Barclays must suspend penalty banking charges, judge says

Barclays Bank must not take penalty overdraft charges from their customers until the High Court has reached a verdict in the test case, it has been reported.

Judge Abraham, of Luton County Court, adjourned the case of Nadine Fry before the outcome of a test case in the High Court was revealed.

According to The Times he told the court: “until the expiry of the stay, no further penalty charges or interest on penalty charges should be debited to the claimants account by the defendant”.

Personal banking customers have been reclaiming bank charges recently as part of a widespread consumer revolt against the extra fees.

Barclays alone has repaid nearly £90 million in charges this year.

A spokesman for Barclays Bank said: “All county court judges are saying different things. This is why the banks are going to the High Court to get some clarity around this issue.”

The High Court’s ruling is expected in February 2008. A ruling in favour of customers could result in the end of free banking and losses of £10 billion for the banks.

Tags: ruling, investment, luton, county court, revolt, personal banking, court judges

Consumers outraged by judge’s bank charge decision

A number of consumers in the UK are outraged at the decision of a judge in Hull who plans to dismiss their court cases against a number of banks.

Around twenty customers who have taken their banks to court over reclaiming bank charges have been told that the cases are likely to be dismissed as a result of the recent case won by Lloyds TSB. Lloyds was the first bank to win a case, when the Birmingham judge ruled in the banks favour rather than in favour of the plaintiff, Kevin Berwick, who was seeking over £2500.

Despite officials from the Financial Ombudsman Service stating that the Lloyds TSB case is not a definitive one, the judge from Hull, Ian Besford, has cited this case in his decision to dismiss the cases against Lloyds TSB, Barclays, and HSBC. The cases are due to be heard on July 4th. A number of the consumers concerned have contacted the BBC with regards to the issue.

A spokesperson from Consumer Action Group stated: ‘Kevin Berwick lost in his case in Birmingham because he didn’t supply enough evidence. This judge in Hull seems to be striking out the claims before he has even seen the detailed evidence of each claimant.’

However, the judge has stated that he plans to dismiss the cases because there appears to be ‘no reasonable prospect of success in the light of the recent decision’ regarding the Lloyds TSB case.

This is the first judge to have referred to the Birmingham Lloyds TSB case in his decision. A court official from Hull stated: ‘It is entirely up to each judge to decide for himself if the Birmingham judgement is an interpretation of the law he agrees with.’

Tom Smith
12th June 2007

Tags: costs, charges, bank, ruling, claim, fees, penalties, judge

Consider financial ombudsman over bank charges

In the ongoing disputes relating to bank charges Lloyds TSB recently became the first bank to win a court case against a customer that was trying to reclaim bank charges that had been imposed for exceeding the overdraft limit on the account, and for returned cheques and direct debits.

And is seems that this unprecedented case has started to put some consumers off from trying to reclaim charges from their banks. However, experts advise that there is another route available.

This is Money has advised consumers that if they don’t feel confident about taking their bank to court of reclaiming bank charged they can simply go through the Financial Ombudsman Service. This is a free service, so consumers will have nothing to lose by taking their complaints to the ombudsman. And if, at the end of the day, the consumer does not agree with the financial ombudsman’s decision he or she can still take the case to court.

This is Money also warns that this cannot be done the other way around. So if a consumer takes the bank to court, and the judge rules in favour of the bank, the consumer cannot then take the complaint to the financial ombudsman because the judge’s ruling has to be the final one. So, anyone having trouble getting bank charges back from their bank should consider complaining to the FOS before taking the case to court.

Even banks are now using the Lloyds RSB case to try and make consumers feel as though this is a definitive decision, but this is not the case.

One FOS spokesman stated: ‘We are seeing letters from banks suggesting the Birmingham case is definitive. This is usually happening at local branch level. Often when we raise it at a senior level, head office agrees that the letters are wrong and stop any more going out.’

Tom Smith
10th June 2007

Tags: fees, ruling, case, court, bank, judge, ombudsman

Lenders responding well to exit fees ruling

Mortgage lenders have responded positively to a Financial Services Authority (FSA) ruling that borrowers should be told more clearly about the cost of exit fees.

That is according to the ifs School of Finance, which says many lenders have removed or reduced the fees on their mortgages.

A number of banks and building societies have made “encouraging steps” to reduce exit fees since the FSA ruling was made public, with Barclays, Kent Reliance and Portman all named as firms that have announced changes.

The ifs School of Finance also points to a “general willingness” among lenders to ensure that customers are being treated fairly when it comes to exit fees.

This too follows a statement from the FSA which said that some customers are being left in the dark over specific issues with their mortgage.

“Banks and building societies have proved very responsive to the FSA’s recent announcement,” said David Fields, head of banking at the ifs School of Finance.

“However, it remains imperative that customers should consider the overall cost of a mortgage, ie; administration and exit fees as well as the interest repayments, before they make what is likely to be the biggest financial decision of their lives.”

Those of you considering getting a mortgage should make sure that you have done your research and are completely aware of any potential costs which are not immediately apparent.

Tags: number, exit fees, FSA ruling, Mortgages, ruling, overall cost, general willingness, bank