It may take some time to reclaim erroneous fees. Photo: David Aubrey/Corbis
The Office of Fair Trading has won a partial victory in the first stage of a case against eight high street banks and building societies about unauthorised overdraft fees. But in the short term the news is far from good for indebted banking customers.
For starters, the case has still got a long way to go. Rather than deciding whether the fees charged by banks - up to £39 in some cases - were fair, the court was ruling on whether the OFT had the power to assess the terms and conditions used by banks now and over the past six years, and whether the fees could be described as a penalty. The OFT won the first part, but lost the second, and it seems highly likely that an appeal will ensue.
This will take months if not another year, leaving poor (literally, thanks to the banks' charges) customers waiting to find out if they will get their money back. Following an agreement between the Financial Services Authority, the Financial Ombudsman Service and the banks to suspend repayment of fees until the case is completed, claimants have been left in limbo since July last year.
And even if the OFT is the ultimate victor, consumers are unlikely to get as much back as they would have done prior to the case. Previously the banks were returning most, if not all, of the unauthorised fees to claimants. But once the OFT has set the new maximum for charges the banks are likely to keep that maximum from every unauthorised charge they have made over the past six years.
The case is necessary to ensure a fairer charging structure in the future, but in the short term the least well-off banking customers are stuck between a rock and a hard place. It is difficult to see who is benefiting from this case other than the lawyers.
