23 January 2008
Barclays, one of eight UK lenders accused of levying unfair penalty charges from customers, has launched its High Court defence of the fees.
The ongoing case, brought against seven banks and one building society by the Office of Fair Trading (OFT), aims to decide whether or not the penalties taken from account holders for offences such as going over overdraft limits are excessive.
Should the OFT win, the way in which current accounts are handled could be radically changed - with some analysts suggesting that banks, denied funds from penalty fees, might begin to charge for previously free services.
A consumer revolt last year saw hundreds of thousands of Britons take action to reclaim penalty charges issued to them by banks - and the sheer number of court cases that ensued has led to the High Court test case being called.
Representing Barclays, Iain Milligan QC said that the charges, which are mapped out on contracts signed by customers when current accounts are opened, were an integral part of the banking process.
"Barclays' case is that it is obliged to supply the whole bundle of services, for which the customer is obliged to pay the whole bundle of charges," he commented.
Last week, barristers for the Royal Bank of Scotland accused the OFT of stirring up a "hornet's nest" by criticising bank charges as part of their defence.
The case continues.
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