Page last updated at 22:56 GMT, Tuesday, 21 August 2007 23:56 UK

Banks still being sued over fees

By Ian Pollock
Personal finance reporter, BBC News

Judge's order suspending all bank overdraft claims in Devon & Cornwall
Devon and Cornwall bank customers' cases have been halted

Some bank customers are still suing successfully for the return of overdraft charges, despite an impending test case on the issue.

Banks and the Office of Fair Trading recently agreed to stage a test case to decide if the charges were fair.

District and county court judges have been told they can temporarily halt any current cases until the courts make a final judgement, probably next year.

However, it is clear that some courts are still allowing claims to proceed.

On Monday at Eastbourne County Court, deputy district judge Parkes lifted a stay on a claim by a man from Hailsham in Sussex, who argued that his bank, HSBC, had procrastinated for months after he first asked for the return of his overdraft charges.

That case will now be heard in September.

Last week at Clerkenwell & Shoreditch county court, a judge refused to stay a claim against the Allied Irish Bank, after it filed a mere four lines in defence, which the judge said amounted to a "bare denial".

The judge pointed out that stays would not be granted automatically.

"A lot of areas are seeing the need to stay cases," said a spokesman for the Judicial Communications Office (JCO).

"Other areas are doing it on an individual basis."

No defence

In some courts, judges are still going ahead with cases where the bank has not asked for a stay, and are awarding money to claimants when the bank fails to turn up to defend itself.

One claimant wrote on the Moneysavingexpert website after a hearing at Birkenhead county court last Friday.

"When it was my turn, I found out that there was nobody from Abbey to deal with my case and went in to face the judge alone," the claimant wrote.

"She told me that as Abbey hadn't turned up to defend against me, she would be finding in my favour, but had Abbey turned up, she would have granted a stay, as that was what they were all doing until after the test case."

The claimant was awarded 2,768 plus costs.

Civil justice

When the Office of Fair Trading and the banks agreed at the end of July to go to a test case on the legitimacy of overdraft charges, the banks also approached the Master of the Rolls, the head of the civil justice system in England and Wales, and asked him to stay all current cases.

To allow individual claims to proceed is likely to result in considerable wasted costs
Judge Gary Hickinbottom

However, Sir Anthony Clarke decided not to do so.

Instead, his deputy wrote to all senior civil judges in England and Wales and asked them to consider staying cases on a case-by-case basis, as appropriate.

In other words, he left it up to them.

So far, blanket stays have been imposed only in Wales and in Devon and Cornwall.

Judge Gary Hickinbottom, the designated civil judge for Wales, explained the decision, saying: "It is probable that litigation will either determine or at least give considerable guidance to the outstanding individual cases.

"To allow individual claims to proceed is likely to result in considerable wasted costs, with the possibility of conflicting judicial decisions that will inevitably have to be reconsidered in the light of the outcome of the Commercial Court litigation in any event," he said.

Court by court

The website of the Consumer Action Group (CAG) currently lists more than 30 courts in England and Wales where all cases are being stayed.

Another 28 courts are deciding whether or not to stay claims case-by-case.

But nearly 40 courts appear still to be hearing cases as normal and not applying any stays.

In more than 100 other courts, the situation is unclear.

Meanwhile, the government's Money Claim Online service is also staying all new cases if a bank puts in a written defence.

Unfair?

Some claimants who now face having their cases held up, possibly for many months, think all this is very unfair.

These are ordinary people who don't know the ropes - it's costing them money to do this and denying them justice
Marc Gander, CAG

Some of them have spent months preparing their cases, trying to drag a reluctant bank to the doorsteps of the court, only to see the whole process halted with a court date in sight.

The JCO stressed that any claimant in this situation could still ask the judge to lift a stay and let the case go ahead.

One good reason for doing this, highlighted by the Financial Services Authority, is if further delay might cause the claimant personal hardship.

However, some campaigners regard all this as very unsatisfactory and unfair to disgruntled bank customers.

"It puts people in a very bad situation," said Marc Gander of the CAG.

"These are ordinary people who don't know the ropes - it's costing them money to do this and denying them justice."

Cost and reputation

For the banks, a halt to the many cases against them will be a welcome relief.

The volume of court cases effectively required further action to resolve the situation
BBA spokesman

Recently, the big five High Street lenders (RBS, HSBC, HBOS, Lloyds and Barclays) finally admitted just how much they had been paying out in "goodwill" payments to customers demanding a refund of their overdraft charges - a whopping 399m in the first half of this year alone.

That helps to explain why they have finally agreed to a legal test case, even though it carries the possibility that they might lose and end up having to compensate millions of customers, going back up to six years.

"The volume of court cases effectively required further action to resolve the situation," said a spokesman for the British Bankers' Association.

"It was not doing anybody any good reputationally."

The test case, at the Commercial Court, a branch of the High Court in London, is scheduled to start on 14 January 2008, before Lord Justice Smith.

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