Banks go on the offensive against customers

Anger at Lloyds' attempt to strike out legal challenges but rivals expected to follow suit

Lloyds Banking Group was facing a furious backlash from customers last night after announcing it would ask the courts to strike out thousands of legal claims against it just two days after a landmark legal judgment in the overdraft fees case.

The bank, which, following a series of government bailouts is now 43 per cent-owned by the taxpayer, was accused of acting with indecent haste following a judgment handed down on Wednesday by the Supreme Court, which said the Office of Fair Trading was not entitled to investigate the fairness of unauthorised borrowing fees.

There was particular surprise that the bank leading the charge to snuff out compensation claims is an institution that had to be partly nationalised in order to save it from collapse following the credit crisis.

"It is disappointing that the ink is barely dry on the judgment and Lloyds is already rushing to do this," said Adam Williams, principal campaigner at the consumer group Which? "We very much doubt whether they would have moved so quickly had the judgment gone the other way, given how they have dragged their feet throughout this affair."

Martin Lewis, of Moneysavingexpert.com – one of the leaders of a campaign for a refund of bank charges for up to 8 million people caught out after exceeding overdraft limits – said customers were not being given time to consider their position. Mr Lewis, whose group has hired a leading banking QC to investigate potential alternative routes to redress for customers, said: "What I find disingenuous is that Lloyds knows we are taking legal advice. One hopes the bank is not trying to capitalise on its time advantage, because that would be invidious."

Lloyds is the first bank to have responded to Wednesday's ruling with legal action. Yesterday, it argued that the ruling against the OFT effectively invalidated most of the complaints made against it by customers seeking a refund of unauthorised borrowing fees already levied. As a result, it is to ask the courts to dismiss all complaints filed using the sort of standard template letters that millions of people have downloaded from the internet, or adapted from models published in newspapers such as The Independent – which has fought for compensation for bank customers.

The bank published a statement on its LloydsTSB and HBOS websites pointing out that the chief City regulator, the Financial Services Authority, had lifted its temporary freeze on complaints about overdraft charges.

"We will be asking the county and Sherriff Courts to apply the principles of the Supreme Court judgment and for cases to be withdrawn where appropriate," the bank added.

Banking industry sources said that other current-account providers were likely to follow Lloyds' lead, with executives from across the sector now in talks about a common approach, but there was widespread surprise that one bank had chosen to move so speedily.

Michelle Slade, of the personal finance group Moneyfacts, said: "Lloyds has not wasted much time: there are already a lot of people annoyed about the judgment in this case and the speed of this is going to annoy people even further."

A spokesman for the Office of Fair Trading said that it had not yet ruled out a fresh legal challenge to unauthorised borrowing charges. "We are still considering our position," he said. "This is a matter for the banks, but it may not be possible for the courts to strike out these cases en masse, because they are all individual cases."

County court judges have been issued with no guidance by the Supreme Court on how they should interpret Wednesday's judgment, though they have been told to wait to see whether the banks and their customers come to some form of agreement. However, legal experts say the ruling will make it very difficult for the complaints to succeed, because they were filed on the assumption that it was possible for regulators to investigate unfair charges. The Financial Ombudsman Service has also warned that it will now have to reject many of the complaints made to it about bank charges.

Lloyds is the UK's biggest provider of current accounts and overdrafts, with its market lead having been cemented by the takeover in September of the Halifax Bank of Scotland Group. That deal was cleared by the competition authorities because it was seen as a rescue of HBOS, which had come under huge pressure at the height of the credit crunch. It emerged earlier this week that HBOS had to borrow £25.4bn in emergency funding from the Bank of England last November in order to continue trading.

Lloyds Banking Group eventually benefited from an injection of billions of pounds of public money as part of a recapitalisation plan designed to put it on an even keel, leaving the taxpayer with a 43.4 per cent stake in it. It is currently in the process of raising more than £13bn from shareholders – including £5.7bn from the Government – further to shore up its finances in what will be the UK's largest ever rights issue.

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
PROMOTED VIDEO
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little