Business bank account customers will no longer be able to reclaim unfair overdraft charges from their bank following this week’s landmark High Court ruling. Although the judge at the centre of the case ruled on Thurday that the excessive penalties levied on personal account holders by eight High Street banks could be assessed for fairness by the Office of Fair Trading – he cast business account customers out in the cold. Business accounts are covered by common law instead of the consumer law governing individual’s current accounts, even though each can suffer charges of up to £39 a time for incursions into ‘unauthorised’ overdrafts. This is a major blow to small businesses hoping to reclaim their hefty overdraft charges.
Posts Tagged ‘bank charges’
Businesses ruled out of bank charges battle
Saturday, April 26th, 2008Court gives all clear for OFT to probe bank charges
Thursday, April 24th, 2008The Office of Fair Trading has won its High Court battle against UK biggest banks on unfair charges. A judge has decided that the Office of Fair Trading (OFT) can rule on the fairness of the charges, which many customers have been trying to reclaim. Mr Justice Andrew Smith said his judgement did not necessarily mean the charges were unfair. This judgement means the OFT should be able to decide what a fair charge would be for unauthorised overdrafts. Both the banks and the courts have been deluged with claims since the beginning of 2006, which they were finding very difficult to deal with. But since both sides agreed to stage the test case, tens of thousands of claims have been put on hold in either the county courts or with the Financial Ombudsman Service (FOS). Banks earn approximately £3.5bn a year from the charges, which are believed to affect one in 10 of bank’s 45m customers, according to price comparison group uSwitch. Go here or more details.
How will banks recoup their dented profit margins?
Tuesday, December 18th, 2007The banks always find various ways to recoup losses through their customers. When credit card charges had to be reduced from as high as £39 to £12, some responded by tagging on an annual fee, some have already started fining customers who are in credit and other like RBS reduced the interest free period their customers have before payments are due. And there have been many others setbacks; mortgage exit fees, miss-sold Payment Protection Insurance (PPI), various bank account charges, and now the US sub-prime mortgage crisis. They have already started by increasing mortgage arrangement fees to as high as 4% of the loan. The banks are very shrewd in finding various ways to pass the buck!
