Northern Bank is providing the following update to its customers regarding the ongoing legal proceedings between some banks, (“the Banks”) and the Office of Fair Trading (OFT) regarding a complaint about unarranged (unauthorised) overdraft charges.
As previously advised, after hearings in February 2008 and December 2008, the High Court decided that the Banks’ current terms and conditions relating to unauthorised overdraft charges and their various sets of historical terms and conditions, with the exception of one specific term used by a particular bank:
- Are not unenforceable penalties; but
- Are assessable for fairness under the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).
On 23 May 2008, the High Court decided that the Banks were allowed to appeal the Judge's decision that the Banks’ current terms and conditions could be assessed for fairness. Subsequently the Banks appealed the High Court’s decision and the case was heard by the Court of Appeal from 28 October to 5 November 2008.
The Court of Appeal on 26 February 2009, confirmed the judgment of the High Court, stating that the unarranged overdraft charging terms are nor part of the core bargain between a consumer and the bank. In April 2009 the banks were granted leave to appeal to the House of Lords.
The Banks and the OFT have agreed that the case should move forward as quickly as possible. With assistance from the Court, this has been achieved to date and the Banks are committed to ensuring that this remains the case going forward. At this stage it is not possible to predict when the test case will be finally concluded.
What this means for any complaints?
In the meantime, the FSA has confirmed a further six-month extension to its waiver on handling complaints related to unarranged overdraft fees. Customer complaints relating to unarranged overdraft charges will therefore continue to remain on hold up until 26 July 2009 or on resolution of the test case. The FSA agreed to this subject to conditions that protect your rights.
The Banks will also continue to ask County and Small Claim Courts to keep cases relating to unarranged overdraft charges on hold until the test case process is concluded.
Further help
Individuals have the right to refer a complaint to the Financial Ombudsman Service (FOS) or the Courts. However, the FOS has agreed not to act on any complaints until the legal proceedings between the Banks and the OFT have been concluded.
Should you issue a claim in the Courts we will apply for a Court Order to put your claim on hold pending the outcome of the proceedings in the High Court.
Further information
A copy of the text of the full judgment can be found at www.judiciary.gov.uk
We will continue to keep customers informed of any further developments.