Page last updated at 00:13 GMT, Wednesday, 11 February 2009

Frozen overdraft claims revealed

High Court in the Strand
An important appeal court decision will be handed down soon

It has been revealed that at least 65,000 people have had their claims for the return of overdraft charges frozen in the court system.

The figures, obtained from the Ministry of Justice, have been made public by campaigners for the first time.

The legal claims were halted in July 2007 by a general stay on overdraft cases, imposed by county court judges.

The stay was part of a wider agreement to allow a High Court test case to decide if bank overdraft fees are fair.


A year and a half since the 2007 agreement, the High Court litigation, agreed between eight banks and the Office of Fair Trading (OFT), is still running.

The figures on the number of frozen cases, as of last November, were supplied to the campaign group Legal Beagles by the Ministry of Justice (MoJ).

A spokesman for the group, Julian Siddle, said the litigation agreement, which also allows banks to defer dealing with complaints made directly to them, was very one-sided.

"People are still incurring charges even though banks have obtained a waiver, so they don't have to deal with new complaints," he said.

A decision is expected soon on an appeal by the banks, who have objected to last year's initial High Court ruling that the OFT had the authority to decide if their charges were fair or not, under the consumer contract regulations.

But the second stage of the overall test case, on the main issue of whether or not the banks' charges are in fact fair, has yet to start.

Cases stayed

Until the summer of 2007, the UK's main banks had been besieged by an unprecedented consumer revolt.

Thousands more claims are piling up with the banks themselves

Nick Spooner, Legal Beagles

Hundreds of thousands of disgruntled customers were suing their banks in the county courts, usually successfully, for the return of the overdraft fees they regarded as excessive and unfair.

In most cases the banks gave in to these claims, preferring to refund 784m to an estimated 378,000 customers in 2007, rather than run the risk of adverse judgements in any courts.

But the stay, a policy that has been agreed by individual county court judges, meant that unresolved and new cases were put on hold until a final High Court ruling.

"Pending the final outcome of this matter, the management of individual cases in the county courts is a matter for county court judges to consider based upon the circumstances of each individual case," said an MoJ spokesman.

"However, at the hearing in May last year, Mr Justice Andrew Smith confirmed that the reasons behind the original stay on such proceedings continue to apply, at least until the disposal of the appeal."

Piling up

Nick Spooner of Legal Beagles said many other cases, lodged with the Financial Ombudsman Service (FOS), were also on hold.

And the MoJ figures were, in his view, probably an underestimate.

"The 65,000 figure only applies to the cases which the MoJ was absolutely sure related to claims against banks for the return of overdraft charges," he said.

"There are others that the MoJ couldn't pick up when searching its data base, because of the different ways in which people had written their claims.

"Meanwhile thousands more claims are piling up with the banks themselves," he added.

The OFT has estimated that in 2006 12.5 million people paid some sort of overdraft charge.

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