JUDGE CALLS HALT TO BANK CHARGES

Barclays has so far repaid £87m in overdraft charges this year
A judge has stopped Barclays bank taking any more penalty charges and interest from a customer who sued for their return.
Judge Abrahams, at Luton County Court, has ordered Barclays to stop applying the charges until a High Court test case settles the legal issues involved.

Barclays said it will be entitled to reclaim any further charges from Nadine Fry should the test case be successful.

The five main banks have handed back almost £400m in charges since January.

Barclays itself has so far repaid £87m in overdraft charges this year.

'Not general policy'

Judge Abraham's decision is likely to be deeply disturbing to the UK's banks, in case other judges around the country adopt a similar line.


Luton county court's order against Barclays bank

A spokesman for the Judicial Communications Office (JCO), which speaks on behalf of judges, said: "This is not a general policy - each case is assessed on its own merits."

In the past year, tens of thousands of bank customers have been winning refunds of overdraft penalty charges from their banks, amounting to millions of pounds.

To resolve this vexed issue, the banks, along with the Office of Fair Trading (OFT), agreed at the end of July to stage in the High Court next year a test case on the legality of the charges.

The OFT believes they are an unfair and illegal penalty under consumer protection regulations.

The banks say they are a fair charge for providing a service to their customers while their accounts are in the red.

Waiver win

At the same time as announcing the test case, the banks won from the Financial Services Authority (FSA) a waiver from the current rules so that they can largely stop processing new claims against them until the legal issues are sorted out.

Likewise, the Financial Services Ombudsman (FSO) decided to stop dealing with the thousands of similar complaints it has been receiving.

The banks also asked the courts to suspend all existing legal actions against them for the time being.

However, any decisions on cases that are already before the courts have been left up to local judges to decide.

SOURCE: BBC