Supreme Court Supports Banks
The UK’s new Supreme Court has just scored a bit of a PR own goal when one of it’s first decisions denied about a million people the chance to screw their banks over overdraft charges.
All the hullabaloo aside, all the court has decreed is that the Office of Fair Trading cannot be allowed to look into the fairness of the charges which used to range from around £15 to nearly £50 for bounced cheques and other misdemeanours. Even though the banks heralded the Supreme Court’s observation that the overdraft charges were in everyone’s contracts with the banks (in other words, what is everyone moaning about), this was not a judgement on the legitimacy of the practice of charging exorbitant fines.
And nor did the banks even think they would win a decision such as this. They have fought every judgment against them by seeking a ruling from a higher court. Some observers said that even if the Supreme Court had found against them, they could have spun things out in the courts and via the Office of Fair Trading until 2015, they might then have been bought to account and had to pay billions in compensation to their customers.
As it was the banking representatives came out of the court punching the air, clinging onto the one decision for years that had gone their way. They knew, as did everyone else, that the Office of Fair Trading, even though it might have taken years to write the report, would have found the charging practices unfair.
With the Office of Fair Trading neutralised, the Supreme Court handed the banks a huge defensive position and allows them to draw back from what might have been a ruinous onslaught.
Conspiracy theorists of course will say they have been proved right. Banks had already paid millions out to customers in settlement – they never wanted to fight a case in open court unless a decision went against them and the floodgates opened. So just around the corner from the recession, the authorities stepped in and said that a test case should go before the courts to decide whether, or not, the banks were being unfair. It appeared to some that the banks, who were starting to see the problem looming up with the coming recession, had to pull strings with the Government and the Establishment to let them string things out. So it was decided that everyone’s claims, going through the County Courts at the time, were suspended until a test case was brought, not as to the legitimacy of the bank’s actions, but whether the Office of Fair Trading could make a judgement.
Local courts were simply fed up with banks saying they would defend every case rigorously and then, once they had exhausted all delaying tactics, caved in and reached an out-of-court settlement. This had to be stopped as it was wasting a lot of time, but to consumer groups and conspiracy theorists alike, it seemed like the banks had been handed a get out of jail free card. The worse case scenario would be that they would have to around 2015 until they had pay-off their customers (hopefully when they were out of recession); the best scenario would be that a court would find in their favour and let them claim a moral victory – which is indeed what has happened.
Consumer groups are livid, smell a very large rat and urge everyone to write to their MPs; the same guys of course who have just taken a battering over their hands being caught in the till. People shouldn’t expect too much sympathy there say many.
But, as one American politician once said, it’s not over until the fat lady sings. The decision as to whether the banks charges were fair, or unfair, has yet to be decided by a court. No precedent has yet been set. So, in many ways, it’s straight back to square one.
People with a grievance will flock back to the country courts once the banks think it right to send the boys around again and bully their customers for some quite substantial monies owed. The courts will become full again of people and their banks hammering out the rights and wrongs of bank charges. Hence the day of reckoning is yet to come and a case will need to be tested once and for all. Only then will banks be able to claim they were right, or their customers claim they were right.
The story ain’t over yet by a long way.
Guest Article by Neil Camp
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My name is Alan Potts and I'm the Editor of the BUYability web site and Managing Director of BUYability Limited. You can connect with me or keep up to date with new posts on this blog via the following social media sites: 
