Bank Case

17 January 2008

By Corinne Day

A High Court Judge, Mr Justice Andrew Smith will today and tomorrow review legal submissions from some of the top lawyer's in the country over fees that banks have imposed on consumers who have exceeded their overdraft limits.

The full hearing will begin on Wednesday in the International Dispute Resolution Centre in Fleet Street. The case was originally to be held in the Royal Courts of Justice, but due to the expected turnout of lawyers and journalists, it was thought that the case necessitated a larger venue.

The case was brought by the Office of Fair Trading, who will argue that fees imposed by banks on to its customers who had exceeded their overdraft limits were illegal under contract law, including the Unfair Terms in Contracts Act (UCTA) 1977. Thousands of claims have been previously brought by individual customers before county courts, so the outcome of this case will effect thousands of pending decisions. It is thought that the banks have already spent hundreds of thousands to settle out of court claims. However, if this case goes in favour of consumers, the banks could stand to lose millions or even billions. Furthermore, if the banks did lose the case, consumers may also lose out, because it would mean the end of "free" current accounts and prices will surely increase elsewhere.

The banks in question (and one building society) are Abby National, Barclays, Clydesdale, HSBC, HBOS, Lloyds TSB, Royal Bank of Scotland and Nationwide Building Society, who have instructed some of the most prestigious lawyers in the country. The case will most likely progress to the House of Lords due to the importance of the issues being raised, namely issues surrounding unfair contract terms as between businesses and consumers. A judgment is expected by Easter.

Corinne Day is a trainee solicitor who specialises in information technology law and intellectual property law.