On 26th July 2007 came a bombshell announcement on Channel Four News. The Office of Fair Trading (OFT) had issued High Court proceedings against the main British banks to settle the question of whether bank default charges were unfair. This meant that at a time when thousands of bank customers were winning compensation all their complaints were suddenly put on hold. The OFT, the banks, the county courts, the Financial Service Authority (FSA) and the Financial Ombudsman Service (FOS) all agrred to freeze bank charge complaints until the issue was settled in the High Court.

Nine months later, on April 27th 2008, the judgment was published. It destroyed most of the banks' arguments ruling that the 1999 Unfair Terms in Consumer Contract regulations (UCTTR) did apply to bank charges and that the OFT were entitled to investigate them. However on 24th May the banks announced they would be taking the case to the Court of Appeal so bank customers who have been angered by the heavy default charges banks have been and still are taking from their current accounts have another long wait ahead of them before they stand a chance of getting their money back. The banks lost again and the case was escalted to what has now become the Supreme Court , the highest court in the UK.

The timetable is as follows:

1. November 2009 - The Supreme court hands down its decision on whether the OFT has the right to decide on the level and fairness of charges.

2. The OFT will give its ruling on default charges stating (presumably) that they are too high and proposing what might be a reasonable charge for the banks to make in the future for bouncing a direct debit or seeing an account go a few pennies or pounds into the red.

3. Possible appeal against the OFT's decision on the level of charges.

As explained on our Home Page this lawsuit has put all current account complaints on hold until it is settled one way or the other. Neither the Financial Ombudsman Service nor the county courts will consider one of these complaints until the High Court had decided the issue. The FSA which regulates the banks has said that the banks must acknowledge all new complaints but won’t have to investigate them and can ignore them completely until the case is settled.

Prior to this announcement thousands of people had been taking their cases to the small claims court and in almost every case the banks settled rather than face a trial. Indeed, CLAIMS had never lost a single case. However bank charge complaints had begun to clog up the court system because the banks usually put in a defence and pretended they would go to trial pulling out hours before the hearing.

For more information regarding the announcement please see the following sites.

OFT Investigation regarding the current account charges and the test case

Financial Ombudsman Service frequently asked questions regarding current account bank charges.

FSA update regarding the test case and what happens next.

FSA waiver from handling complaints.

Letter from the FSA to the banks regarding the firms' failure to keep to their regulators rules regarding complaint handling and making misleading statments to their customers who have complained.