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Bank charges ruling a blow for consumer

MILLIONS of customers hoping to reclaim more than &pound;1bn in overdraft charges suffered a blow yesterday following a landmark ruling in favour of the banks.<br /><br />The Supreme Court sided with eight major lenders who had challenged decisions made by the lower courts that the unauthorised bank charges come under &ldquo;unfair contract&rdquo; rules.<br /><br />The ruling means the Office of Fair Trading (OFT) does not have the powers it thought it had to scrutinise the fairness of bank charges.<br /><br />The lenders had faced having to make refunds of more than &pound;1.1bn if they had lost the case. A large chunk of the &pound;2.6bn of revenue they receive from the charges each year would also have disappeared.<br /><br />Consumer groups were angry with the decision. They say it allows banks to continue to charge customers up to &pound;35 each time they are overdrawn without permission &ndash; even if the amount is less than a pound. Campaigners believe the cost to the banks is as little as &pound;2.50.<br /><br />The OFT said it would consider the judgment before making a decision on whether or not to continue with its parallel investigation into unauthorised overdraft charging terms.<br /><br />But for those customers that do not go into red without permission, the ruling was better news. Banks had warned the case could have meant the end of free banking.<br /><br />The Treasury said it was focusing on a &ldquo;fairer system for the future&rdquo;.