Overdraft bank charges court case update

Customer Q&A waiver lifted

Summary of Supreme Court Judgment

On 25 November 2009 the Supreme Court said that the level of unarranged overdraft charges is not assessable for fairness under the Unfair Terms in Consumer Contracts Regulations. This means the banks have won their appeal and the test case has concluded.

This is a final judgment from the Supreme Court as they have decided it is not necessary and/or not in the public interest to make any reference to the European Court of Justice.

Q: What does this mean?
The Supreme Court decided that an unarranged overdraft charge is a key part of a current account.

This means that where the charges are explained in clear language, under consumer fairness legislation, the level of an unarranged overdraft charge can’t be challenged to see if it’s fair or not.

Q: What happens next?
While the Supreme Court judgment was a win for the banks, we acknowledge the concerns some of our customers have with these charges. We will work with the Financial Services Authority (FSA) to ensure the outstanding customer complaints are brought to a swift conclusion. We will also continue to work with the Office of Fair Trading (OFT) to agree a positive way forward.

Q: What does this mean for customers who have complaints about unarranged overdrafts on hold?
During the test case, we agreed with the FSA and the Financial Ombudsman Service (FOS) that customer complaints relating to unarranged overdraft charges would remain on hold.

As the judgment concludes the test case, the FSA has agreed that these complaints should no longer remain on hold.

This means that for those customers who currently have an outstanding complaint about unarranged overdrafts, we’ll be writing to them shortly to let them know what today’s judgment means for them.

We be asking the County and Sheriff Courts to apply the Supreme Court judgment to dismiss any claims they currently have on hold.

Q: What will happen to new customer complaints about unarranged overdraft charges?
As this judgment concludes the test case, the FSA has agreed that the waiver on bank charges complaint handling should be lifted.  This means we will handle complaints through our standard process.  We will continue to treat customers sympathetically who are vulnerable and in financial hardship.

Q: Can I complain to the Financial Ombudsman Service (FOS) about my unarranged overdraft charges?
Yes.  Where a customer’s complaint is not accepted by a bank, the customer has the right to take their complaint to the FOS. 

Q: How can customers avoid unarranged overdraft charges?
We continue to provide our customers with the products and services to help them avoid unarranged overdraft charges.  For more information on these products and services, please click here.
Q: Where can I find more information?

The Financial Services Authority:
www.fsa.gov.uk
The Office of Fair Trading:
www.oft.gov.uk
The Financial Ombudsman Service:
www.financial-ombudsman.co.uk
The Supreme Court
www.supremecourt.gov.uk