Thousands of 'unfair bank charge' claims caught up in courts

Thousands of 'unfair bank charge' claims caught up in courts

More than 65,000 people have had their claims against overdraft charges frozen in the court system, campaigners said today.

The figure was obtained from the Ministry of Justice by Legal Beagles, a consumer website campaigning for banks to return "unfair" charges on current accounts to their customers. Claimants hoping to reclaim charges now find themselves caught up in the legal system while they wait for the result of a test case against current account providers.

Julian Siddle, a spokesman for the site, said the number of people waiting for their claims against banks to be resolved was far higher. "The 65,000 figure given by the Ministry of Justice is a very conservative estimate. There are many complaints held with the Financial Ombudsman Service which haven't been registered with the courts, as well as ­thousands caught up in the banks' complaints systems."

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More than 2m letter templates aimed at helping consumers reclaim charges on current accounts have been downloaded from financial websites including Guardian.co.uk/money and MoneySavingExpert.com and more than 370,000 people have made a successful claim against their banks.

Current account providers repaid some £784m in unfair bank charges to consumers, preferring to settle rather than take the case to court.

However, in the summer of 2007 a halt was called to the payouts pending the result of a test case by the Office of Fair Trading (OFT) against eight current account providers, and claimants have been caught up in the court system since then.

The Financial Services Authority allowed current account providers to sign up to a waiver which lets them off dealing with consumer complaints about bank charges while the case continues. The waiver was due to expire at the end of January but has now been extended for at least six months, pending the end of an appeal by the banks.

Siddle has branded the waiver "one-sided". "The waiver is unfair. Banks are still able to charge customers but they are also able to ignore the eight-week limit on complaint handling while the waiver is in place," he said. Under the terms of the waiver, banks are only obliged to deal with complaints from people in genuine financial hardship.

The consumer group Which? is advising people who want to reclaim bank charges to lodge their complaint now, rather than await the result of the test case.

In April last year, the high court judge Justice Andrew Smith ruled the OFT could challenge bank charges. The banks took the case to the court of appeal in October, and a decision is expected soon.

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