It has not been a good week for anyone hoping to claim back unfair bank charges. The Supreme Court has denied the Office of Fair Trading the power to assess excessive bank charges under “unfair contract” rules. Lord Phillips, the Supreme Court president, admitted that the unanimous ruling “may cause disappointment and indeed dismay to a very large number of bank customers”.
So what next? Banks and building societies will be breathing a sigh of relief – they’ve already paid out around £560m to unhappy customers. If they had been forced to settle the tens of thousands of claims that have been frozen while seven of them contest previous High Court and Court of Appeal rulings, refunds of up to £1bn could have been due, according to The Telegraph. Meanwhile, restrictions on future charges – in particular for unarranged overdrafts – could have cost them another £2.6bn a year.
Overall, the Supreme Court decided the charges are ultimately a private matter between customers and their bank or building society. And as David Black at Defaqto notes, anyone who doesn’t like the charges package on offer “should wake up to the fact that they don’t have to stay with the same current account and should not be afraid to switch to get a better deal”.
As for customers who have submitted a claim but not yet been paid, it doesn’t look good. Thisismoney.co.uk’s Alan O’Sullivan reckons “bank-charge reclaiming was effectively killed off”. The Supreme Court sees no reason to refer the case to the European courts. There is a glimmer of hope – the OFT may decide to restart its legal challenge in the High Court on different grounds. But it could be up to two years before any further decision is reached.
So, if you have already successfully reclaimed money, well done – the latest ruling has no effect. For anyone else, the chances of backdated charges being refunded any time soon look pretty small.
The one silver lining is that banks no longer have an excuse to go around threatening customers who keep their noses clean with the spectre of the ‘end of free banking’. But don’t expect the rate on your savings to jump as a result.