A court case against several high street banks and building societies for unfair bank charges starts today. The Office of Fair Trading challenges not the charging procedure, but the over inflated amounts passed onto account holders in what the bank calls ‘administration costs’.
The unfair charges for unauthorised borrowing were highlighted in 2006 and since then thousands of people have contested the fees they were charged. Many banks charge up to £30 for each overdrawn transaction, often for every day the account remains overdrawn without the banks permission.
As the law stands, banks can charge a ‘reasonable fee’ to cover admin costs however, it has been queried many times because it probably only costs the banks £2-3 for each overdrawn account. Passing an over-inflated figure of £30 to customers then seems very unreasonable.
The court case is set to change bank charges as we know it. Whoever wins, it is ultimately the customers who will still end up paying for any losses the banks make.
Even though the court case starts today, we are unlikely to have a decision for a while, especially if whoever loses goes for an appeal. It could be 2009 when we get a final verdict on the matter.
Read more about it in the article The End of Free Banking?
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