Banks have traditionally levied heavy financial penalties on consumers who exceed their overdraft limits or have insufficient funds to honour cheques or direct debit payments. In April 2007, the OFT launched an investigation into whether these charges were fair and legal in terms of reflecting the true administrative cost to the bank. This was followed some months later by the commencement of legal proceedings between the OFT and nine high street banks, the outcome of which will be decided by the High Court. A date for this test case has not yet been set, and the banks have appealed this decision.

For the past year, thousands of consumers have lobbied their banks for reimbursement of sums paid over the years. In most cases, these claims have been settled on a ‘goodwill’ basis with the result that hundreds of thousands of pounds have already been repaid. However, since the OFT launched their case against the banks, the FSA has now ruled that all consumer claims be put on hold pending the outcome of the case. If the high court find in the banks favour, there will be no obligation to settle any further claims. But if the ruling goes in favour of the OFT, this will effectively open the floodgates in consumer claims for requests to reimburse charges paid plus interest over the last six years.

So what does this mean for consumers in the here and now? Anyone searching for information on excessive or unfair bank charges will be greeted by dozens of websites offering advice and templates with a view to reclaiming such charges. Many will do it for you on a ‘no win no fee’ basis. But due to the FSA ruling, while many people are continuing to put in claims, nothing is currently being processed. The advice from some is to make the claim anyway, so it can be ‘top of the pile’ if and when a judgement of unlawfulness is made against the banks. However, the wheels of justice grind exceedingly slowly, and it may be a long wait – proceedings may run well into 2009.