The long-running bank charges case may have gone against the
consumer, but there is a light at the end of the tunnel.
Despite ruling in the banks' favour, a Supreme Court judge has
hinted that bank charge victims may be able to seek refunds
regardless.
In his ruling, the judge told the Office of Fair Trading (OFT)
that their legal argument was weak and that they would have had a
better chance if they focused on clause 5 and not clause 6 of the
Unfair Terms in Consumer Contracts Regulations 1999.
Whereas Clause 6 mainly relates to disproportionate fees, clause
5 is broader in legal scope and says that contracts that have not
been negotiated individually (i.e. a current account with a bank)
must be in good faith, and not contain terms that could cause a
significant imbalance to the detriment of the consumer.
It can easily be argued that unauthorized overdraft charges
levied on customers DO create an imbalance in that the consumer
loses out while the banks benefit to an excessive degree. Does this
cause a detriment to the consumer? Just ask one of the millions of
people who ended up with £100s of bank charges just for going
overdrawn by £2 on one occasion.
Should the OFT pursue the banks on clause 5 argument then a
fresh can of legal worms will be opened. And as the Financial
Services Authority (FSA) has now taken off its waiver - meaning
that every individual bank charges refund claim is now active -
there is nothing to stop people making claims on the basis of
clause 5.
The judge also said that the Supreme Court believes overdraft
costs are part of the price of a bank account - in which case they
would be regulated by the FSA. This could
potentially mean that consumers may soon be able to claim
that their account was mis-sold to them and therefore be entitled
to compensation.
Kevin Rose, of Claims Financial Ltd., said: "Although the ruling
has come as a massive shock we will not give up on getting
consumers their refunds until every avenue has been exhausted. The
banks may have won this round but we will not stop fighting until
it's over."
Claims Financial
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