Banks told to 'come clean' on fees
Updated on 04 July 2007
A district judge has ordered two banks to come clean over unauthorised overdraft fees in a move that could see the "true cost" of charges revealed for the first time.
Judge Iain Besford told Yorkshire Bank and Alliance and Leicester to disclose how they calculate their penalty fees and what the actual cost to them is of servicing a bounced payment.
Campaigners said they were delighted with the development, describing it as a watershed moment in the fight against "unfair" bank charges. Of the 44 claims originally due to be heard in Hull on Wednesday, all but eight were settled by banks beforehand.
More than £50,000 is believed to have been paid out to customers in a run-up to the session, despite earlier indications that the judge was minded to dismiss their cases.
In a bid to prevent that happening, the consumer action group and MoneySavingExpert.com funded legal representatives to argue the case of a number of the claimants.
Sitting in open court, Judge Besford said he felt as if he was the first judge to see "more of the picture". He added: "There is a number of issues coming through nationwide. What we want to do is try to narrow the issues down so that if necessary the matter can go to trial."
Of the cases still live, four involve customers at Yorkshire Bank. Rather than strike out the cases, Judge Besford said that they should proceed to the Small Claims Court.
In addition, he agreed to a disclosure order that would see banks explain how they reach fees in excess of £30 for going over an agreed overdraft or bouncing a single payment.
Campaigners claim that the real cost to the banks is as little as £2.50, and as such the charges levied are unfair, disproportionate and unlawful. Under the terms of the disclosure order, Yorkshire Bank will have to show the calculations that make up its charges. They were also told to reveal what actions they take in relation to each charge and what the actual cost incurred by the bank is in administering unauthorised payments.
Yorkshire Bank's legal representative agreed to the terms of the order. Alliance & Leicester, which chose not to be represented in court, were given the same directions. Disclosure is due to be made by the end of the summer. The two banks involved now have a choice either to try and settle the cases or come clean on the charges.
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.
