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Bank charges appeal is thrown out Bank charges appeal is thrown out
(30 minutes later)
An appeal by eight banks against a ruling that a regulator can investigate the fairness of overdraft charges has been thrown out. An appeal by eight banks, against a High Court ruling that a regulator can investigate the fairness of overdraft charges, has been thrown out.
The Appeal Court ruled that the Office of Fair Trading (OFT) has the power to look into the issue. The Appeal Court ruled that the Office of Fair Trading (OFT) has the power to investigate the issue of bank charges.
Master of the Rolls Sir Anthony Clarke said the banks could not appeal against the decision in the House of Lords. However, the banks have decided to appeal further to the House of Lords, against the appeal judges' advice.
Tens of thousands of claims currently on hold in the English and Scottish legal systems will stay frozen.Tens of thousands of claims currently on hold in the English and Scottish legal systems will stay frozen.
Sir Anthony dismissed the appeal and told the banks they should now allow the OFT to decide whether their charges were fair or not. Banks continue fight
However, cases will stay frozen until the OFT has concluded its investigation. Sir Anthony Clarke, Master of the Rolls, dismissed the banks' appeal and told them they should now allow the OFT to decide whether their charges were fair or not.
He said four High Court judges had now come to the same conclusion on the issue of the OFT's jurisdiction.
However, the British Bankers' Association (BBA) said its members still disputed the decision of the High Court and now the Appeal Court.
"The banks continue to believe that the Regulations do not apply to these type of charges," a spokesman said.
"The banks will apply to the House of Lords for permission to appeal the Court of Appeal's decision.
"The banks will work with the OFT to ensure the next stages in the test case process are progressed as quickly as possible," he added.
Unanimous decisionUnanimous decision
The banks had argued that their overdraft charges fell outside the scope of the 1999 Unfair Terms in Consumer Contracts regulations.The banks had argued that their overdraft charges fell outside the scope of the 1999 Unfair Terms in Consumer Contracts regulations.
It is great to see the Court of Appeal being so unequivocal in their guidance to the banks Chris Warner, Which?It is great to see the Court of Appeal being so unequivocal in their guidance to the banks Chris Warner, Which?
However, the three Appeal Court judges rejected this. However, the three Appeal Court judges rejected this view.
"We have unanimously concluded that the application should be refused," said Sir Anthony."We have unanimously concluded that the application should be refused," said Sir Anthony.
"The issues should now be resolved by an OFT assessment of fairness." "The issues should now be resolved by an OFT assessment of fairness," he added.
If the banks wish to appeal further they will have to appeal directly to the House of Lords for permission. He refused the banks leave to appeal further, but they have decided to appeal directly to the House of Lords anyway.
Bank charges campaigners were delighted with the Appeal Court ruling.Bank charges campaigners were delighted with the Appeal Court ruling.
Chris Warner, of the consumers' association Which?, said: "It is great to see the Court of Appeal being so unequivocal in their guidance to the banks that this is the end of the road. Chris Warner, of the consumers' association Which?, said: "It is great to see the Court of Appeal being so unequivocal in their guidance to the banks that this is the end of the road."
"They should now let the OFT do its job. The banks have the right to appeal to the House of Lords but the Court of Appeal could not have been clearer that that is not the appropriate way to go forward." "They should now let the OFT do its job. The banks have the right to appeal to the House of Lords but the Court of Appeal could not have been clearer that that is not the appropriate way to go forward," he added.
Next stage County courts
This is the latest stage of litigation between the OFT and eight banks which started in July 2007. The litigation between the OFT and eight banks started in July 2007 and now looks likely to run into 2010.
Since then, tens of thousands of claims for the return of overdraft charges have been frozen in the English and Scottish legal systems waiting for a test case to eventually decide if bank overdraft charges are fair or not.
If the OFT ultimately wins the case, several billion pounds could potentially be refunded to millions of bank customers.If the OFT ultimately wins the case, several billion pounds could potentially be refunded to millions of bank customers.
The banks must now decide if they wish to argue over the OFT's jurisdiction to the House of Lords or whether they should now proceed to a second round of court hearings over the issue of fairness itself. Since the test case started, tens of thousands of claims for the return of overdraft charges have been frozen in the English and Scottish legal systems, waiting for a final decision on whether bank overdraft charges are fair or not.
Alternatively, they could try to cut a deal with the OFT to short-circuit the whole process if they felt they were likely to lose. In 2007, when the campaign for the return of overdraft charges was threatening to swamp the court system, the UK's banks were estimated to have repaid more than three quarters of a billion pounds to about 378,000 customers.
A further 65,000 claims are known to be on hold in the English county courts alone.
Sir Anthony Clarke said it was "sensible" that the stay on county court proceedings should remain in place until a final decision on fairness of bank charges was made.
All county courts have now been sent a letter to this effect, from the deputy head of Civil Justice in England & Wales, inviting local judges to continue the existing stays, until either the House of Lords or the OFT's investigation come to a conclusion.