Newsroom

Consumer Power Forces Banks Into Court

Monday 14 January 2008

The Consumer Council says pressure applied by Northern Ireland bank customers has finally paid off as banks are forced to defend their penalty charges before a High Court judge in London today. The Office of Fair Trading test case will establish if charges placed on customers who stray into the red without permission are fair.

Alison Laird, Senior Consumer Affairs Officer at the Consumer Council, said:

“The Consumer Council believes unauthorised overdraft charges are unfair and can lead many customers into financial hardship and spiralling debt.  Consumer power has forced this issue into the Court and we are seeking a guarantee once and for all that bank customers will only have to pay charges that are fair.

“The Consumer Council has helped put back more than £160,000 into the pockets of customers here, which is an average refund of £1,215[1].  Those who had the courage to challenge their bank have been refunded but the banks haven’t stopped applying charges to customers in the red.   We need the banks to do the right thing for all their customers.

“The Consumer Council has worked closely with the Office of Fair Trading and the Financial Services Authority as this action is brought against the banks.  We support this Court action but it is important for consumers that the timescale does not slip as they continue to face excessive and punishing charges.  Banks have been profiting from these unfair charges for many years at their customers’ expense, to the tune of £3.5 billion per year[2].  

“If the banks are found to have charged customers too much then they may have to refund their customers, an amount estimated at £5 billion[3].  Therefore it is really important that bank customers make their complaint now so that their case is looked at as soon as the judgement is made.  The Consumer Council’s free guide on how to challenge your bank is available to download at www.consumercouncil.org.uk or telephone the banking team on 0845 601 6022.”

Notes to Editors

 

Case Studies of bank customers helped by the Consumer Council to get a refund from their bank:

1)    A mother who is part-time student calculated that she had paid £2,511 in charges over three years.  When she applied to the Court she received a refund of £2,000, which is the maximum she could apply for in the Small Claims Court.  

2)    A young couple just about to get married and who were trying to buy a house had more than £2,000 of charges imposed on their account.  They have now got their £2,000 back after challenging their bank.  

3)    A single parent was charged £106.96 when she was overdrawn because a cheque was delayed in a postal strike.  She complained to her bank and was given a full refund. 

4)    A taxi driver was refunded £2,000 when he applied to the Small Claims Court.  He was hit by unauthorised overdraft charges because of his irregular income and had been refused an increased overdraft, from £100 to £200.  The bank ignored the complaints he made in person and in writing but gave him a full refund when he applied to the court.

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