The banks and the Office of Fair Trading could both claim victory in the High Court case over current account charges. But in practice all the result means for now is that there will be more court cases.
The test case in the High Court, a joint effort between the OFT and the banks, covered three issues of principle which had to be settled before the OFT could move forward.
The OFT view is that unauthorised overdraft charges are excessive. It also contended that they were in the nature of penalties and that they were described in unintelligible terms.
2-1 to the banks
The court decided against the OFT on both these points - a score of 2 to the banks. But the court agreed with the OFT on the central issue that the charges were capable of being judged under regulation governing the fairness of contracts - 1 to the OFT.
If the court had ruled that the bank charges were penalties, the OFT could quickly have said they were far too high for what the banks provided and forced them to cut charges. As it is, the OFT can apply the ‘unfair terms’ regulations, but will have to justify its verdict, which the banks are almost certain to take to court.
And in fact either party could appeal to the Appeal Court against any one of the High Court’s three verdicts - a decision they will have to take before May 22nd.
Everything is still on hold
Before then, the OFT will issue its own final report on its investigations into bank charges, expected to justify its contention that the charges are unfair and need to be reduced.
Since the banks collectively gather some £3.5 billion in charges each year, they are expected to fight the OFT every step of the way.
The case, though, was heard on the basis of the banks’ current terms and conditions, not those that used to apply - and it might be arguable that some of them were written in unintelligible terns and that the charges were effectively penalties.
So for people wanting to reclaim bank charges the position hasn’t really got any clearer. Nor does it look as if the hundreds of thousands of people with ‘frozen’ claims against the banks will be able to move them forward any time soon.
