Banks ‘in no rush to settle’

Apr 25 2008 Evening Gazette

SCORES of claims by Teessiders who say they have been cheated out of money by the high street banks could sit on lawyers’ desks for months, a debt specialist said today.

It follows a landmark High Court ruling yesterday, which said that charges relating to unarranged overdrafts on personal current accounts could be assessed for fairness, opening the way for further action by the Office of Fair Trading.

Chris Stannard, a specialist in debt advice with Hartlepool law firm TMJ Legal, said in his view the banks had always known their charges were not an administrative fee, but a penalty.

The definition is crucial, since banks are not allowed to fine customers for going overdrawn.

“The banks have carefully worded any settlement as a ‘gesture of goodwill’ and no admission of liability.

“But the fact that they were paying out before this case went to the High Court means they believed it was a penalty.”

They have until May 22 to decide if they are going to appeal the hearing.

“It could go all the way to the House of Lords. The banks stand to lose a lot of money.

“They have between £2bn and £3.5bn at stake,” said Mr Stannard, which has dealt with around 20 cases, many of which were put on hold when the OFT action began.

Banks had threatened to end free banking if the case went against them.

“The OFT wants, I think, to come to a compromise with the banks whereby clients can keep the free banking and have a fair deal in relation to bank charges.

“I think the banks are always going to be able to charge something. This case was brought to determine how much.

“A lot of people are saying this is a great victory, but this is not the end. There are going to be appeals and until and if they are heard the matter is going to stay very much on hold,” he said.