Mass hearings in fight to reclaim bank charges

Mass hearings in fight to reclaim bank charges

A handful of customers should be selected to have their complaints against their banks put forward to trial as test cases to settle the issue of "unfair" charges, a high court judge said today.

Leeds Mercantile Court originally scheduled a record 200 cases to be heard today as courts struggle to deal with a tide of litigation brought by disgruntled bank customers.

With many of the original claimants settling out of court, Judge Grenfell was confronted in the end with only 24 people.

However, with mass hearings taking place at courts in Leeds, London, Guildford and Birmingham and more expected over the coming weeks, the judge said finding one or two cases to go forward to trial would be the best way to cope with the matter.

Although the verdict of such a trial would not be binding on all other cases, it would be "persuasive", the judge said.

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He told the claimants and bank representatives present that dealing with all cases one-by-one would be cumbersome, while group litigation was likely to be expensive.

But with banks eager to settle outstanding claims with customers rather than see the matter go to full trial, it is uncertain if the judge's bid will be successful.

Setback

Action by customers to have their bank charges reimbursed has been gathering pace since last year when the OFT indicated that large charges on credit card default payments were unlawful.

Campaigners suffered a setback earlier this month after a second victory for the banks in the courts in Lancaster.

In May, a judge at Birmingham county court had dismissed a claim for £2,545 from Lloyds TSB customer Kevin Berwick. The judge said the bank's charges were legitimate fees for servicing an overdrawn account.

Mr Berwick said that Lloyds had already offered him a settlement, which he turned down after deciding to fight the case.

Campaigners have described the rulings as "anomalies" and suggested that claimants had not prepared their cases properly. They have pledged more than £100,000 to a legal fund to fight cases they believe stand a chance of creating a legal precedent.

They argue that the bank charges are unlawful as they do not represent the real cost to banks of administering a bounced payment or unauthorised overdraft. The banks, however, insist they are legal and customers sign up for them when they open a current account.

The major banks have refused to reveal how many people have threatened to sue them, or how much they have paid out in settlements so far.

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