Banks likely to appeal against charges ruling
Judge indicates that appeal will be allowed in overdraft unfair contracts ruling
A High Court judge has indicated that the major high street banks will be allowed to appeal against his ruling last month that their penalty fees are subject to regulation by the Office of Fair Trading.
The Financial Services Authority has granted the banks a "stay"on outstanding claims by customers for the return of charges paid when their accounts go into unauthorised overdraft. This payment can be as much as £35. Banks make up to £3.5 billion every year from these charges.
The ruling by Mr Justice Andrew Smith had opened the way for an OFT investigation into whether the charges were unfair, but given the timescales for an appeal, this inquiry is unikely to be concluded for at least 18 months.
The banks involved in the court case are Abbey, Barclays, Clydesdale, Halifax Bank of Scotland, HSBC, Lloyds TSB, Royal Bank of Scotland and Nationwide. They argue that overdraft charges are exempt from the 1999 Unfair Terms in Consumer Contract Regulations because they represent legitimate fees for providing overdraft facilities.
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