Overdraft Charges: Banks Win Supreme Court Ruling

Overdraft Charges: Banks Win Supreme Court Ruling

by Ashley Clark, Director

The Supreme Court has ruled in favour of Banks in a huge test case that has been running for over two years where banks make excessive unauthorised overdraft charges.

The Supreme Court overturned decisions all the way up through the legal system in the UK via the High Court and the Court of Appeal which had previously ruled that the Office of Fair Trading would be allowed to investigate how fair bank charges were for those who breach their agreed overdraft limit i.e.  "go over you limit".

Whilst the dust has not settled on this ruling, many consumer action groups are of course angry with the decision given that there is over £2.5bn pa of additional income at stake for Banks.  

Likewise, a positive ruling would open the floodgates for billions in compensation claims for excessive charges to be refunded and the leading 7 banks have fought long and hard against this.

We are not sure who is right here.  We understand consumer groups suggesting that charges are excessive but why should a Bank have to suffer a client who abuses their credit position?

• If you know what the published penalty charges are then you abuse your limits at your peril
  
• If you don’t like their charges then change banks
  

We suggest this has been a complete waste of legal fees.  Any private business should be allowed to operate on their own terms and in a free market, if you do not agree with those terms then change your bank.

The simple answers are:

• Do not live beyond your means
• Do not set up an overdraft and do not go overdrawn, let alone exceed an agreed overdraft facility
• If you do get into difficulty, contact your bank immediately.
  

Useful links:

Contact us - Book Callback - Free Consultation - Newsletter - Money MOT - Discounts

Back to News Summary