Customers still pressing claims against banks despite test case

Banks are still facing a mass revolt from customers despite the halting of some claims in the run-up to a test case in the High Court, The Independent has learnt.

Several county courts are hearing cases begun before the announcement of the Office of Fair Trading (OFT) action as well as hearing entirely new cases.

Under a little-publicised agreement between the banks and the OFT, customers can still obtain a refund if they can prove the charges have caused them "hardship". In addition, claimants can still obtain refunds for two types of bank charge unaffected by the test case involving fees on current accounts: credit card late payment charges and mortgage exit fees.

As well as claiming back credit card fees dating back years, people are also successfully challenging fees set at a lower £12 rate intended to satisfy the regulatory authorities, say campaigners.

On mortgage exit fees, banks and building societies are automatically repaying anyone who asks for a refund of increases in the cost of winding up a home loan, as part of an agreement with the Financial Services Authority.

Payments may also be obtained for the entire exit fee if customers can persuade courts that it cannot be justified on the basis of its costs.

All of these routes to a refund have kept the pressure on the banks in the revolt against penalty fees, which has been championed by The Independent. The consumer group Which? called on bank and building society customers to continue to submit claims rather than wait for the result of the OFT test case, which will be heard in January.

High street banks and building societies are estimated to make up to £4.7bn a year from fees for unauthorised borrowing, which campaigners say breach the Unfair Terms in Consumer Contracts Regulation 1999 because they exceed costs.

The OFT is hoping the case will clear up whether banks are allowed to charge up to £38 a time whenever a current account customer goes over their overdraft limit or bounces a cheque.

When the OFT announced its case last month, it agreed that banks could stop voluntarily settling cases, and the Financial Ombudsman Service suspended payouts.

Campaigners were furious when it dawned on them that the banks could continue levying the disputed charges. However, banks are still being pursued through the courts, which are making decisions on a court by court, and case by case, basis. Although many county courts have stayed all cases, some such as those at Newcastle and North Shields are hearing existing ones. Courts at Peterborough and Croydon are still considering new claims.

Campaigners are urging no let-up in the revolt prior to the conclusion of the OFT case, which could be delayed by further action at the Court of Appeal or the House of Lords.

A Which? spokeswoman said: "There is no reason why people should think the whole thing has ground to a halt. The banks would like to think that, which is exactly why they shouldn't stop downloading the letters and making the claims."

Marc Gander, of the Consumer Action Group, said court actions were proceeding all the time despite the OFT case. He urged customers to continue demanding refunds and to lodge court claims where applicable to ensure they would receive payments once the test case concluded. "The pressure has to be kept up," he said.

Although financial institutions have raised other fees, particularly on credit cards, to make up for the shortfall, the revolt has wiped £400m off profits since January.

Claims can be made for bank charges dating back six years. Forms are available free at which.co.uk, moneysavingexpert.com and consumer action group.co.uk.