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 ‘OFT’
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.
Bank charges court case opens
Monday, January 14th, 2008The court case into unauthorised bank overdraft charges began today. The Office of Fair Trading has brought the test case to determine whether the penalties, which can cost customers up to £39 a time for exceeding their borrowing limits and for bounced direct debits and cheques, are legal and fair. If the High Court judge agrees with the OFT, this should open the floodgates for compensation on a large scale for victims of unauthorised overdraft charges. On the flip side, the banks may start to charge all customers for everyday banking, for example by levying a monthly fee, to recoup their lost income.
