22 October 2007
Eight of Britain's biggest high street financial services providers, including seven banks, have formally submitted their defences for a test case which might permanently alter the way they make money in the UK.
In a case brought by the Office of Fair Trading, London's High Court is set to decide whether or not bank charges for offences such as breaking overdraft limits are unfairly high.
Prior to the suspension of claims ordered by judges earlier this year in anticipation of the High Court case, banks had paid out a total of approximately £570 million to 329,000 customers who complained about the charges in 2007.
Currently, basic financial services such as Direct Debit, depositing a cheque and taking money out of a cashpoint are free in Britain - in contrast to banking practices in other countries, where they are charged for.
British banks say that they recoup this potential loss of earnings by levying heavy fines for customers' going overdrawn - and therefore might introduce the basic charges in future if the test case is lost and penalty fines are curtailed.
Defences filed by the banks also claim that, because notification of the charges is contained in customers' initial contracts, the charges are legal.
"The charges cannot be contrary to the requirement of good faith or unfair provided that the bank deals with the customer fairly and openly at the time of the conclusion of the contract," the court statement from HSBC said.
However Marc Gander, of the Consumer Action Group, commented: "The fact that [banks] have paid out about half a billion pounds to prevent the issue going any further in the lower courts does not show much good faith."
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