UK consumers face bitter disappointment
(27 November 2009 – UK) British retail banks came out on top in a landmark legal case in the Supreme Court which may cause tens of thousands of consumers to lose frozen overdraft refund claims.
The case, which was brought between the UK’s Office of Fair Trading (OFT) and seven retail banks and one building society, is in reaction to the increasing number of current account consumers trying to reclaim unauthorised overdraft fees paid since 2001.
More than 1.2 million consumers had lodged complaints with their banks hoping to get more than £2 billion (A$3.58 billion) back in returned fees.
One consumer, Emma Green, account manager for a financial marketing company in Cheshire, whom banked with Halifax, was charged a £35 over draft fee for exceeding her account limit by only 75p.
In a further instance, Ms Green was working for a company in financial hardship and her monthly salary was not paid on time, without warning, and resulted in 15 scheduled direct debits to bounce.
The repercussion for the returned payments was the maximum £105 penalty a day for several days.
Ms Green said that she is bitterly disappointed with today’s Supreme Court ruling and is now uncertain about the future of the £1,600 she has been waiting 18 months for.
Thousands of consumers were successful in getting their money back through out of court settlements; but when the case was launched by the Financial Services Authority in July 2007 all claims were frozen until the case’s conclusion.
The ruling, which concluded a series of trials and appeals lasting two years, determined that the OFT could not challenge overdraft charges because it does not have the power to decide whether unauthorised charges are fair.
A spokesperson for Barclays, one of the appealing banks, said the bank welcomes the Supreme Court’s ruling that the overdraft fees are legal; confirming that unarranged overdraft charges are an important part of the price for the package of current account services provided to customers.
In Australia, NAB made the decision to drop penalty fees despite the A$100 million price tag attached and was rewarded with a 40 percent reduction in customer complaints and a six fold increase in customer acquisitions.
More than 1.2 million consumers had lodged complaints with their banks hoping to get more than £2 billion (A$3.58 billion) back in returned fees.
One consumer, Emma Green, account manager for a financial marketing company in Cheshire, whom banked with Halifax, was charged a £35 over draft fee for exceeding her account limit by only 75p.
In a further instance, Ms Green was working for a company in financial hardship and her monthly salary was not paid on time, without warning, and resulted in 15 scheduled direct debits to bounce.
The repercussion for the returned payments was the maximum £105 penalty a day for several days.
Ms Green said that she is bitterly disappointed with today’s Supreme Court ruling and is now uncertain about the future of the £1,600 she has been waiting 18 months for.
Thousands of consumers were successful in getting their money back through out of court settlements; but when the case was launched by the Financial Services Authority in July 2007 all claims were frozen until the case’s conclusion.
The ruling, which concluded a series of trials and appeals lasting two years, determined that the OFT could not challenge overdraft charges because it does not have the power to decide whether unauthorised charges are fair.
A spokesperson for Barclays, one of the appealing banks, said the bank welcomes the Supreme Court’s ruling that the overdraft fees are legal; confirming that unarranged overdraft charges are an important part of the price for the package of current account services provided to customers.
In Australia, NAB made the decision to drop penalty fees despite the A$100 million price tag attached and was rewarded with a 40 percent reduction in customer complaints and a six fold increase in customer acquisitions.
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