RBS Contend ‘Customers Like Bank Charges’ In Test Case

The High Court has today heard evidence for the first time in the high profile bank charges test case, which has suggested that bank customers appreciate the current system of charges for unauthorised negative balance transactions according the the lawyer representing the Royal Bank of Scotland.

Leading QC Laurence Rabinowitz, respresenting the Royal Bank in speaking to the virtue of the current charging system, suggested that current account customers actually sympathise with the current system and the charges levied by the banks against those consumers that may stray beyond their agreed credit limits.

As an alternative, Rabinowitz suggested that banks would be forced to charge on all transactions to make up for the losses incurred on unauthorised spending were the current system of charges to be ruled unfair, as testimony to the validity of the present system which only penalises those directly involved in breaching their predetermined limits.

The claim by the Royal Bank representative holds that the current account service provided by banks is subsidised by the unauthorised overdraft spending of certain customers, and that this is a favourable model to the alternative which would require all customers to pay for their services.

However, it is likely that this will be contested by the representatives of the Office of Fair Trading, which has set about to achieve clarification on behalf of the consumer as to the fairness of that kind of charging to customers.

The OFT case swings on provisions of the Unfair Contract Terms Act, which strikes down the validity of unfair terms in consumer contracts, such as the current account agreements in place in consumer banking.

It remains to be seen whether the RBS contention will be accepted and whether this sentiment will be echoed by the representatives of the other banks and institutions involved in the case.

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