Latest news on bank charges being refunded

Judges have ruled that the overdraft charges of up to £38 that are made for unauthorised overdrafts should be tested for fairness which means that there are over a million banking customers who have now taken a step closer to getting refunds.

The Court of Appeal has rejected the banks’ claims that the charges were part of the central agreements with their customers but the likelihood is that the decision could mean £1bn of refunds.

The banks that are involved in the case are Abbey, Barclays, Clydesdale, Halifax Bank of Scotland, HSBC, Lloyds TSB, Royal Bank of Scotland Group and Nationwide Building Society.

The Office of Fair Trading (OFT) is now in a position to decide whether the charges are fair, although this may have further repercussions as it could be the end of free banking if charges on current account customers are to be regulated.

The dispute is mainly around the fact that being overdrawn without permission can breach the agreed limit, although campaigners say that the true cost to banks in terms of administration is as low as £2.50. However, the banks argument to the OFT is that the charges are legitimate payments for the goods and services provided to the customer.

Following the judgment made, Peter Vicary-Smith the head of the consumer group Which?, has said that the banks should now begin to refund customers money or suffer further problems to their public image.

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