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| Version 3 | Version 4 |
|---|---|
| Banks agree to charges test case | Banks agree to charges test case |
| (40 minutes later) | |
| A number of UK lenders, including HSBC, Lloyds TSB, Royal Bank of Scotland and Nationwide, have agreed to go to court in a test case about overdraft charges. | |
| Banks have had a long-running battle with consumers over whether fees levied for unauthorised borrowing are legal. | Banks have had a long-running battle with consumers over whether fees levied for unauthorised borrowing are legal. |
| The Office of Fair Trading will sue the banks claiming the charges are unfair. | The Office of Fair Trading will sue the banks claiming the charges are unfair. |
| Tens of thousands of cases have already been settled out of court, costing the banks millions of pounds in refunded charges, and clogging up local courts. | Tens of thousands of cases have already been settled out of court, costing the banks millions of pounds in refunded charges, and clogging up local courts. |
| Market watchdog the Financial Services Authority (FSA) will allow banks to suspend dealing with any claims filed against them until the test case is decided. | Market watchdog the Financial Services Authority (FSA) will allow banks to suspend dealing with any claims filed against them until the test case is decided. |
| However, the banks will still need to make a note of any claims lodged, and will have to honour offers to settle claims that were made before the test case and waiver were announced. | However, the banks will still need to make a note of any claims lodged, and will have to honour offers to settle claims that were made before the test case and waiver were announced. |
| Angela Knight, chief executive of the British Bankers' Association (BBA) said that legal clarity was needed to end uncertainty for banks and consumers alike. | Angela Knight, chief executive of the British Bankers' Association (BBA) said that legal clarity was needed to end uncertainty for banks and consumers alike. |
| Unfairness rules | Unfairness rules |
| The Office for Fair Trading (OFT) said that the lenders approached the UK's financial watchdogs in order to sort out the problem and agreed to the test cases in England and Wales, Scotland and Northern Ireland. | The Office for Fair Trading (OFT) said that the lenders approached the UK's financial watchdogs in order to sort out the problem and agreed to the test cases in England and Wales, Scotland and Northern Ireland. |
| LENDERS IN TEST CASE BarclaysHSBCRoyal Bank of ScotlandClydesdale BankHBOSAbbey NationalLloyds TSBNationwide | LENDERS IN TEST CASE BarclaysHSBCRoyal Bank of ScotlandClydesdale BankHBOSAbbey NationalLloyds TSBNationwide |
| The OFT said that on Friday it would commence proceedings in England's High Court for "a declaration on the application of the law in respect of unauthorised overdraft charges". | The OFT said that on Friday it would commence proceedings in England's High Court for "a declaration on the application of the law in respect of unauthorised overdraft charges". |
| "The banks do not accept that the unfairness rules of the Unfair Terms in Consumer Contract Regulations apply. The OFT believes that they do and is seeking to establish this legal principle clearly in the court," it added. | "The banks do not accept that the unfairness rules of the Unfair Terms in Consumer Contract Regulations apply. The OFT believes that they do and is seeking to establish this legal principle clearly in the court," it added. |
| "The OFT considers that a quick determination of this point of principle will assist in securing a clear and orderly resolution of the fairness of these charges." | "The OFT considers that a quick determination of this point of principle will assist in securing a clear and orderly resolution of the fairness of these charges." |
| Out of court? | Out of court? |
| To date, the banks have been reluctant to contest such cases, usually settling out-of-court. | To date, the banks have been reluctant to contest such cases, usually settling out-of-court. |
| So far no bank has outlined the case for its charges in open court. | So far no bank has outlined the case for its charges in open court. |
| If a bank were to do so and lose its argument that the charges were fair, it could lead to many more bank customers getting refunds, analysts said. | If a bank were to do so and lose its argument that the charges were fair, it could lead to many more bank customers getting refunds, analysts said. |
| However, Ms Knight of the BBA said that banks had been unwilling to take an individual to court as the case would be different from person to person and would not offer a definitive answer on the legal issues being questioned. She added that the banks had not softened their view that the charges were legal and fair, and could only "start looking at the issues underneath" once they had a ruling. | However, Ms Knight of the BBA said that banks had been unwilling to take an individual to court as the case would be different from person to person and would not offer a definitive answer on the legal issues being questioned. She added that the banks had not softened their view that the charges were legal and fair, and could only "start looking at the issues underneath" once they had a ruling. |