Banks set to appeal OFT charges ruling

The eight law firms which failed in their attempt to prove overdraft charges as fair are set to appeal today’s landmark judgment, has learned.

The lawyers will reconvene at a case management conference where they are expected to launch the appeal.

The decision to appeal comes as today’s ruling will give claimants ground upon which to challenge the fairness of the charges.

The OFT argued that overdraft charges were excessive and “penalty charges”; that terms and conditions (T’s & C’s) supplied by the banks were not written in “plain intelligible language”; and that overdraft facilities are not a chargeable service.

Mr Justice Andrew Smith today rejected the banks argument that under the 1999 Unfair Terms in Consumer Contracts Regulations the relevant terms on overdrafts are exempt from assessment as to fairness.

However, he added that this did not mean that the relevant terms should necessarily be regarded as unfair, or “that they are not binding upon consumers”.

On the issue of the bank’s language in T’s & C’s Smith J said four of the eight banks were left wanting in “certain specific and relatively minor aspects”, yet all banks’ T’s & C’s were provided in “largely” plain intelligible language.

The High Court also found in favour of the OFT in its argument that a bank refuses to pay out on a cheque then no service has been given. However, if banks do pay out on a cheque it should be regarded as customer service.

Overdraft charges should not be considered as penalty charges, the High Court added. One source close to the case said this removed the grounds upon which most county court claims against banks had been brought.

The Office of Fair Trading (OFT) initiated the proceedings against the banks, which provided 90 percent of the UK’s current accounts, following a deluge of claims that bank overdraft charges are unfair.

In a statement the OFT said: “It is important to note that this judgment only covers points of legal principle and does not determine whether the relevant charges are actually unfair.

“We are continuing our investigation into the fairness of these terms and will consider our position after reviewing the detail of this judgment.”

The CMC will convene on 22 May to establish what can be regarded as a fair overdraft charge. It is understood that lawyers representing the banks believe there are sufficient grounds upon which to launch an appeal at the CMC.

Who instructed who for who?

The OFT instructed Brian Doctor QC of Fountain Court

Ashurst partner Wilson Thorbury instructed Ali Malek QC of Three Verulum Buildings to represent Abbey National

Simmons & Simmons partner Colin Passmore instructed Iain Milligan QC of 20 Essex Street to represent Barclays Bank

Addleshaw Goddard partner Michael Barnett instructed Richard Salter QC of Three Verulum Buildings to represent Clydesdale Bank

Allen & Overy partner Mark Florent instructed Robin Dicker QC of 3-4 South Square to represent HBOS

Freshfields Bruckhaus Deringer partner Simon Orton instructed Richard Snowden QC of Erskine Chambers to represent HSBC Bank

Lovells partners John Holland and Andrea Monks instructed Bankim Thanki QC of Fountain Court to represent Lloyds TSB Bank

Slaughter & May partner Ewan Brown instructed Geoffrey Vos QC of 3 Stone Buildings to represent Nationwide Building Society

Linklaters partner James Gardner instructed Laurence Rabinowitz QC of One Essex Court to represent The Royal Bank of Scotland Group