UK court says bank charges subject to regulation

LONDON – A British court ruled yesterday that banks’ charges on consumers’ overdrafts should be subject to regulation by a government agency.

The Court of Appeal’s ruling upheld a lower court decision on the issue, and came after consumers who feel the charges are excessive filed thousands of suits in county courts.
The banks said they would seek to appeal to the House of Lords, Britain’s highest court.
Overdrafts allow account holders to have a negative balance up to a limit set by the bank. Banks charge fees if the limit is exceeded, and charge interest based on the size of the overdraft.
The banks argued that the charges were exempt from regulations on consumer contracts because they were legitimate charges for goods and services.
‘The court has not said fees are unfair just that they can be looked at to see if they are fair or not,’ the British Bankers Association said in a statement.
‘The banks continue to believe that the regulations do not apply to these type of charges.’
The Office of Fair Trading welcomed the ruling.
‘The court found that these terms are not part of the core or essential bargain between a consumer and their bank, and therefore consumers do have protection’ under government regulations, the agency said.
‘This judgement confirms the OFT’s long-held interpretation of this important aspect of consumer law, and is one that consumers themselves would identify with.’ -Nampa-AP

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