resolution in the test case – the waiting isn't over yet.

The Financial Services Authority has told banks they don't have to pay any claims until the test case process is completed – and this could still be well over a year away.



Why is the process taking so long?

The test case is split into two parts. The first stage – which concluded on Thursday – was all about deciding whether or not bank charges were subject to the Unfair Terms in Consumer Contract Regulations (UTCCR) 1999. The judge ruled that they were, opening the door for the second stage, which will consider whether the charges really are unfair. Each of these cases is likely to be subject to appeals – regardless of the outcome – followed by a final appeal to the House of Lords (where a final and binding decision will be made). Even then, there is the possibility of the case continuing in the European courts. The first case started in January, and took almost four months to conclude – and it is unlikely it will reach the House of Lords before 2009.



Does Thursday's verdict mean the banks are likely to lose the next stage of the case?

Not really. In fact, Thursday's judgment wasn't all bad news for the banks. Although they lost their battle regarding the consumer contract regulations, the judge ruled in their favour when it came to the debate over whether bank charges could be considered to be a "penalty". It's a technical point, but if they'd lost here, it would have been much easier for the OFT to win the second stage of the case.



What happens next?

The banks and regulators need a few weeks to digest yesterday's 120-page judgement. They will then all get together on 22 May to decide what happens next. It is expected that the banks will confirm their intention to appeal the initial decision, while the OFT will get things moving for the second part of the case. Fortunately, the OFT doesn't have to wait for the result of the appeals to get the second case under way.

Much of the second hearing will revolve around the banks trying to prove that their charges relate to the costs they incur. For example, many banks still charge upwards of £20 for going overdrawn without permission. However, the OFT is likely to argue that the actual cost to the bank here is much less – perhaps only the cost of sending a letter, and the cost of providing the additional funds.



Can I still make a claim for unfair charges?

There's nothing to stop you putting in a claim for unfair bank charges now. If you've accidentally slipped into the red for the first time, and found yourself hit with nasty fees, it's well worth appealing to your bank's better nature and asking them to waive the charges. If you don't have any luck, try suggesting that you'll take your account elsewhere if they don't scrap the charges.

If you're making a large claim for several years' worth of charges, however, you're unlikely to get any resolution to your claim now – although there's nothing to stop you from filing it. The vast majority of banks and building societies are covered by the FSA waiver, meaning they don't have to process claims until the test case is resolved.

A small number of small providers are not covered by the waiver, such as ICICI, so you may still be able to pursue claims against these. To check whether your bank is covered by the waiver, visit www.fsa.gov.uk/pubs/waivers/details_disp.pdf.

If your bank does have a waiver, your claim will sit in the queue until the test case is over. You can make a claim for any charges levied within the last six years.

I've made a successful claim – can the banks take it back?

No. If you've already been paid out, the banks will not ask for the money back if they win the test case. However, if your claim is in the queue, it's very unlikely that you'll secure a payout if the banks win.



What will happen if the banks lose?

All the claims in the queue should be paid out if the banks lose. Furthermore, the OFT is likely to impose a cap on bank charges. It is thought that banks won't be allowed to charge more than £12 if you bust your overdraft limit.

Beware, however, that such a clampdown will only result in banks looking to recoup their revenue from elsewhere. Some commentators believe that it is only a matter of time before the banks will be forced to start levying a monthly fee for every current account holder.

Voices
voices
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
arts + ents
News
Ross Burden pictured in 2002
people
News
scienceHad asteroid hit earlier or later in history, the creatures might have survived, say scientists
PROMOTED VIDEO
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
News
President Obama, one of the more enthusiastic users of the fist bump
scienceBumping fists rather than shaking hands could reduce the spread of infectious diseases, it is claimed
Sport
Laura Trott with her gold
Commonwealth GamesJust 48 hours earlier cyclist was under the care of a doctor
Arts and Entertainment
Gal Gadot as Wonder Woman
arts + entsFilmmaker posted a picture of Israeli actress Gal Gadot on Twitter
News
Bryan had a bracelet given to him by his late father stolen during the raid
people
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
arts + ents
Arts and Entertainment
Pedro Pascal gives a weird look at the camera in the blooper reel
arts + entsPrince Oberyn nearly sets himself on fire with a flaming torch
News
Danny Nickerson, 6, has received 15,000 cards and presents from well-wishers around the world
newsDanny loves to see his name on paper, so his mother put out a request for cards - it went viral
Sport
France striker Loic Remy
sportThe QPR striker flew to Boston earlier in the week to complete deal
News
Orville and Keith Harris. He covered up his condition by getting people to read out scripts to him
People
Arts and Entertainment
Zoe Saldana stars in this summer's big hope Guardians of the Galaxy
filmHollywood's summer blockbusters are no longer money-spinners
Arts and Entertainment
O'Shaughnessy pictured at the Unicorn Theatre in London
tvFiona O'Shaughnessy explains where she ends and her strange and wonderful character begins
Life and Style
Workers in Seattle are paid 100 times as much as workers in Bangladesh
fashionSeattle company lets customers create their own clothes, then click 'buy' and wait for delivery
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Training/Learning and Development Coordinator -London

    £28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

    Training Programme Manager (Learning and Development)-London

    £28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

    .NET Software Developer (.NET, C#, ASP.NET, front-end)

    £30000 - £45000 per annum: Harrington Starr: A Global Financial Service Organi...

    C# Web developer (C#,MVC,ASP.NET,SQL)

    £30000 - £40000 per annum + Bonus+Benefits+Package: Harrington Starr: C# Web d...

    Day In a Page

    A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

    A new Russian revolution

    Cracks start to appear in Putin’s Kremlin power bloc
    Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

    Apartheid’s sadistic killer that his country cannot forgive

    The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
    Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

    Standing my ground

    If sitting is bad for your health, what happens when you stay on your feet for a whole month?
    Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

    Greene prays for chance to rebuild after injury agony

    Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
    Israel-Gaza conflict: Secret report helps Israelis to hide facts

    Patrick Cockburn: Secret report helps Israel to hide facts

    The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
    The man who dared to go on holiday

    The man who dared to go on holiday

    New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

    The Guest List 2014

    Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on
    It's the best of British art... but not all is on display

    It's the best of British art... but not all is on display

    Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
    Critic claims 'I was the inspiration for Blanche DuBois'

    Critic claims 'I was the inspiration for Blanche DuBois'

    Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
    Sometimes it's hard to be a literary novelist

    Sometimes it's hard to be a literary novelist

    Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
    Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

    Edinburgh Fringe 2014

    The comedy highlights, from Bridget Christie to Jack Dee
    Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

    Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

    The woman stepping down as chair of the Heritage Lottery Fund is worried