Will the banks be handing some money back?

Almost three years ago when the UK economy was still in its unnatural state of euphoria, and the banks reigned supreme, certain parties began to take up the case on behalf of those sectors of the UK population who were starting to lag behind in the credit race, and had fallen victim to exorbitant charges levied by the banks against them for breaching their overdraft and credit card limits.

With all that has happened since, this issue has been swept to the back of the line of things to worry about. However thanks to the patience and fortitude of those who believed in the rank unfairness of these charges, a test case has now reached the House of Lords, and it would appear that an end to one of the most unsavoury aspects of pre-collapse UK banking greed might be reaching some form of conclusion.

The conclusion and the subsequent crediting of accounts of those who have been unfairly treated is still very far off in the distance, as the Lords are only to decide at this stage whether the Office of Fair Trading I will be the body chosen to rule on the dispute and are not liable to discuss whether the draconic borrowing charges were illegal. Although many of the UK banks who made windfall profits on these charges are now ironically owned by the public themselves, that are still expected to fight tooth and nail to block any refunds as well as any claims for compensation that are likely to follow.

While there are several precedents of individuals suing banks in the county courts and winning, the banks appear to be unnerved by the prospect of an overall ruling endgame against them and the Pandora’s Box it will happen.

The argument that is already being put forward is that bank’s have been subsidizing their free banking services from the income earned by those who constantly are in unauthorized overdraft and incur excessive administrative fees, such as the famous but infamous £40 letter to advise a client that they are in overdraft of 50 pence. They claim that if everyone were to manage their accounts according to the book then they would have to charge everyone equally. An example of the kind of logic that got banks to where they are today

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Tags: Bank, Bank of England, Banking, British Economy, Credit Crunch, UK Banks