Gordon Brown calls for quick bank charge compensation

Click to follow
The Independent Online

The Prime Minister today called on banks to find a quick way to refund customers if they lose the current test case on unauthorised overdraft charges.

Gordon Brown said a negotiated solution would be in everyone's best interests, and he urged the banks and the Financial Services Authority to explore ways to resolve the issue without further delay.

In a letter to Martin Lewis, the founder of MoneySavingExpert.com, he said: "I certainly agree that once the legal issues have been resolved, any compensation that is due should be paid as swiftly as possible.

"How compensation should be paid depends on the how the case is resolved. I know that for consumers fighting for fair treatment the extremely lengthy legal processes can be unacceptable."

The test case on the issue of unauthorised overdraft charges was jointly launched by seven banks and a building society and the Office of Fair Trading, after consumers started to reclaim millions of pounds paid in the charges through the courts.

It is currently being heard by the House of Lords, and will be transferred to the new Supreme Court when it opens next month, after the banks involved appealed against the High Court and Court of Appeal decisions that the charges did come under the scope of the OFT.

If the Supreme Court finds against the banks it will pave the way for a further hearing to decide whether the charges are fair and, if not, what a fair charge would be.

Banks have so far paid out £559 million in refunds to customers who have reclaimed the fees, while nearly one million claims have been frozen while the test case takes place.

Responding to Mr Brown's letter, Mr Lewis, who has long campaigned on the issue of unauthorised overdraft charges, said: "This is a major signal bank charges has been pushed up the Government agenda.

"Assuming the Supreme Court rules that fairness rules apply, as the OFT's already indicated it believes charges are unfair, it's game on.

"Yet the worry is banks will mount a further legal challenge to the OFT's ruling, traipsing through the courts again, and this is where the PM comes in. By pushing for a negotiated settlement we could get a quick solution."

He said such a settlement would mean that consumers did not need to go to court or the Financial Ombudsman Service to get their money back, but would simply be able to write to their current account provider and request it.

But he added: "While still a triumph, I believe it should go further still. As banks unfairly took people's money without asking, they should be given it back without asking, otherwise we risk the illiterate or financially-phobic missing out."